An employment contract (also known as an employment agreement), is a type of contract that sets out the terms and conditions of employment between an employer and employee.

If you’re an employee starting a new job, having an employment agreement reviewed by a lawyer can ensure that you are not caught off-guard by unfavourable terms and conditions. The most important provisions, from an employee’s perspective, typically deal with benefits, discipline, termination, non-solicitation and non-competition (your right to work for competitors, start your own company in the same industry and solicit your employer's clients/suppliers during or after your employment ends).

Studies show that most employees don’t negotiate the terms of their employment. This is a common mistake as many employers are willing to negotiate, even on compensation, in order to land the right employee for the job. Even during employment, consulting a lawyer about your employment contract could help identify illegal provisions (i.e. provisions that are contrary to the Employment Standards Act) or get a better understanding on how a court might interpret a given clause.

If you’re an employer, obtaining employment agreements that are tailored to each position ensures that there is no uncertainty in the terms and conditions of employment for your workforce. In addition to providing predictability, well-drafted and fair employment agreements can help retain good talent and avoid potential litigation. Beware of off-the-shelf employment contracts as they may include terms that are contrary to workplace legislation or are inapplicable to your industry or jurisdiction. Moreover, off-the-shelf employment contracts won’t be tailored to your specific workplace or the responsibilities of specific personnel.

A good employment agreement will address a wide-range of topics, including such things as:
  • Compensation
  • Duration or term of employment
  • Leaves and Vacation
  • Responsibilities
  • Work Standards
  • Probationary Periods
  • Termination and Resignation
  • Confidential Information and Intellectual Property

If no written employment contract exists, a court can use verbal agreements and the practices of the parties to determine the applicable terms and conditions of employment. If this is the case, the terms of the Employment Standards Act and common law will also form the basis of any terms and conditions of employment.

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