Employment contracts

Making your employment agreements work for you

Employment contracts or agreements, often in the form of an offer letter, set out the terms and conditions of the relationship between employers and employees. Whether you are an employer or an employee, our experienced employment lawyers can review your employment agreement to make sure it satisfies legal requirements and meets your needs.

The general principles of contract law apply to employment contracts, but their application has been modified by the courts in recognition of the special nature of employment relationships, which can change over time. Employment contracts are subject to minimum employment standards, such as those set out in the Employment Standards Act, 2000 (ESA, 2000) or the Canada Labour Code (CLC), and other legislative requirements, as well as common law principles.

To be enforceable, employment contracts must be clear and understandable, provide adequate consideration (e.g. something valuable such as salary and benefits) to the employee, and be signed before the employee’s start date. It is important for employers to remember that a new contract or amendments to an existing contract will require additional or ‘fresh’ consideration.

Standard employment contracts usually identify the employee’s position, term of employment and compensation including base salary, overtime, and bonus or other types of variable compensation. They also include entitlements to benefits, pension, stock options, vacation and sick leave, and notice of termination. More specialized or executive employment contracts may include additional provisions, such as confidentiality, intellectual property ownership, and post-employment restrictive covenants (non-solicitation and non-competition clauses).

Consulting one of our skilled employment lawyers in advance, before an employment contract is signed, can help employees and employers enter into a relationship that works well for both parties and avoids future disputes.

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