Understanding Employment Contacts

Getting an offer for a new job is certainly exciting and with it usually comes a written employment contract. The employment offer should always be carefully reviewed before you sign off, however. You should never feel pressured to sign off on an offer immediately after you receive it and you should feel comfortable to ask the employer if you can have a bit of time to look over the contract. This is when you can ask a lawyer to review the terms with you.

If you are already employed, but believe your employer is not holding up its end of the bargain when it comes to your employment contract, it is also worth speaking to an experienced employment lawyer. In any event, it never hurts to have a firm general understanding of your employment contract. 


Know Your Rights

You have certain rights, as an employee, under legislation called the Employment Standards Act (“ESA”). Employers must follow these rules, particularly in the following areas:

• Maximum hours of work and entitlement to meal time/break time
• Overtime pay
• Vacation time and vacation pay
• Notice of termination/pay in lieu of notice
• Public holiday pay
• Minimum wage

For example, your employer must give you a paid 30-minute meal break for every five hours of work completed, pay you on statutory holidays, and give you two weeks paid vacation after every year of service. Get to know the terms of the ESA, and be wary if your employment contract seems to contain conditions that are offside any of these rules.

Standard Clauses in Employment Contracts

Many employment contracts have similar subsections detailing various terms of the contract. Common subsections in employment contracts are typically on:

• Salary/Compensation
• Vacation Entitlement and Benefits
• Non-Solicitation and Non-Competition
• Work hours, Duties and Responsibilities (i.e., Job Description)
• Termination

A good employment contract will clearly, and in detail, spell out both the employee and the employer’s rights and obligations with respect to each of these subject matters. Be wary of an employment contract that is vague or overly simplistic. It is ambiguity and a lack of detail that can often cause problems down the line, where an employee and employer disagree about an item that is not adequately or clearly described in the contract.

Unlawful Terms in Employment Contracts

A fundamental principle of Canadian law is “freedom of contract”, which means parties to a contract should be relatively free to agree to whatever contractual terms they wish, and that those terms will be enforced. There are some exceptions, however. In the employment context, an employer cannot contract out of the terms of the Employment Standards Act, even if the employee agrees.

For example, if your employer wrongfully dismisses you with cause or terminates you without cause, the ESA requires that you get a minimum of one week of notice, or pay in lieu of notice, per year of service you worked. If any employment contract provides for less notice than this, even if it is signed by you, it will be held to be void, and therefore legally unenforceable.

How Can an Employment Lawyer Help?

Although it is good to familiarize yourself with the terms of the ESA to protect your rights, it is not always crystal clear if your contract is compliant with the ESA. Also, there are ways your employment contract might fail to abide by the common law (in other words, decisions that have been made in court that affect the enforceability of certain types of contractual provisions).

Let’s say, for example, your employment contract contains a non-competition clause preventing you from working in a business in the same industry within the same city after you leave the employer. In many cases, non-competition clauses are too broad and oppressive to the employee to be enforceable. A good employment lawyer will have a solid understanding as to whether the terms of your contract are fair, reasonable, and enforceable.

In Kerzner v American Iron & Metal Company Inc., 2017 ONSC 4352 (CanLII), the court sided with the plaintiff, holding that a non-competition clause was unenforceable. The plaintiff had been employed under a two-year fixed-term contract, and the non-competition clause in his contract prevented him from engaging in similar employment for a span of eighteen months, across multiple provinces. The court found this to be unreasonable, because of the short term of the employment and the broad geographic area covered by the clause.

As another example, an experienced employment lawyer will have a good understanding about your severance entitlements if you are terminated. If your employment contract provides for less than one week of pay in lieu of notice for each year of service, the contract will be void and unenforceable. However, you may not have an understanding as to what you are then entitled to, and may need the help of a lawyer to ensure that you reach a fair settlement with your employer, or otherwise litigate.

Common law entitlements to severance pay can be quite nuanced and context specific. In Gadbois v Newcom Business Media Inc., 2016 ONSC 2310 (CanLII), for example,, the plaintiff’s lawyer was successful in arguing that he was entitled to 16 months of severance pay, rather than the defendant employer’s proposal of 11-14 months, given the plaintiff’s age, tenure, and industry-specific experience.

For Employment Law in Niagara, Contact J Leigh Daboll

If you are unsure about the fairness and lawfulness of an employment contract or if you believe your employer isn’t holding up the terms agreed to, contact us to discuss your matter. Call to arrange your consultation with an employment lawyer in Niagara at 905-892-0569.

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