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Creating a Binding Employment Contract

February 4, 2004
by Israel Foulon LLP

Question: Do you have some suggestions as to how I may best create a binding employment contract?

Answer: Employment contracts codify the essential terms and conditions of the employment relationship. Spelling out the rights and obligations of both the employer and the employee will reduce the likelihood of misunderstandings developing or disputes arising during the employment relationship or thereafter. It should be noted that not all employment engagements require a written employment contract. But having determined that a situation would best be served by a written contract, the following points should be kept in mind:

  1. Ideally, the employment contract should be completed prior to the commencement of work in order for it to be enforceable. Doing so will minimize an employee’s chance of claiming a contract was entered into under duress or some unconscionable circumstance. If the contract is executed after employment has commenced, additional steps will have to be taken so the legal requirement of “consideration” is met.
  2. The employment contract must adhere to the minimum standards contained in the employment standards legislation. If a conflict arises, and these standards have not been met, the offending provisions of the contract will be considered to be void and the employee’s rights will be determined by the relevant case law.
  3. The terms of the employment contract should be reasonable and should reflect a balanced view of the interests of both parties. A manifestly one-sided arrangement will invite challenge to its enforcement and could lead to a successful argument being advanced that the agreement was the product of an inequality in bargaining power.
  4. The employment contract should contain a provision that allows for periodical revision or review. The parties should expect that the employee’s duties and responsibilities will change over time and the contract should provide a means by which the salient aspects of the relationship can be modified.
  5. The language of the contract should be clear and unambiguous. While this point applies to all agreements, this is especially important with respect to the employment contract where the employee may be asked to agree to terms that would otherwise be unobtainable in accordance with the relevant case law. Such provisions, therefore, must not be drafted so as to be open to challenges on the basis of uncertainty or ambiguity.
  6. The employee must be provided with a sufficient amount of time to review the contract and should be given the opportunity to obtain independent legal advice should he so desire.

Peter Israel is the senior partner in the Toronto law firm of Israel Foulon LLP – Employment and Labour Lawyers. He can be reached at 416-640-1550 or pi@qtw38575.mywhc.ca. A version of this article originally appeared in the Carswell publication, Canadian Employment Law Today



Legal Disclaimer

This article is for informational purposes only and is not intended to provide legal advice, which in all circumstances must be tailored to the specific facts of any problem. You should obtain a proper legal consultation in order to determine how this article applies to your specific situation. Please feel free to contact Israel Foulon LLP to learn more at 416-640-1550.