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Frequently Asked Questions

EMPLOYMENT CONTRACTS FOR EMPLOYEES

Congratulations on your new job offer!

We know that for you, this is an exciting new opportunity. To us, it is a new legal relationship, with many rights, obligations, and risks. Our job is to help make sure that you are set up for success, and that starts with your employment contract. We’ve prepared this handy FAQ for some of the most frequently asked questions that we get from clients such as yourself, and we’ve included links to some additional resources on our website that can provide some extra information.

Keep this guide handy as you work with us – it may help answer any quick questions that you have along the way (but of course we’re always available by phone or email if you need any further information).

Why do I need an employment contract? Does it need to be in writing?

This is a bit of a funny question. The short answer is no – you don’t need a written employment contract. Legally, if you’re performing work for someone and they are paying you for your work, then you have an employment contract – it just isn’t on paper.

A written contract is what gives you and your employer some certainty in the employment relationship. It forms an agreement between the two of you about things like your job duties, your hours of work, your benefits (if you receive any), etc. Otherwise if it’s not in your contract, then it’s usually the employment standards laws of your province, along with judgments in previous employment law cases, that set out the rules (learn more about that here). 

Remember – an employment contract is usually meant to protect your employer more than it protects you. Without a written contract, the ESA (or the Canada Labour Code, for a smaller number of federal employees) is what governs your employment, and no contract can legally offer you anything less than your legal minimums. There are exceptions though – click here to learn more.

What should be in my employment contract?

There are standard items that are contained within most employment contracts. These include items such as:

  • Job Duties
  • Salary/Wages and Bonuses
  • Hours of Work and Overtime
  • Vacation
  • Benefits
  • Other perks (car allowance, phone allowance, gym membership etc.)
  • Non-competition/Non-solicitation clauses
  • Termination clause (what happens if you are let go from the job)

Most of these are in place to protect your employer because they help to solidify the terms of your relationship, but they can protect you as well. It is important to ensure that all of the terms that you discussed with your employer are set out within the written contract. This is because an employment contract will often contain language towards the end that describes it as the “entire agreement” between you and your employer, so anything you had discussed with them verbally will not be included as part of the agreement.

You should review the contract carefully with a lawyer prior to signing, and if there were any terms or perks that they had promised that you don’t see in the agreement, ask to make sure that they are included so that you have that extra degree of certainty.

One last thing – your written employment contract is not the only part of your contract. There may be other documents that govern the workplace, such as an employee handbook or any workplace policies. You’ll be expected to abide by those as part of your employment, so they form part of your contract as well.

What should I keep an eye out for when going through my agreement?

Remember that before you sign any contract, you’re still in the driver’s seat. You may need to sign a contract to accept your new position, but remember that you signing a contract is likely to your employer’s advantage. 

Keep a close eye on what is in the contract, as well as what is not. Your termination clause for example is telling, since most clauses try to ensure that you would get less if you were let go than you would earn if you had no written contract at all. Also be mindful if there is any sort of probationary period, as it’s something that you’ll want to try and have removed especially if you are a more senior-level employee. You should also watch out for non-competition or non-solicitation clauses that can limit what you do after your employment ends. 

As we discuss below, by default your employer can’t arbitrarily make significant changes. Watch out for any wording in your contract that gives them the right to.

Lastly, make sure that your compensation is spelled out clearly in the agreement. Any ambiguity in how your earnings are defined will only lead to later headaches.

Can I negotiate the terms of my contract before I sign?

Yes, you can, but you may want to be careful about how you do it. 

Before anything has been signed, you and your employer are really two parties bargaining, so if there is something else that you were looking for (a salary increase, a change in your bonus, extra vacation) then the best time to negotiate these things might be before you sign anything at all. Remember though that if you’re bargaining with your employer, they may ultimately hold the bargaining power. If you start making requests that are totally out of line with their initial offer, they have the power to pull the job offer entirely before you’ve accepted.

There are pieces though that you will likely want to negotiate in any job offer, especially if you are looking at more senior or professional roles. We can advocate for you during this process, and help make sure that the offer is worthy of the talent and experience that you bring to the role.

How can I tell if what’s in my contract is legal?

That can be hard to do without seeking a full legal review. Employment contracts can be tricky – many are worded in language that’s intended for only a lawyer to understand, since that lawyer likely wrote it in order to protect their client. Sometimes, laws change, and contracts that were enforceable before will not be “legal” anymore.

As a handy guide, there are some great reference guides available from the Ministry of Labour about the ESA, or guides about the Canada Labour Code if you’re working in a federally regulated industry (think banking, air travel, telecommunications). These will help you to understand your minimum entitlements as an employee. 

There is a rule in law that if a contract is badly drafted so that it is confusing, it will be interpreted in the way most favourable to the  party who did not draft it. However, you may be hesitant to sign an agreement that’s going to present headaches down the line. Working with our team can help clarify the current state of the law. 

If something isn’t in my contract, what happens then?

Not every employment contract is long and written by a lawyer in legal language. Some employment contracts are only a few pages, or even only one page, that spell out the key terms of your employment in very simple terms or bullet points. These contracts are perfectly legal so long as you and your employer have agreed to the terms.

For anything not stated in your employment contract, the employment standards legislation in your province, along with judge-made law from previous legal cases (referred to as “common law”), are usually what sets out what you will get at a minimum. Employment standards for example has rules about minimum wage, overtime, hours of work, vacation etc. By law, an employer cannot violate these thresholds, or offer you any less than your legal minimums, so you can assume that these laws fill in any gaps in your employment contract.

The only time that differs is when it comes to your termination pay. An employment contract has to restrict you in writing to only getting what is in the ESA if the company ends your employment. Otherwise you may be entitled to significantly more.

Should I keep a copy of my contract handy while I’m working?

You don’t need to keep a copy of your employment contract on your desk at all times, but it’s always good to keep a copy handy somewhere in your inbox or on your personal computer. If your employment does end and you consult with our team, we will want to review that agreement to make sure that whatever the company is offering you in your termination package is in line with what is written in the contract.

Also the law may have changed since you signed your last contract with your employer, and those changes could be significant. If you have an outdated contract and the employer has not made any updates, that contract may not limit what you could receive if your employment is terminated. Learn more about that here.

Does my employer have to follow the contract to the letter?

Not exactly. Your employer does have the power of some flexibility within the employment relationship. Most employment contracts that were drafted by a professional include a line, usually in sections about hours of work and job duties, that says that things may change from time to time. So if your employer makes a small change and asks you to do some additional work one day, they likely have the freedom to do that. 

What your employer cannot do, though, is completely ignore the terms of your contract and start making up their own rules. For example if your contract says that you’ll be paid bi-weekly and that you’re expected to work 40 hours per week, your employer cannot decide to suddenly start paying you monthly, or spontaneously make you work 60 hours per week without any overtime pay. That would show that the employer is acting as though they’re no longer bound by the contract (see below).

What happens if my employer offers me a new contract while I’m working?

Sometimes your employer will make changes on their own that will require you signing a new contract. They may be offering you a promotion or a salary raise, or introducing new benefits. These can obviously be great things for your career, but it is always important to have that agreement reviewed by one of our lawyers before you sign. They may be making that offer in exchange for changing other terms of that contract that you may not even realize, so a careful review is important. 

If the change is not a positive one, like a change to your role or location of work that you do not agree with, both you and your employer have options. You could potentially refuse the change and stick with your current agreement instead. However if your employer is determined to make the change, they may give you what’s called ‘working notice,’ which is notice that in a set number of weeks your new contract takes effect, and if you are not on board then you are no longer employed with the company. 

However, what your employer cannot do is make ‘substantial’ changes to your existing contract without your approval. If your employer all of the sudden decides to put you in a completely different role, or cut your salary or pay structure in half without your approval, that may be considered a constructive dismissal. In that case, the employer is no longer holding themselves to your employment contract, so they have effectively let you go without actually telling you that they did. The term ‘constructive dismissal’ is used too often in common conversation, but an actual constructive dismissal follows a strict legal test. Learn more about how constructive dismissal really works.  

If your employer offers you a new agreement while you’re working, or starts making significant changes to your existing contract, it’s always best to consult with a lawyer to make sure that your rights are protected.

Can I compete with my former employer and take their clients?

The answer, as it often is in the legal world, is it depends.

All employees have a duty of confidentiality, and higher level employees may have fiduciary duties which will further limit their ability to compete. Confidentiality will prevent any employee from using confidential information for the benefit of themselves or third parties. For example, you cannot use your knowledge of your former employer to deliberately undercut them, or your knowledge of their contracts to strategically target their former customers.

Additional post-employment restrictions can be imposed by employers, usually in the form of non-competition covenants or non-solicitation covenants. However, just because it’s in writing, doesn’t make it enforceable – even if you signed it. Courts can strike down any restrictive covenant it deems unreasonable.

If you have any other questions, our team is available to help you as needed. Our goal is to provide you with cost-effective, strategic advice to help you handle your employment law matter.

Contact us today.

Employment Lawyers - Rudner Law
Alternative Dispute Resolution Rudner Law

Rudner Law
15 Allstate Parkway
Suite 600
Markham, ON
L3R 5B4

Phone: 416-864-8500
Text: 416-864-8500

Email: info@rudnerlaw.ca

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