There is no such thing as free labour on the farm – even within family
Doing chores on the farm without any financial compensation may still be a time-honoured tradition in Ontario, but the courts do not necessarily see it that way. This is especially true when it involves an adult-labourer working for free or being insufficiently paid on a farm. It makes no difference if the adult-labourer also happens to be the son or daughter of the farm owner.
With life expectancy continually on the rise, it is more and more common to have middle aged “children” working on a farm that is still owned by their parent(s). In many cases, the work being done is being chalked up as the son’s or daughter’s duty, and is otherwise not being paid for or is being underpaid.
While such an arrangement might be legally acceptable in cases where the farm is going to be eventually passed on the son or daughter, the courts do not assume that anyone will simply agree to work for free. In other words, if the farm is not eventually passed on to the child who has worked on the farm for no or little wages, the son or daughter may be in a position to sue for unpaid or underpaid wages. If it involves a lifetime of work, such claims can be significant.
The legal principle involved is called a “constructive trust”. What this means is, the courts will consider the unpaid /underpaid wages as being held in trust by the parent – presumably to be paid out at some point in the future. In situations where the assets of a deceased parent have been willed to other people, the claims of the son or daughter can survive and be made against the estate or beneficiaries. Put another way, the wages held in trust by the parent do not belong to them and therefore cannot be legally given to someone else.
It is important to note that any lawsuit must be formally made in a timely manner. Ontario’s limitation period is two years. A person who has a constructive trust claim must file a claim no later than two years after first being denied their claim to a trust by their parent, estate or beneficiary. This rule is strictly applied by the courts.
Last year, I wrote about how a promise to pass on a family farm could constitute a legally binding contract. While this is still true, it is also true that, even where there are no promises made, years of service on the farm are still compensable.
As always, litigation should be avoided at almost any cost – especially within family. The best way to avoid intra-family litigation respecting family farms is to communicate and establish a farm succession plan. However, if all of this fails, it is also important to know your legal rights and obligations.
Remember: there is no such thing as a free lunch, and the same can be said about labour on the farm.