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Employment Contracts in Ontario: What You Need to Know

After recent major precedent setting cases, written employment contracts in Ontario have become the standard when onboarding new employees. Having a written employment agreement is beneficial for both employees and employers as both parties have something tangible to refer to throughout their relationship from the time of onboarding, and if necessary, at the time of termination. Drafting and relying on a written agreement reduces the possibility of expensive litigation. This can be done by implementing certain conditions and terms that employees can rely on to ensure proper statutory minimums are being provided while employers can rely on these same conditions to protect their business.

This article aims to clarify what exactly employment contracts in Ontario are and what you, as an employee, can expect from these types of agreements

What Should Be Included In An Employment Contract?

In general, an employment contract in Ontario needs to contain some sort of benefit or consideration. In most employment contracts, this would be an exchange where an employee provides their skills, labour and services to the company and the employer would provide monetary compensation to the employee in return. The employer would extend an offer outlining this consideration and the employee would accept. All valid and enforceable employment contracts contain this exchange.

Generally, within the contract, there are other clauses outlined such as job descriptions, pay, and hours. Probation dates, vacation time, notice periods and termination pay can also be included in your contract as well. Most employers will opt for written employment contracts when extending an offer to an employee in order to legally limit the amount of notice or compensation that they will owe to employees whose employment is terminated without cause.

Although employers can legally limit notice or compensation for termination, employers cannot contract to provide less than the minimum ESA standard for these clauses, and if they do, the contract will be deemed as invalid. Employers are free to negotiate for more benefits with their employees, but cannot negotiate below the minimums.

What If You Don’t Have A Written Employment Contract?

A common misconception is that all employment contracts in Ontario are written and need to be written in order to be valid. This is false. As an employee, you may be bound by an oral agreement that carries certain safeguards to protect you throughout your employment tenure. This oral agreement can provide certain entitlements set out in the Employment Standards Act, and any other benefits your employer may have made during the course of your employment.

Depending on certain factors relating to the employee’s age, length of service, the character of employment, position held and ability to mitigate, employers have to pay terminated employees significant months of pay at the time of termination. This figure can go as high as 24+ months in some cases.

How Can You Determine If Your Employment Contract Is Valid?

Before you begin a new working relationship with a future employer, it is imperative to review your contract before signing. Highlight and ask questions with your future employers HR rep or whoever is assisting in recruiting you. Additionally, hiring an employment lawyer to look over your contract would be beneficial as well. An employment lawyer can tell you if your contract is ESA compliant. In particular, having a lawyer looking over specific clauses such as termination rights, notice, severance pay could save you time and money in the long run by avoiding costly litigation.

Contact Us

If you are an employer or an employee who needs an employment contract reviewed, our team of experienced employment lawyers at Achkar Law can help. Contact us by phone toll-free at 1 (866)508-2548 or email us at [email protected] and we would be happy to assist.

If you are a small or medium-sized company looking for full-service support with a same-day response, visit our CLO Program page for our strategic solutions.

Disclaimer: This blog is not intended to serve as or should be construed as legal advice and is only to provide general information. It is in no way particular to your case and should not be relied on in any way. No portion or use of this blog will establish a lawyer-client relationship with the author or any related party. Should you require legal advice for your particular situation, fill out the contact form, call (800) 771-7882 or email [email protected]