Understanding the Significance of Employment Agreements: A Comprehensive Guide - Part 2
This article serves as a sequel to the comprehensive guide titled “Understanding the Significance of Employment Agreements: A Comprehensive Guide - Part 1”.
Employment agreements can be structured in various formats, ranging from a basic offer letter to a detailed multi-page contract. Both formats are considered appropriate for establishing an employment contract.
An intricately tailored written employment agreement can provide significant advantages, such as:
Clarity on all terms, reducing the likelihood of future disputes.
Documentation of agreed-upon terms, providing evidence in case of conflicts.
Clear guidelines for termination and related issues, helping to prevent legal disputes.
Defined compensation terms, making handling matters like salary increases easier.
Mutual understanding of rights and responsibilities, preventing unintentional violations where ignorance is not a valid defence.
Employment agreements are generally considered enforceable unless certain circumstances render them unenforceable. In such cases, a common law employment agreement, which is designed to favour the employee, replaces the original agreement. That is the case of Queen v. Cognos Inc., 1993 CanLII 146 (SCC) for negligent misrepresentation by an employer during the hiring process and Earle v. Grant Transport, 1995 CanLII 7289 (ON SC) for employee misrepresentation.
There are various legal grounds on which an agreement may be deemed unenforceable. These grounds may include:
Failing to provide the agreement to the employee to sign when starting a new job, except in the case of a promotion where it can be given later.
Instances of undue influence and duress.
Significant deviations over time in an employee's position, responsibilities, and compensation from what was initially outlined in the agreement.
In Ontario, employment agreements are often written to balance the scales in favour of the employer, as common law generally leans towards protecting employees' interests.
Employees should pay attention to termination clauses that limit their entitlement to notice of termination based on the minimum requirements of the Employment Standards Act (one week's notice per year of service). Employers often include their own termination clauses to avoid providing more compensation than the minimum standards required.
Employers should consider involving a lawyer to ensure proper protection considering the technical nature of employment agreements. The cost of hiring a lawyer is worthwhile, as they can help draft a solid agreement and potentially save costs in the long run. Mistakes in termination clauses and reliance on incomplete internet information are common pitfalls when drafting agreements without legal assistance. Employees, too, may benefit from having a lawyer review their agreement to safeguard their rights.
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**The information provided herein is a general background of contractual, technology and intellectual property law concepts. It does not constitute legal advice, and should not be relied upon as legal advice. Athena Innovation & Legal, nor the author, make no express or implied representations or warranties in respect of the information, including but not limited to the accuracy of the information.**
