What Is An Employment Agreement?

Like any commercial contract, an employment agreement sets out the rights and obligations of the parties: hours of work, rate of pay, vacation etc. Unlike other commercial contracts however, an employment contract is unique for numerous reasons:

• Termination of the employment contract by the employer has significant consequences for the employee both economic and psychological. As noted by the Supreme Court of Canada:
  • Work is one of the most fundamental aspects in a person’s life, providing the individual with a means of financial support and, as importantly, a contributory role in society. A person’s employment is an essential component of his or her sense of identity, self-worth and emotional well-being.¹
• Employment contracts can change over time. Employees are promoted and the needs of the business can change. An employee’s job at the end of their career is often very different from the job they started with.
• Employment agreements contain certain unique “implied terms” created over time by the courts as matters of good public policy, such as the obligation of the employer to provide reasonable notice of termination of employment.
• Employment agreements can contain implied terms based on industry customs and practices.
• Employment agreements are affected by operation of labour and employment laws. Ontario’s Employment Standards Act, for example, sets out minimum termination notice provisions, below which no employer may contract.

What If I Don’t Have A Written Employment Agreement?

First, don’t panic! Someone who is hired on a handshake is not necessarily in a worse position than someone with a written contract. Most employment agreements are not completely in written form, and contain terms that evolve over time by the conduct of the parties. Other aspects of the employment relationship are governed by workplace and employment legislation. As discussed above, there may be terms implied by law.

In some cases, an employee with no written employment agreement may be in a better position than one with a written agreement. A common example is the assumption that an employee is entitled to common law notice (sometimes more than one month per year of service), which most employers will attempt to restrict through reference to the minimum notice requirements of the Employment Standards Act.

What Are Implied Terms In An Employment Agreement?

As discussed, “implied terms” are those implied by the law even though they are not directly laid out in the wording of the contract. The most well known example is the implied term that an employer will provide an employee with adequate notice before being terminated. At the same time, the law recognizes the right of an employer to terminate an employee immediately, and without notice when there is sufficient cause to justify it. Other terms that will be implied by the courts include:

• That an employee will perform his or her duties with proper care and skill
• That an employee will be loyal and protect the interests of his or her employer
• That the employer will provide a safe workplace and take reasonable precautions to prevent accidents
• That an employer will act with good faith in the manner of dismissal of an employee and not be unduly insensitive

Restrictive Covenants: Non Solicitation and Non Competition

Employers will often attempt to protect their goodwill and competitive advantage by insisting that departing employees do not work for competitors or solicit past customers for business. However, employers can go too far in drafting covenants that are overly restrictive and unnecessary to protect the legitimate interests of the business. That being said, it can be dangerous to assume the ‘oft repeated wisdom that non-competes are rarely enforced by the courts. While it is true that restrictive covenants are prima facie unenforceable, they will be enforced when an employer can show that they had a legitimate business interest to protect, and that the restrictive covenant is reasonable. To further complicate matters, in some circumstances, such as when an employee is considered a fiduciary, the law may operate to restrain an employees post-termination activities despite there being no written agreement.

Book A Consultation With An Employment Lawyer Today

When you start a new job or work position, you should always feel like you are protected. An employment lawyer from Haber Lawyers would be happy to review the terms of your employment agreement and make sure that you aren’t being taken advantage of. With years of experience, the professionals at Haber know exactly what to look for and how to suggest improvements where necessary. They will make sure you get the right deal.

Book a consultation with an employment lawyer at Haber Lawyers today.