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Although not as common anymore, back in the day most people used to get hired pursuant to what we call a verbal contract: you get offered a job and a salary, you accept, and there’s your contract!

One thing many people don’t realize is that a verbal employment contract is just as enforceable as a written employment contract. There is one limitation, however: the verbal ones are much harder to prove.

As a result of increased litigation, written employment contracts are becoming extremely more detailed. Drafters try and foresee as much as they can so that no matter what happens with the employment relationship, the employee’s contract will set out what the outcome will be.

Below are three things every employer should consider including in every written employment contract.

1. Resignation and Termination clauses

A properly drafted employment contract should include a resignation clause and a termination clause.

Especially with more senior-level employees, you will want them to give you more advance notice than the typical two weeks should they choose to leave your employ. These individuals are generally much harder and more time-consuming and expensive to replace. If you include a resignation clause in their employment contract, you can require them to give you a certain level of notice of their resignation – for example, a few months – to allow you the time to find a replacement. And if they do not give you the required notice, you can seek damages from them for their failure to do just that.

Also, most written employment contracts will set out how much notice an employee is entitled to receive should they be terminated without cause. These clauses need to be specifically drafted to be enforceable, so we highly recommend you seek legal advice for purposes of drafting employment contracts, and especially termination clauses. If notice clauses are not properly drafted or if you don’t include one at all in the contract, an employee will be entitled to reasonable notice, which is generally significantly more money than what you could otherwise have owed them upon termination.

2. Restrictive covenants

Many employees acquire very specific knowledge and skills from working with an employer – especially a highly specialized one. I’m sure you would hate to help an employee acquire this information just to have them go work for a competitor and take all of your customers with them. In an effort to protect your interests, it may be worthwhile including a non-solicitation or a non-competition clause in the employment contract. These clauses limit what an employee can do once they no longer work for you, and should they breach these clauses, you would be entitled to damages and possibly other remedies.

3. Employee entitlements

Many contracts will refer to other documents, such as internal policies, group benefits, and possibly a bonus structure. If you want an employee to be bound by these documents, their entitlements either need to be specifically set out in their employment contract, or their contract needs to refer to that document. A copy of such document should be provided to them before they sign the contract.

Similarly, if an employee is provided with any company property to do their job, such as a laptop, cell phone, or even a car, you want to make sure to include these within the contract and specifically state that these are your property and are to be returned at the end of the employment relationship. You don’t want to have to fight for what’s yours.

Don’t forget: if you want to hire someone, come speak to one of us in the Employment Law Group so that we can draft that employment contract for you. Let us help you protect your interests in a way that will hold up in court.

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2021 Nelligan O’Brien Payne LLP.

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