Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only. If you need legal advice with respect to an Employment Agreement, you should seek professional assistance (e.g. make a post on Dynamic Lawyers). We have Toronto, Ottawa, Hamilton, Brampton, Mississauga and other Ontario lawyers registered to help you.
This is the ninth of a series of blog posts about Employment Agreements in Ontario. In the first blog, I talked about who is an Employee and how they differ from independent contractors. In the second blog, I discussed why Employment Agreements are used and what makes them different from ordinary commercial agreements. In the third blog, fourth blog, fifth blog, sixth blog and seventh blog I discussed some of the basic terms you will find in a standard contract template for an Employment Agreement with an indefinite term. In the eighth blog, I talked about the first 5 tips when it comes to Employment Agreement: things EMPLOYERS MUST KNOW AND WATCH OUT FOR! Here, I’ll be continuing that tips and traps discussion when it comes to drafting, reviewing, and negotiating an Employment Agreement.
Tip #6: Give Everything to the Employee up front!
Lets say the Employment Agreement references external rules, policies, procedures, etc. Maybe there are important provisions (e.g. benefits, termination, location of work, expenses) that affect the Employment Agreement. To avoid creating problems later on, the Employer should provide those rules, policies, and procedures up front at the same time as the Employment Agreement is being offered. Employees are often shy and don’t want to start demanding things from the get go (particularly if they are on probation). But they can later complain that they didn’t understand or agree to terms in rules, policies and procedures which they never knew about! So give ‘em everything!
Tip #7: Make the Employee Sign BEFORE they start working
There must be “consideration” any contract in favour of the employer. That is, an employer must provide something in return to the employee if the employer wishes to insert a clause that negatively affects the employee’s interests. Therefore, employers should ensure that the employee signs the contract prior to or as part of accepting employment. That way, it can be argued that the employee received the position in return for signing the contract. If the Employee starts working under an ORAL contract or OFFER of Employment (but not a full fledged written Employment Agreement), then they will be receiving consideration (payment and benefits) already. If the Employer then wants to change things up by having them sign a full fledged written Employment Agreement, the Employee can claim they didn’t agree, didn’t receive any additional consideration (because they were already getting paid for working), and therefore that Employment Agreement is invalid and unenforceable. What would govern in those situations? Basically, the oral agreement, offer of employment, common law, and Employment Standards Act, 2000 could all govern – but not the Employment Agreement – OUCH!
Tip #8: Avoiding Procedural Defects with the Employment Agreement
I’ve previously talked about how contracts (and Employment Agreements are no different) can be challenged on the basis of procedural defects. These procedural defects relate to the way in which the Employment Agreement was entered into – e.g. through duress, undue influence, unconscionable bargain, misrepresentation, etc. Just make sure – as much as humanely possible that is – that the Employee understands the agreement, has had enough time to review it carefully, has had independent legal advice concerning it, is signing freely and voluntarily, etc. Having the Employee initial in the bottom right hand corner of every page and including a certificate of independent legal advice are good practices.
Tip #9: Changing the Employment Agreement
Minor changes can be made to the Employment Agreement – assuming the Agreement itself allows them – by the Employer giving notice to the Employee of those changes. It’s a contentious issue. What’s minor? Well, this will depend on the specific circumstances of the case. Regular annual pay raises will likely be minor. This is a good thing for the Employee, who may have little to complain about (other than the amount is too little). If the Employer considers changing a policy manual a minor thing, a good course of action is to give the Employee written notice of the change. It’s the Employer’s hope that the Employee will not claim that the Employee unilaterally changed a fundamental aspect of the employment relationship without giving additional CONSIDERATION (e.g. more pay, benefits, title, etc.). In those situations, the employee can claim that they were CONSTRUCTIVELY DISMISSED AT COMMON LAW and therefore entitled to reasonable notice. So if an Employer wants to make a change to the Employment Agreement and not find themselves in litigation, then they should offer something more than what you’re presenting giving the Employee (i.e. new CONSIDERATION). If in doubt, consult with a lawyer.
Tip #10: Review and Make Amendments to the Employment Agreement
Things change. And when they do, you should include those changes as amendments to the Employment Agreement. The Employer and Employee should sign these amendments. Importantly, the amendments should show what new CONSIDERATION is being provided in exchange for the changes. This will help protect the Employer from claims of constructive dismissal. Make sure the amendment agreement confirms the remaining terms of the Employment Agreement other than those that are being changed! If you need a lawyer’s help, feel free to make a post.
By the way, if you’re an Employer and looking for an Employment Agreement (indefinite term), then you’ve come to the right place:
Employment Agreement (Client) – Indefinite Term
This Ontario Agreement can be used by an Employer who wants to hire an Employee. The “indefinite term” part means that the Agreement starts on a date provided for in the Agreement and then comes to an end only when the Employee resigns or is terminated by the Employer (by giving notice, payment in lieu of notice, or for Just Cause). Here’s the sample Video Guide that comes with this Employment Agreement – Indefinite Term:









