Understanding Your Employment Contract
Updated: Jul 26, 2021
So you aced the interview and scored a job. Nice!
Here are some things to help you understand your employment contract and what it means.
1. ALWAYS READ YOUR CONTRACT BEFORE SIGNING AND GET A COPY
READ YOUR CONTRACT BEFORE SIGNING AND GET A COPY
You are entitled to take time to do this.
2. What the heck are contracts anyways?
Contracts must have three things to be binding:
Consideration (something promised aka money in exchange for work)
An acceptance of the offer
Contracts can be written or orally agreed upon. Oral contracts are just as binding, however, written are usually preferred for clarity of misunderstandings, addressing contentious issues and reducing uncertainty.
3. Okay, so where do the terms of my contract come from?
Express Terms - Explicitly agreed upon written or oral terms clearly laid out.
Implied Terms - Terms read into by judges because they weren’t expressly agreed upon initially
Ancillary Terms - Terms found in employee handbooks, HR policies, benefit plans etc. They are intended to be legally binding. (We suggest getting copies of these too.)
4. Common Contractual Terms You’ll Find
Clarifies duties and expectations. An employee can refuse to do duties outside of this if the tasks of the jobs fall outside of these duties. Be aware of language that allows the employer to change the duties of a job such as “any and all other duties as may be required” which can prevent these refusals
What you are paid must meet minimum standards in the area which you live. If it doesn’t then your contract is null and void.
The start date and length of time. If it is not a fixed term contract then the period is indefinite. Be wary if an employer continuously uses a series of fixed term contracts to avoid other statutory requirements such as termination pay. Contact us if this is an issue for you. Fixed term contracts should have a set review date.
Indefinite and fixed term contracts vary in termination requirements. Typically after 3 months probation on indefinite contracts employees are entitled to notice and/ or pay depending on the type of termination and where you live. Contact us for more information or if you think your employer hasn’t followed the termination clause set out in your contract or minimum termination requirements where you live. Some definitions you will want to note are just cause, discipline, and notice of resignation/ termination.
This is the part at the beginning of an employment relationship in which an employee may be dismissed without an employer being obliged to provide notice or pay. This is not an implied term of a contract and must be expressly provided for it. These periods are typically three to six months.
If moving geographic locations is necessary for the job the contract should address it. Otherwise the right to relocate an employee could be an implied term. This could create a fundamental breach of contract and constitute constructive dismissal. Moreover an employee may be entitled to relocation costs. Always make sure this is discussed if there is potential to move.
If benefits are given such as medical, dental etc. This should be discussed and upon dismissal or resignation, how this matter would be dealt with should be in this part of the contract.
Restrictive Covenants are SUPER IMPORTANT!
5. Restrictive Covenants
Restrictive Covenants are meant to protect an employer’s business interests; restricting what an employee can or can’t do during and after employment in regards to matters such as customer lists and confidential information.
There are three specific types you may encounter
Non-Disclosure Clauses - These clauses prevent a departing employee from disclosing information about an employer after employment ends.
Non-Solicitation Clauses - This prevents a departing employee from soliciting an employer’s clients for a period of time after the contract ends.
Non-Competition Clauses - These clauses prevent departing employees from creating competing businesses for a specific time or within a specific area after employment ends.
Clarify in these instances: 1. What information constitutes as confidential, 2. What is their social media policy, and 3. The expectations on your private social media during and after the employment relationship. Ask yourself what limits are reasonable and unreasonable. If you have questions call us!
Ownership of Intellectual Property - This pertains to inventions, patents, and copyrighted information created while employed. It is about who owns this information during and after the course of employment.
Choice of Law - This pertains to which jurisdiction of law governs the contract. Sometimes it is geographical, industry based, or based on a collective agreement.
Corporate Policies - Most employers want an employee contractually bound by its general policies such as handbooks etc. You should get a copy and have time to review these policies. GET A COPY AND REVIEW THESE POLICIES!
Entire Agreement Clause - This states that the signed contract constitutes the entire agreement between you and your employer. If a dispute arises, the contract, not other promises outside of it, are binding. So get it all written in the contract.
Inducement - This addresses if previous service with a previous employer will be recognized for severance purposes. If the employee was induced to leave secure employment the parties should expressly state of the previous years of service have an impact.
Independent Legal Advice- This clause states that the employee had the ability to seek independent legal advice before signing the contract. THEREFORE YOU CAN SEEK INDEPENDENT LEGAL ADVICE BEFORE SIGNING ANYTHING!
Severability Clause - If you go to court this part discusses if the court invalidates part of the agreement, if it invalidates the rest of the contract.
6. When a Contract isn’t enforceable or its enforcement is up to interpretation
Lack of Consideration
If you start working before the contract is finalized, and you aren’t being provided proper pay/consideration for new duties or terms the contract could be unenforceable. Therefore it is best practice to not do work before a contract is given.
Inequality of Bargaining Power
If the contract is deemed unconscionable or unreasonably one sided it could be invalidated.
This is when the terms no longer reflect the realities of the employees position within the organization.
Failure to meet minimum statutory standards
If the contract contravenes minimum standards laws where you live and it is not negotiated that way through a collective bargaining process, the contract may not be enforceable.
Use of Ambiguous Language
When the language is intentionally vague, under the contra proferentem rule, ambiguous language is usually interpreted by a judge against the party that drafted the contract.
Do you think your contract was violated? Did the employer not give you a copy? Have more questions?
Article by UWW-CA member, Tania B.
Edited: May 28, 2021