Why Employment Agreements Deserve Legal Review: Tailoring Contracts to Protect, Empower, and Succeed

Employment agreements are the cornerstone of setting out the terms and conditions of employment for newly hired employees. It is essential to ensure that these contracts comply with Canadian employment law and provincial standards, whether fixed-term or indefinite. While many employers have predefined templates for employment contracts, it is highly recommended to seek legal advice to review them before issuing them to potential employees. This will ensure the contracts are legally sound and protect employers from possible legal consequences.

Engaging a lawyer to review employment agreements is crucial for several reasons. Firstly, it ensures that the terms and conditions of the agreement comply with applicable laws and regulations. Secondly, a lawyer can identify and address potential legal issues arising from the agreement. Lastly, a lawyer can negotiate on behalf of the employer or employee to obtain more favourable terms that may not have been included in the original agreement. It is crucial to engage a lawyer to review employment agreements for several reasons, such as:

1. Customizing Contracts for Unique Roles

Job requirements differ depending on the position, seniority level, and associated responsibilities. Employment contracts must reflect these differences, and a lawyer’s expertise can help draft contracts that align precisely with each role’s specific requirements.

2. Safeguarding Sensitive Information

Employers should exercise caution when structuring confidentiality, non-solicitation, and non-competition clauses to protect sensitive information from being compromised outside the organization. Legal guidance ensures comprehensive protection of proprietary knowledge.

For instance, in 2021, the Working for Workers Act introduced a new statutory prohibition on non-competition agreements between employers and employees under Ontario’s Employment Standards Act. According to the new legislation, employers in Ontario are not allowed to make agreements with their employees that contain a non-competition clause that mainly restricts the employee from engaging in any activity that competes with the employer’s business after the employment relationship between the two ends.

3. Thoughtful Termination Clauses

Termination clauses must balance the need to safeguard against potential damages from former employees while maintaining adaptability to market fluctuations. Skillful consideration of termination clauses by a legal professional allows for a fair and pragmatic approach, providing flexibility and mitigating risks.

4. Articulating Competitive Employee Benefits

To secure the best employees, offering competitive and well-defined employee benefits is vital. The compensation structure, bonus plans, and stock options are some of the elements that must be meticulously documented in employment contracts. A lawyer’s guidance is essential to achieve clarity, equity, and strategic alignment in these critical areas, which in turn helps attract qualified professionals and foster their long-term commitment.

Emphasizing the Importance of Legal Language 

Employment contracts are legally binding agreements requiring precise language to avoid unintended consequences for employers and employees. While pre-made templates are now commonly available, they may not always align with specific jurisdictions and can leave parties vulnerable to legal disputes. Therefore, it is imperative to engage expert employment lawyers to review and update contracts as required.

Employers can benefit from legal expertise by customizing contracts to their unique needs, protecting confidential information, creating fair termination clauses, outlining competitive benefits, and ensuring compliance with the complex legal landscape. These considerations are crucial for establishing harmonious and prosperous working relationships while protecting the interests of all involved parties.

Athena Innovation & Legal

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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.**