Let’s say you are operating a small business or mid-size employer in Ontario and currently recruiting for a new position in your company. Let’s also say that, after spending dozens of hours (and plenty of money) on recruiters to find just the right fit (including posting job ads on websites like LinkedIn, Indeed and ZipRecruiter), you think you’ve found just your leading candidate and offered them an employment contract. However, once you land your new hire, after searching and interviewing, how do you know:
- The employee is truly the “right fit” for the job (not to mention in your company)?
- You will be able to protect your rights and obligations as an employer during the employment?
- What to expect from your new employee?
- What are you financial obligations to the employee in terms of salary, bonus, commissions, benefits, and vacation pay?
- What are you responsibilities to the employee should you eventually decide to terminate their employment?
In this blog article on employment contracts, we will discuss these and many other issues from the perspective of an employer in Ontario. In short, we strongly encourage all employees who are able to negotiate an employment contract (also called an employment agreement).
What is an Employment Contract?
An employment contract is crucial to securing the terms of your employment relationship with an employee, including your financial obligations to them and the work expectations you have set for the employee. However, employment contracts should go far beyond simply reciting the basics of the employee’s new job. In fact, they are generally intended to protect the interests of the company as a whole. For instance, among other things, they should clearly address how (and what happens when) you decide to end the employment relationship (termination of employment), and establish a confidentiality obligation to protect the company’s proprietary information.
As a company operating in an ever-changing economy and employment law system, understanding employment contracts will help you protect your company’s interests and bottom line, while establishing the rules governing your relationship with your employees.
What Employment Terms should be Included in an Employment Contract?
There are many important items that should be included in your employment contract, including the following:
- duration of employment (e.g., are you hiring the employee on a fixed-term basis or indefinite term employment)?
- Salary
- Benefits
- Vacation or other time off
- Work schedule
- Duties and Responsibilities
- Confidentiality agreements
- Termination of employment (e.g., termination for just cause, termination without just cause, resignation, etc.)
- Resignation requirement
- Non-solicitation agreement/Restrictive covenants
- business expenses reimbursement
- dispute resolution (e.g., jurisdiction or choice of law clause)
Termination of Employment
At some point, every employee’s job comes to an end, usually by resignation or termination. For any business, it is important to be prepared for situations when your “back is against the wall,” as during an economic downturn. That is why it is important for an employment contract to include a termination of employment section to address precisely these issues. In a sense, being proactive as an employer by including a termination clause in an employment contract provides you with a head start on negotiating a severance package should you eventually decide to terminate an employee’s job (and helps minimize the risks and financial consequences of a wrongful dismissal claim by an employee). In Ontario, the Ontario Employment Standards Act, 2000 requires employers to pay a minimum amount of termination pay, benefits continuance and, in some cases, severance pay if they decide to terminate an employee’s job without cause. If you want to ensure that you need only provide your employee with the minimum amount of termination pay or severance pay (and not the much greater pay in lieu of notice required by common law in a severance package), you will need to negotiate it in your employment contract.
Contact Employment Lawyer Today
If you are an employer dealing with a wrongful dismissal claim brought by a former employ you terminated, or if you are an employee would like to understand your legal rights and ability to claim for wrongful dismissal or negotiate your employer’s severance package, contact our employment law firm to speak with a top employment lawyer for help. Contact our experienced employment lawyer by phone 647-822-5492 or fill out the contact form to the side. We would be happy to assist in your employment law matter as quickly as possible.
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