When a business hires an employee, a contract is formed. It does not need to be written and the law will set out a number of implied terms of that relationship. It will often be prudent however, that the contract be committed to writing. A written employment contract is a means to outline the terms of the employment relationship by setting out the responsibilities, privileges, and the boundaries and limitations, of both the employee and the employer. So even though employment contacts can be made through express or implied oral agreements, we recommend a formal written employment contract.
There are a few particularly important provisions that employers might want in an employment contract, which have to be committed to writing. The first and most obvious are the terms respecting termination. While the Employment Standards Act establishes minimum requirements for employers when terminating an employee, the common law may ask more of an employer. A contract can potentially limit the employer’s obligations under common law, while ensuring compliance with the Employment Standards Act.
Additionally, although non-competition clauses are now null and void in Ontario in most circumstances, an employer may be able to partially restrict a departing employee with a non-solicitation clause, provided it is appropriately limited and clearly defined.
Lastly, certain businesses like software companies should seek to define intellectual property rights as between the employer and employee and do so in a manner that is compliant with the law.
The lawyers at Inch Hammond are available to assist you with your employment contracts.