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Employment Contract requires offer, mutual agreement, consideration, acceptance. Any contractual term that attempts to limit employee’s entitlement to Employment Standards Act (ESA) minimum standard is under strict scrutiny. Employment agreement drafting is substance over form and lots of legal issues are involved. It's more of an art than science.

Contract formation

An employment agreement is a contract that requires offer, mutual agreement, consideration and acceptance. In employment law context, if an employer has acted in a way that forms an expectation, even if it’s more than the ESA minimum standards requires, the employer is estopped from not honouring such expectation. In employment law, an employer cannot change the contractual terms of the employment contract unilaterally without valuable consideration in exchange. Do note that a promise for continue employment, in employment law context, DOES NOT count as a valuable consideration in exchange.

The employment contract should have a clear job description that set out the role and duties of the employee.  The contract should include salary or wage details, overtime, bonuses and allowances that are relevant. The written contract should contain clear contractual terms concerning vacation and leave entitlements relevant to the employee such as annual leave, long service leave, sick leave and paternity leave.

Nature and Type of Employment

Your contract should state whether the employee is hired on a full time indefinite basis, on a fixed-term basis, or is being hired as an independent contractor to avoid ambiguity.

To address all relevant employment law issues in an independent contractor agreement, it's important to correctly define the legal relationship in the agreement.

The more control the business has over its independent contractor, the more likely it is for a Court in the employment law context to find that an employment relationship is established. In employment law context, when workers purchase or rent equipment or large tools that require major investments and costly maintenance, it usually indicates that they are self-employed individuals. The more the independent contractor is shield off from risk of loss, and the more financial dependent an independent contractor is on the payor, the higher the likelihood he/she will be deemed to be an employee in employment law context.

Many employment contracts contains restrictive covenant such as confidentiality agreement and non-competition clauses that stipulates that a worker is not allowed to compete against employer. A restrictive covenant is only enforceable if it is limited in scope and duration. If the scope is overboard or the duration is too long, it will not be enforceable in employment law context.

Many employment contracts contains a termination for cause provision. The current employment law legal position on the issue of just cause is that except in truly egregious cases, a Court will rarely find just cause. And if you have a just cause termination clause in your employment agreement, if it allows an employee to be terminated absent wilful misconduct, the ENTIRE terminate clause (both with and without cause sections) will be stroke out by the Court in an employment law case! See e.g. Waksdale vs. Swegon North America Inc., 2020 ONCA 391 (CanLII), a 2020 Ontario Court of Appeal Case.

Many employment contracts contains a termination without cause provision. Even if a termination clause for termination without cause exists in an employment contract, unless the termination clause specifically stated that the common law reasonable notice is to be excluded, otherwise it does not preclude the application of the common law “reasonable notice” in the employment law context.

Even if your employment agreement survived all the employment law booby traps thus far doesn't mean that it arrived home safe and sound just yet. In employment law, an employment agreement termination clause that specify the notice required for a without cause situation may not be enforceable if the employment contract specifically stipulated that severance, and other employee benefits are to be included in the “in lieu of notice” payment, as the employment agreement has the potential of render a termination below the “minimum guarantee” of ESA.

In employment law context, the termination clause is not enforceable if it is ambiguous and unclear as to whether the minimum ESA standard has been met. If the employee hasn’t been informed of what the ESA minimum was before signing the employment contract, a Court will likely NOT enforce the employment agreement termination clause in an employment law case. And the list goes on and on forever ….

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Employment Contract FAQs:

Employment Contract FAQs
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