Why Employment Contracts are Good
Our readers are probably sick of hearing us go on about employment contracts, but we will never stop recommending them!
An employment contract gives both employers and employees certainty about their entitlements both with respect to compensation and also on exit.
Whether terms are written down or not, employment relationships will be governed by various terms. In the absence of a contract, courts read in implied terms of employment from the common law. It’s better to get those terms written down so you actually know what they are and don’t have to wait for a judge to tell you!
But We Already Have Employment Contracts!
The title of this post is “Why you should update your employment contracts and why January is a good time to do so.” I just set out why it’s a good idea to have contracts. If you already do have them, you might be wondering why you need updated ones!
Canadian courts are very friendly to employees looking to invalidate their employment contracts. Employees usually only sue their former employers after they are terminated and when they are looking for a bigger package than what is set out in the contract. Courts are always finding creative ways to give those bigger packages to employees and therefore the law on termination provisions changes pretty often!
We recommend that you get your employment contracts reviewed at least once a year and more if there is a big legal change or if a change is recommended by your employment lawyer. We also always recommend that you get legal advice if you’re involved in contract negotiations with an employee or want to create a unique contractual term. There are a million little ways you can accidentally invalidate a whole contract and you don’t want that.
Employment Contract Troubles
I mentioned the “million different ways” you can invalidate a contract. You might find this a little hyperbolic and maybe it is a little, but courts have ruled that a violation of the Employment Standards Act, 2000 in any termination provision invalidates all termination provisions. It’s much much easier to invalidate a termination provision than you might think and you want those termination provisions to be valid. Termination provisions are what provide certainty to both the employee and the employer in the event of a termination. If the contract provisions are invalid, an employee will be entitled to notice of termination in accordance with the common law, which can be up to 24 months of pay.
What To Do
Call us, of course! Or, as a start, check out our free Employment Contract Checklist. Make sure your contracts are in good shape now and you’ll have a happier 2022. If you do end up needing to roll out new contracts – maybe even to existing employees – raise and bonus time is a great time to do so as you’ll need to provide employees with consideration for entering into a new employment contract. All fun things to keep in mind as we head into the holidays!
If you have questions or would like to book a chat with a lawyer to have your contract templates reviewed, get in touch.
