Employment Contracts

If there is no employment contract what governs the relationship?

In the absence of a contract, the employer/employee relationship is governed by existing statutes and common Law. For example, in Ontario, the employer must comply with the Employment Standards Act, the Ontario Human Rights Act and often the mandate and policies of the Workplace Safety & Insurance Board. In addition, when a Court decides an employment issue the judgement becomes part of the common law indicating how the Courts very certain circumstances. Manny of the issues surrounding termination are based on Common law.

When you start a job, it is common for the employer to request that you sign an offer of employment or employment contract which governs the terms of your relationship. If your employer does not present you with either document, you must ask yourself whether it would be appropriate for you to ask for one.

Timing – When should an employment contract be signed?

It is important to know that you can not be forced to sign an employment contract once you are already employed, nor can you be compelled to sign an amendment to an existing contract. For any employment contract to be valid it must be entered into at the time of employment, or, at least, the employment offered being conditional on the employee entering into a contract of employment. Once the job has started (that was not conditional on a contract) then to be valid there must be some reasonable compensation being offered i.e. a promotion, raise bonus etc.

Job description – How detailed should the job description be?

This is particularly important as it sets the parameters of the work that you will be required to complete. A unilateral change to this description imposed by your employer could constitute grounds for wrongful dismissal. Also, a failure on your part to perform the tasks required of you could lead to your termination for cause. Care should be taken to ensure that both parties have a clear understanding of what is expected.[/accordion-item]
[accordion-item title=”Benefits and bonuses – Should the contract cover more than just salary?”]Often the employer will provide you with your salary on an annual or hourly basis. However, it may be that you are entitled to employee bonuses and benefits. The contract would be beneficial to you in that it could set out how the benefits or bonuses are earned. For example, are they based on your performance level or are they part of your base salary? You may also want to set out at what time the bonuses or benefits are applicable to you as employers often have a three-month probation period before an employee 15 entitled to additional compensation or a policy that if your employment is terminated prior to the payment of the bonus you are not entitled to participate, even on a pro rata basis.

Is a termination date important in an employment contract?

As an employee, the Length or duration of the contract is an important factor in planning your career choices. If the contract is for a fixed or short period of time, you may want to ensure that there is a right of renewal or a right to turn the position into a permanent one. If there is no provision that sets out the extension of the contract and you stay on Longer than the set term, then you may be deemed to be an indeterminate employee and many of the terms of the contract will no longer be valid. On the other hand, the Employer is entitled to terminat4e your employment at the end of the term without the need to establish any cause.

Dedication – Can there be more than one employment contract for an employee?

In addition to your position, do you have a separate business endeavour that you do not want to give up? Does the business relate in any way to what you are doing for your employer? it may be that the employer does not want its’ employees to carry on outside work and it may be particularly problematic if your side business is similar to that of your employer. If you foresee a problem with respect to your employment, this should be dealt with in the contract.

Intellectual property ownership – If an employee creates something novel who owns it?

As an employee, you may want to ask yourself what is your Level of contribution to the development of ideas for your current employment? Often a contract would indicate that any new inventions, novel ideas or creative development produced by you during your employment is the property of the employer. You may want to ensure that the ownership of the intellectual property rights rests with you and that you are able to take the works with you upon the termination of your employment.

Non solicitation – What can an employee do to compete if he or she is terminated?

The Courts have found that non-competition agreements which Limit an employee’s ability to earn an income in his/her profession are void as against public policy. As a result, employers have begun to adopt non-solicitation clauses which specifically prevent the employee from working with the employer’s existing clients/customers. This often applies for a fixed period of time and can range anywhere from six months and longer. Depending on the nature of the industry in which you are employed, you will want to Look at whether your inability to deal with certain customers or suppliers would restrict your ability to earn a living once the existing employment relationship ends. Also, if there are staff members that are critical to the success of your business, you will want to ensure that you can bring them with you to your next job. This clause is often the one that adversely affects employees and, therefore, it is important to review this with a Legal advisor before you sign the contract.[/accordion-item]
[accordion-item title=”Termination – Is it important to deal with termination in the contract?”]Given the importance of regular and steady work, you will want to ensure that your employer cannot unreasonably terminate your employment. For example, your employer’s desire to downsize the workplace is not a valid reason for termination unless it is provided for in your contract. As stated above, the provisions of the contract that deal with termination, both for cause and not for cause, should be carefully reviewed.

Employment standards act vs contract – Is an employment contract the only thing that governs the employer/employee relationship?

The Employment Standards Act deals with such matters as vacation entitlement, notice period for termination and many other employment-related issues. The Human Rights Act covers matters such as termination of disabled employees and the need for the employer to accommodate for employees with disabilities. Cases that have gone before the Courts in which judges interpret these statutes Set precedents or common law. The common law also serves to Set the standard for matters such as notice of termination in excess of that provided for in the Ontario statutes. it is often difficult to predict the effect that common Law principles will have on an employment relation and, therefore, one of the most obvious benefits of an employment contract is that it brings certainty to the employee/employer relationship. With this in mind, it is important to note that many employment contracts attempt to Limit or take away certain employee statutory-rights. As an employee you may want to review an employment contract or offer of employment.

Confidentiality – When an employee leaves what can he or she take with?

As an employee you may be bound by a duty of confidentiality, namely that you will not discuss your work or clientele with others outside of the workplace. This is often at issue when an employee wishes to take his/her existing client-based or client files with them to their new position. As an Employees, you may want this matter clearly set out in the contract to ensure that you are not prohibited from discussing and/or transporting your client files as you progress in your profession.