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salaries to attract employees, and stock-basedincentives are not an option. Not-for-profit organizationsmay feel that they are at a disadvantageas compared to the private sector or governmentin recruiting employees.This challenge should not be viewed as simply astaffing or HR matter, but should be reviewed atthe board level with a view to the sustainabilityof the organization over time. The organizationshould have a clear strategy in place to recruit,develop and retain key employees. There aremany elements in addition to compensation whichcan appeal to potential employees, and organizationsshould focus on the diverse ways in whichthey can recruit and develop talented employees.Organizations that depend on volunteers shouldalso have a clear strategy to help them retain thevolunteers they have by providing a rewarding,enriching experience and to recruit new volunteersas necessary to support the organization’s activities.The organization’s overall human resourcesstrategy should encompass both paid and unpaidwork and should be approved at the board level.Oversight of Human Resources PoliciesOne key element which contributes to the retentionof staff and employees is the cultivation ofa positive work environment. The board playsan important role here in overseeing the policyframework of the organization. Leading organizationsdon’t wait for problems to develop orregulations to be passed, but rather take a proactiveapproach to developing policies that supportthe well-being of their employees and volunteers.Some key areas which must be addressed include:• diversity and inclusion• occupational health and safety• workplace bullying and harassment• accessibility• background checks and screeningPolicies should be available for all employees toaccess, and should address how any complaintswill be handled. There should be a clear chain ofcommunication for any concerns, zero tolerancefor reprisal for bringing forth a complaint, and aproper investigation process. The board shouldreceive regular updates on complaints made andshould be immediately advised of any which cannotbe resolved by, or which involve, members ofmanagement.13. What relationships may existbetween the organization andindividuals providing services?To discharge their responsibility for overseeingthe organization’s human resources policies andpractices, directors need to understand the differentrelationships which may exist betweenthe organization and individuals providing services.The nature of the relationship can havesignificant implications for the person providingservices, the organization and the board. Thethree most common relationships are those ofemployee, independent contractor or consultant,and volunteer.Employee generally refers to a person who performswork for an employer in exchange formonetary compensation pursuant to a contract.Employees have protections and organizationshave specific obligations in relation to employeesunder employment standards and other legislation,which will be discussed further below.Independent contractors provide services to theorganization for a fee. The relationship an organizationhas with an independent contractor is acommercial relationship similar to those it wouldhave with other suppliers. It is not an employmentrelationship, and the organization generally doesnot have the same types of obligations that existtowards employees.The line between an employee and an independentcontractor can often be blurred. In somecases, organizations may enter into “independentcontracts” with individuals who then provide servicesthat may look very much like the servicesoffered by employees. Courts have set out a numberof tests for determining whether someone isan employee or an independent contractor. 66Additionally, courts have also found there can be anothercategory of relationship, known as the dependentcontractor. This is a contractor who is so dependenton the relationship with the organization thatcourts are prepared to find that notice of terminationof that relationship is required, much like the noticerequired to terminate an employee.12
20 Questions Directors of Not-For-Profit OrganizationsShould Ask about Human ResourcesContractorSpecific work that needs to be completed in specifictimeframeServices not part of core business of organizationHow, when and where services are provided negotiatedbetween parties or at sole discretion ofcontractorPayment on basis of fee for servicesContractor provides same or similar services toother organizationsContractor is known as having expertise andknows how to provide the servicesVolunteers are those who choose to give theirtime to an organization with the understandingthat they will not be compensated for the servicesprovided. These relationships are also not subjectto the same rules and obligations that govern theemployment relationship.The line between employee and volunteer mayalso be blurred. For example, someone maybe employed part time for an organization andreceive compensation for that work, but may alsowish to volunteer free time towards the organization,for which there is no compensation.14. Why is accurate classificationand documentation ofrelationships important?The obligations of an organization to individualsproviding services will depend upon whetherthose individuals are employees, independentcontractors or volunteers. The board of directorsis responsible for overseeing these relationshipsas well as the organization’s compliancewith the law and as such directors should satisfythemselves that relationships are appropriatelyclassified and that there is documentation whichsupports that classification and makes the rightsand obligations of the organization and the individualclear.Organizations have substantial obligations regardingtheir employees. They must withhold andmake remittances for taxes, Employment Insurancepremiums, workers compensation, provincialhealth premiums, and Canada/Quebec Pensionplan. Employers must pay minimum wage and providepaid public holidays to their employees. AnyEmployeeWork done over indefinite or set period of time(fixed term contract)Services likely to be part of or related to core businessof organizationHow, when and where services are provided determinedand supervised by employerPayment by way of salary, commission, bonus,benefits, overtime, vacation pay, etc.Employee generally cannot provide same servicesto competitorsEmployer can provide training in how to do work ifnecessaryhours worked by eligible employees in excess ofthe mandated daily or weekly limits must be paidat overtime rates. Employees must be providednotice of termination as required by law.By contrast, volunteers and independent contractorsare not by law entitled to notice oftermination, unless this is specifically included intheir contract. Additionally, the organization doesnot make statutory deductions or remit employertaxes on behalf of volunteers and independentcontractors. Volunteers and independent contractorsare not protected under the organization’sworkers compensation coverage and are not entitledto overtime, leaves of absence or paid publicholidays.One significant risk to the organization stemmingfrom its management of human resources is thatif an organization wrongly classifies an individual’swork as something other than employment andthere is a subsequent finding (e.g., by a court orthe Canada Revenue Agency) that the relationshipis in fact in the nature of employment, theorganization could be found liable for not complyingwith the appropriate legislation.For example, if someone is working full timehours, and then is asked to volunteer time to furtherthe organization’s interests, those volunteeractivities could later be found to be employment,in which case the organization would be liable forany unpaid wages and overtime for those additionalhours, as well as the applicable employertaxes. This is particularly likely when the volunteeractivities are the same or similar to the activitiesperformed as part of employment and wherethere is an expectation that the employee willundertake the volunteer activities.13
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