Some employees are hired pursuant to a verbal contract of employment. For others, the terms of the contract are set out in a formal written agreement.
Written or oral, the agreement between employer and employee is a contract. If some terms of the agreement are uncertain, then basic rights and obligations are implied at law. In addition, all employment agreements are subject to statutory minimum obligations (for example under the British Columbia Employment Standards Act) which cannot be limited or curtailed by contract.
As an employer, it is a good practice to implement formal employment agreements at the time of hire. This promotes not only clarity and certainty, but also serves to define the rights and expectations of both parties.
What Should Be Included?
As mentioned above, it’s important to identify and determine what is expected of the employee and employer. When drafting an employment contract, the goal is to lay the foundation of the working relationship. The following are 8 things to include in an employment contract. Note that this list is not exhaustive and merely serves as a starting point during the drafting process.
- Job Information: This includes the job title, department, to whom the employee will report to, and how they will be evaluated.
- Compensation: This includes benefits and information on raises and bonuses.
- Time Off: This includes sick days, vacation, overtime, and unpaid leave.
- Classification: Is the new hire an employee or an independent contractor?
- Employment Period: Is the position full-time or part-time? When is it effective? Is it salaried or hourly? How many hours and which days is the employee required to work?
- Restrictive Covenants: This includes non-compete agreements, non-disclosure agreements, confidentiality, and intellectual property protection. Note that restrictive covenants must be in writing.
- Termination: This includes grounds for terminations, severance, amount of notice needed, and whether notice should be written.
- Dispute Process: How will disputes be handled? For example, will arbitration be mandatory?
An employment agreement is almost always presented to the employee as an offer that is prior to acceptance by the employee. As an employee, it is important that you obtain independent legal advice prior to accepting any offer of employment. Once accepted, any written agreement is likely enforceable. At Sodagar & Co., we can review employment contracts to ensure that both parties understand and are satisfied with the terms.
