Employment Contracts

An employment contract is the most important document that both an employer and an employee sign in their employment relationship.  It will normally set out the position, duties, remuneration and termination provisions as well as other obligations relating to confidential information and non-solicitation. A properly drafted and effective employment contract can be of benefit to both the employer and the employee.

However many employees are unaware of how an employment contract will affect their legal rights.  For example, many employment contracts limit an employee’s right to compensation on termination of employment to the minimum Employment Standards Act notice and payment provisions [See My Cases: Magyarosi v. Berg Chilling Systems Inc.] and take away their right to the significant common law damages that result from a termination of employment.  Often they will contain non-competition or non-solicitation provisions that impose obligations on the employee after the employment relationship ends.  It is important that employees obtain legal advice before they sign a contract so that they understand their rights with respect to termination, their obligations to the employer if their employment ends and how the contract would change those rights.

Often an employer will present a contract to an employee months or even years after the employment has begun.  Legal advice is crucial at this time so that the employee becomes aware of any rights that will be given up if the contract is signed and what options are open in responding to the employer’s approach.

As a lawyer who has drafted and negotiated hundreds of employment contracts and argued in Court about the validity of such contracts I know the importance of proper wording and meeting the legal requirements for contract formation.  Courts have set aside many employment contracts that have attempted to limit an employee’s rights to common law damages on termination, using legal principles of “lack of consideration”, “failure to meet the minimum Employment Standards Act requirements on notice,” “duress” and “unconscionability”.  It is therefore important that on a termination of employment an employee should not assume the validity of the termination, non-competition or non-solicitation provisions in the contract, but seek legal advice.