Some say that brevity is the essence of wit, but shorter ain’t always better.
In this blog, I make my case against short n’ sweet. No, not against Sabrina Carpenter’s hit album – I’m anti-short n’ sweet when it comes to employment agreements.
In the niche world of employment law, by insisting on shorter documents, employers risk leaving a lot of rights on the table.
Exit the Offer Letter
We usually recommend detailed employment agreements, and though we try not to make them longer than they have to be, the reality is that they are often longer than our clients anticipate. In many cases, they ask for us to “make it shorter”, which is easier said than done. Stuart will sometimes facetiously ask: “Sure – which protections would you like to give up?”.
Sometimes companies compromise by using “offer letters”, which tend to be one or two pages with a job offer and a few important terms, such as title, compensation and start date. What more do you need? With those key terms, the rest is superfluous, or so goes the thought. The offer letter won’t “scare” the candidate away, and if a lengthy contract is needed, we can always do that later, after they accept the offer.
The Implication: But of Course!
The problem with using offer letters is that once the candidate accepts the offer letter, their employment contract is formed. As first year law students learn in their first contract law class: offer + acceptance = contract. Those written terms from the offer letter become the terms of employment, with the balance of the terms – i.e. what was left unwritten – being implied. Indeed, terms that were not put into writing will be determined by legislation, common law, and in some cases, past practice. The best example is the common law obligation to provide “reasonable notice” of dismissal, which is implied into every contract of employment unless explicitly displaced.
The issue is that many terms that would be implied are not so obvious, and as the saying goes, it’s what you don’t know that you don’t know that gets you in the end. For example, in the absence of a written provision allowing the employer to make changes to the terms of employment, any substantial changes made without the employee’s consent trigger a constructive dismissal claim. In other words, it would not be implied that the employer has the right to impose substantial changes.
Say the Quiet Part Out Loud
Implied terms are just one part of the story. What is not in writing and not implied will not be a term of employment. That means that employers leave a lot of flexibility on the table by, for instance, not providing for choice of forum, or by not including a restrictive covenant such as a non-solicitation clause. Regarding the former, by default legal disputes go to the courts, but the parties can agree to have their disputes settled through arbitration, mediation, or a combination of both. Regarding the latter, the parties can agree that the employee will not solicit clients they serviced while during the term of their employment. If these kinds of provisions are not part of a written agreement, they will not be a term of employment and employers will not be able to rely on them. Silence on key provisions means that employers lose out on powerful rights.
Indeed, the value of written employment agreements is that they allow employers to give themselves rights that they would not otherwise have, either because those terms would not be implied, or they would not be readily available for the employer to rely on.
Consider this: an employer may be able to show that it had a practice of putting employees on temporary layoffs and beat a constructive dismissal claim. However, there would be no need to demonstrate that by putting it in writing. Similarly, an employer may be able to prove that its bonuses were purely discretionary and not payable upon dismissal. Again, this would not be necessary if such terms were in writing.
Read Before Signing
Since contracts are generally drafted for the employer’s benefit, it is always important to review and understand an agreement before signing. The content of the provisions, rather than the overall length, are the substance of the agreement. Reviewing and flagging provisions for further clarification and/or revision will help employees negotiate better terms. Having counsel review employment agreements and advise on revisions is always a good idea, as it will further strengthen employees’ position and provide a better understanding of the terms of employment.
For example, there may be a scary looking termination clause which turns out to be unenforceable. Instead of having it revised, the employee can focus on terms that are enforceable and know they don’t have to worry about others.
Go Long
We always advise employers that they should be using written employment agreements. These documents should contain every term that the employer wishes to include, and leave nothing to chance or implication. This is particularly important since our courts are concerned with fairness and the power imbalance between employers and employees; courts will find a way to help employees and when terms are implied these are generally read in the employee’s favour. Putting the terms of employment in writing is the employer’s best opportunity to protect itself, ensure cost certainty, and grant itself important rights it would not otherwise have.
For employees, we always advise that they get their agreements reviewed. While courts will try to find ways to help employees, getting to the point where a court bails you out takes a lot of time and money. It is best to be proactive and get advice before the agreement is signed.
In sum, employment agreements do not have to be tomes. They can still be reasonably short, but they should not sacrifice rights and flexibility just for the sake of brevity. Likewise, longer agreements are not necessarily worse if the extra length is due to additional terms. After all, employment agreements should be customized to fit specific roles and the needs of the organization. A shorter agreement may work for an entry level role, while generally a longer one will be appropriate for a senior level role. In the same vein, an organization that needs beefy intellectual property provisions will have a much longer confidentiality section than an organization that does not need those kinds of protections.
If you’re an employer, we can assist you in preparing employment agreements that are specifically tailored to your organization’s needs and individual roles.
If you’re an employee, we can assist you in reviewing your employment agreement and advising you as to your rights, either upon receiving an offer, a notice of dismissal, or at any point in between.
