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Employment contracts

Do all employers and employees have to have a written employment contract between them?

They don’t. That doesn’t mean the employee is without protection. If there is no written contract between the parties, common law kicks in to provide some protections to the employee, although there are likely far fewer protections under common law than there would be with an employment contract.

However, if there is an employment contract between employer and the employee there are a few things they should include.

What are the elements of an employment contract?

There are a few items that will always be in the employment contract, such as the names of the employer and employee, job title, salary and benefits, responsibilities and vacation.

Additional major clauses in the contract usually include:

Termination clauses

Every employment contract should have a termination clause that explains things like termination for cause and termination without cause.  Termination for cause is when you are fired for some type of bad behaviour. Employment contracts will often say that an employee dismissed for cause is not entitled to severance or notice.

Termination without cause is when you are let go because the organization no longer has need of you, they’re downsizing or other reasons which are usually not related to performance. Under this clause the contract should spell out what severance and notice you are entitled to. Note that your employer has to follow the minimum requirements for notice and severance that is found in the applicable employment standards act.

Confidentiality clauses

Regardless of whether this clause is in the contract, employees have a duty under the law to keep their employers information confidential. Most employment contracts also include confidentiality clauses and often explain in detail what information the employee is to keep confidential.

Non-competition clauses

Usually this clause will exist in the contract and tell the employee that they cannot compete with the employer for a certain amount of time. It will also say that you cannot take an employer’s trade secrets and client lists. However, people have the right to be employed and earn a living and the clause cannot be overly restrictive or overly broad otherwise the court will not enforce it. This clause will usually only be enforced by courts if it’s reasonable.

Policies and procedures

Most employees have company policies and procedures and need to ensure that they give employees manuals and guides that talk about what those policies and procedures entail. The employer does not usually write those policies and procedures into the contract (unless they are brief).

However, the employer should make specific reference to employer policies and procedures and any other manuals or policies (for example: workplace anti-harassment policy) in the contract and that the employee is to follow those policies and procedures. The employee should be given all guides, manuals, policies, etc., before he or she signs the employment contract.

What legislation does the employment contract have to abide by?

In order to have a valid employment contract, the person drafting the contract has to make sure that the agreement complies with the employment standards legislation of the applicable province or territory. If you are a federal employee then you have to look to the Canadian Labour Code. However, employers must ensure that they comply with their requirements under the ESA. Otherwise parts of the contract may be invalid.

Also keep in mind that an employment contract is not written in stone. You can negotiate terms and conditions with your employer before you sign a contract. It’s usually a good idea to review the contract with a lawyer and his or her input in any employment negotiations.

Read more:

Employment Law in Canada

What you need to know about employment contracts