What You Need to Know About Employment Contracts

What You Need to Know About Employment Contracts

Employees need to be aware of what their employment contract entails, especially before they sign. This important legal document governs the relationship between employer and employee. Some employers hire employees without having a written contract, this relationship is contractual even without the signing of a document.

Basic Terms of a Contract

Employee contracts will have all information about a job and the person, date, etc. It is important to document complicated financial arrangements.

The Employment Standards Act sets out minimum standards for minimum wage, the timing of payment, and the maximum hours of work and overtime payment. These are rights that cannot be given up, even if you sign as an “independent contractor.” You should be aware of these basic employee rights in Ontario, which can be found here. You want to ensure that any special benefits promised or guaranteed to you are also documented. Neither private benefit insurance nor pensions are mandatory entitlements

Termination & Non-Competition Clauses

The contract will usually include a termination clause, which is often the most overlooked provision and includes details on severance pay and any post-employment restrictions. Employers may try to use this section to limit the amount of notice or payment instead of notice that they owe their employees.

Many employment contracts use restrictive covenants, such as non-competition provisions and non-solicitation provisions, to protect the employer’s interests. 

Validity of a Contract

For a contract to be valid and enforceable, there must be a consideration for entering the contract. Consideration is the employee’s promise of services in exchange for the employer’s offer of a job.

A well-drafted and signed employment contract must be in accordance with the principles of contract law. Parties must also have voluntarily entered into the contract – there cannot have been any coercion or undue influence. 

You should review your full contract to make sure it is consistent with Canadian law. You may also wish to ask your employer for changes before signing it. Reviewing contracts with a lawyer can be frustrating. Feel free to consult one of our lawyers if you are unclear about your contract. You can reach our office at 905-366-0202 or contact us through our website here.

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