5 tips to consider in your new employment contract

Starting a new job? Here’s what to watch out for in your new employment contract.

Beginning a new job is an exciting time — you’re eager to get started and hit the ground running, and your employer is keen to make you an offer you can’t refuse.

However, before signing on the dotted line, keep an eye out for these 5 things that could affect your rights long after your start date:

1. TERMINATION CLAUSES

Termination clauses in employment contracts often outline the when, why, how, and ‘how much’ of dismissal, including:

• when an employer can terminate an employee for cause or without cause,
• why an employer might terminate an employee’s employment for cause,
• how an employee can resign and how much notice is due, and
• ‘how much’ severance or notice an employee is entitled to upon termination.

Termination clauses that attempt to limit an employee’s severance entitlements upon termination can have serious consequences for the employee.

While an employer cannot contract below the minimum amounts outlined by the Employment Standards Code (Alberta) or the Employment Standards Act (British Columbia), they can contract out of additional common law reasonable notice entitlements, which can significantly reduce the amount of severance that would otherwise be owed upon termination.

Before signing an employment agreement, look to see if your new employer is attempting to limit your severance entitlements.

If so, one of our experienced employment lawyers would be happy to discuss the reasonableness and enforceability of the provision and provide advice on its possible implications down the line.

2. PROBATIONARY PERIODS

An employer may wish to monitor an employee’s abilities and performance before determining whether or not they are suited for continued employment. If the employee is deemed to be unsuitable for the position, the employer may attempt to terminate the employment relationship without providing any form of severance.

Probationary period clauses should detail how long the probationary period will last, what the implications of the probationary period are, and what an employer owes (or doesn’t owe) upon termination during that time.

An employer is obligated to prove that the employee accepted the probationary period and understood its implications before they can terminate an employee without providing severance.

If your new contract contains a probationary period clause, chat with one of our lawyers to determine what effects it could have on those first few months of your employment.

3. NON-SOLICITATION OR NON-COMPETITION PROVISIONS

Non-solicitation and non-competition provisions (also known as “restrictive covenants”) attempt to restrict an employee’s actions after the employment relationship has ended and often act as a restraint on trade.

As a result, courts will scrutinize the terms of a restrictive covenant to determine whether the clause is fair and reasonable. When determining the enforceability of restrictive covenants, courts look at:

• whether the employer has a valid proprietary interest worth protecting,
• whether the restrictions placed upon the employee are reasonable in terms of:
  • What actions are prohibited (i.e., solicitation of clients, customers, current employees, etc.),
  • How long those actions are prohibited (temporal scope), and
  • Within which geographic area those actions are prohibited (geographic scope;
• whether or not the restrictive covenant goes against public policy; and
• whether or not the language of the restrictive covenant is sufficiently clear.

If your new employment contract includes a non-solicitation or non-competition agreement, speak with one of our experienced employment lawyers to determine whether those restrictions are reasonable and how they might affect your career if your employment were to end.

Likewise, if your employment has already ended and your employer is seeking to hold you to an existing restrictive covenant, one of our lawyers would be happy to assist with navigating this process or to provide an opinion on the enforceability of same.

4. TEMPORARY LAY-OFF PROVISIONS

An employer’s right to temporarily lay-off an employee is not automatic. Courts have held that, in order to temporarily lay-off an employee, there must first be a provision in the employment contract that allows the employer to do so.

If such a provision does not exist and the employee is temporarily laid-off, the employee may be able to claim constructive dismissal at common law.

Especially in a world post-COVID, employers are including temporary lay-off provisions in employment contracts to ensure flexibility in their workforce.

Speak with a Taylor Janis employment lawyer if you have questions about the effects of temporary lay-off provisions or what to do if your employer has laid you off in the absence of one of these clauses.

5. DURATION OF CONTRACT

Employment contracts can be for a fixed term, for an indefinite term, or they may contemplate the renewal of the contract following a set date. Either way, your new contract should set out in clear and explicit language how long the duration of your employment will be.

If your new employment agreement is for a fixed term, it should also set out the amount of notice that must be given by either party in order to terminate the contract prior to its end-date. If the amount of notice owed is not defined, you may be entitled to the remainder of the value of the contract if it is terminated early.

Important: Speak with one of our lawyers if your contract does not specify the duration of your employment, or if you think your employer may be attempting to limit your rights upon termination of your contract.

Whether you are an employee looking to start a new chapter of your career or an employer looking to set out the details of a new employment relationship, it is prudent to seek advice from an experienced employment lawyer to ensure your rights are protected and obligations are met.

Any of our lawyers here at Taylor Janis LLP would be pleased to assist with the review, revision, or negotiation of your new employment contract. Submit an online enquiry and one of our intake specialists will contact your shortly to set up a consultation.

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