Legal Experience and Legal Advice
Legal Experience and Legal Advice
Whether you are operating a private senior residence or are a seasoned entrepreneur, the upcoming business opportunities in this sector—already valued at several billion dollars—are expected to grow significantly in the coming years. However, as with any astute manager or investor, a risk analysis of the targeted market is essential to ensure the success of the project. Despite the growing demand in this sector, operating or investing in it could become a financial sinkhole or pose a significant legal risk if proper preliminary analysis is not conducted.
Informed Advice and Regulatory Compliance:
We can support your business projects and ensure that your company remains compliant with current laws and regulations. One major challenge is hiring and retaining competent staff to serve the aging or vulnerable population effectively.
In the following, our law firm has prepared an analysis of one of the main risks affecting this sector that every good manager and experienced investor must consider.
Aging Population and Labour Shortage
Aging Population and Labour Shortage
Since the 1980s, Quebec's demographic has been aging. According to the latest data from the Institut de la statistique du Québec, the population aged 65 and over accounted for just over 20% of Quebec's population in 2020. This institute also projects this trend to accelerate in the coming years, reaching about 27% of Quebec's total population for a population of 10 million people. Statistics Canada indicates that this trend will intensify over the next ten years, until 2031, when all baby boomers will have reached the age of 65 and over. Demographers predict that within the next five years, the number of people aged 65 and over will surpass the number of people under 19 years old. This historic reversal will be a first in Quebec's history.
Quebec is currently experiencing an unprecedented labour shortage. According to Statistics Canada's Job Vacancy and Wage Survey (JVWS), the total number of job vacancies in Quebec increased by 18,455 (+14.4%) to 146,865 between the first quarter of 2020 and that of 2021. Health professions had the most vacancies for 90 days or more.
The employment statistics combined with demographic projections suggest that health sector employers will face even more difficulties in recruiting caregiving staff to meet the rising demand for health services. The JVWS shows that the labour shortage in the health sector also encompasses support staff, such as cooks and janitorial personnel.
From the above, it is evident that employers in the health sector, particularly operators or prospective operators of private residences for seniors, will be exposed to an increasing demand for services in the coming years. However, even during the COVID-19 pandemic, private residence operators struggled to meet the needs of this population due to labour shortages. This significant challenge requires forward planning and resilience from operators. Failing to prepare now could prove financially and legally fatal for operators. Like the captain of a ship, managers must be able to both plan the journey to the destination and navigate the storms that could sink the ship entirely.
Possible Solutions to Address the Labor Shortage:
Possible Solutions to Address the Labor Shortage:
Our law firm and the professionals we collaborate with can assess your situation and suggest solutions for hiring and retaining competent employees. Here is an overview of practical solutions.
a) Immigration and International Hiring:
Immigration is a tool managers can use to fill some of the vacancies in their facilities. By recruiting outside the country, employers potentially have the entire planet as a pool for qualified candidates.
However, many managers avoid this solution due to administrative burdens, processing delays, exorbitant costs, and integration difficulties for the employee.
b) Wages and Benefits:
Some managers use wages and benefits to retain and attract the workforce. However, in a market strongly in favor of employees, this solution can lead to a wage war among employers competing for the same workforce.
An increase in wages leads to higher operational costs for employers. These costs can be absorbed in two ways: either by cutting or reducing certain expenses, which may result in a decrease in service quality or by eliminating certain services offered to residents; or simply passed on to the clientele, who may then either accept it without complaint or express dissatisfaction. In any case, this solution is not sustainable in the long term for either the operator or the users.
c) Flexible Schedules:
Offering flexible schedules is one-way managers attract and retain qualified staff. However, this method has significant limitations in the context of a labour shortage, especially in the health sector with a vulnerable clientele requiring significant care. Therefore, this method can only be effective if it is part of a set of other incentives.
d) Non-competition Clauses:
To limit the temptation for some employees to work for a competitor after an enticing solicitation, some employers insert non-competition clauses in employment contracts.
Several problems arise from the insertion of such a clause in an employment contract. Constant caselaw teaches us that a non-competition clause is interpreted restrictively. The main criteria are geographic limitation, temporal limitation, and limitation to certain determined activities. If even one of these criteria is not met, the entire clause may be judged invalid. Moreover, each of these criteria will be evaluated based on other factors related to the type of employment. In other words, each case is unique, and there is no general rule in the jurisprudence that, for example, a non-competition clause is considered valid if it is limited to 6 months.
e) Profit Sharing:
Offering employees, a share of the profits is a method that can work if combined with other incentives. However, implementing this method poses several challenges at the taxation, legal, and accounting levels. For example, how to determine the share of profits for an employee who has left their job during the year. In such a case, would they be entitled to the profits for the entire year, the profits up to the time of their departure, or no right to profits at all? And are all employees covered by this incentive? That is, are housekeeping staff also included, or is it limited to caregiving personnel? All these questions need to be weighed and analyzed. In fact, avoiding the analysis of these questions could lead to application problems in addition to legal, taxation issues, and interpersonal problems among employees that could then cause financial losses and a decline in service quality.
These methods are not complete or perfect, and none of them alone can stem the labour shortage problem faced by owner of private senior residences. However, combining one of these methods with other incentives can limit the problem or even solve it entirely in some cases. However, the implementation of these measures must be carefully planned and considered both financially and legally.
In this context, having a seasoned lawyer aware of the industry’s reality is essential to limit operators' exposure to sector risks and avoid missing opportunities that will grow in the coming years.