Employment Contracts: What You Need to Know

This blog is one in a series written by our team of employment lawyers, to provide our readers with added knowledge in the area of labour employment law. As Employees, there is so much that you may feel powerless about and it is important to know what your employment rights are and how to protect yourself for the times when you and your employer don’t see eye to eye.

What do I need to know about my employment contract?

Most employees will sign a job offer or employment contract when they accept a new job – and will be happy to do so. But very few fully understand what they are agreeing to. Employment lawyers will always look for a provision about termination of employment, because this little bit of legal language can have huge financial consequences, especially when it comes to termination of employment whether that is through a wrongful dismissal, lay-off, offer for severance or other reasons.

Does it help me to have an employment contract? 

Actually, employment contracts usually help employers, not employees. Most employment contracts are drafted by employers for their own benefit. In the absence of a written agreement, employment law creates implied terms which are generally quite favourable to employees. Employment contracts usually place limits on your implied employment rights to your employer’s advantage.

What does a termination provision do?

In the absence of a written agreement, dismissed employees are presumptively entitled to “reasonable notice” of that dismissal, or pay in lieu of notice. A termination provision can specify some other entitlement in the event of termination – but usually, a termination provision will limit you to something less than reasonable notice (again, most employment contracts exist to benefit employers, not employees).  It is best to speak to an employment lawyer to understand your rights.

Why does my termination provision mention the Employment Standards Act?

The Employment Standards Act sets out the minimum amount of notice and severance that an employee can be entitled to. It is not the “normal” or “standard” amount of termination notice – it is the absolute bare minimum, rock bottom amount that an employer is required by law to give to an employee – even in the face of an agreement to the contrary.

My employment contract contains a termination provision. Am I limited to the amounts in the provision?

Not necessarily. Courts do not like it when employers try to take away employees’ rights to reasonable notice. For this reason, the interpretive rules that courts have developed make it extremely difficult for employers to draft a termination provision properly. The law is so complex and the requirements so strict, that more often than not, termination provisions are unenforceable. Since the law has developed significantly over the last several years, the older a termination provision is, the less likely it is to be enforceable.

What are some ways that termination provisions might be unenforceable?

There are many reasons that a termination provision might be unenforceable in the way it is drafted, but most arguments fall under two categories. First, a provision might limit your entitlements to less than the minimum under the Employment Standards Act. If that would be the case under any scenario (even a hypothetical scenario), that can invalidate the entire provision; even if the breach is seemingly trivial, unlikely, or unintentional. Second, the wording of a termination provision might be insufficiently clear to place a limit on your entitlement. 

How do I know if my termination provision is enforceable?

You would need to get legal advice from an employment lawyer who is very familiar with the case law on employment contracts.

Should I attempt to negotiate my employment contract before signing?

That depends, and if you are going to try to negotiate your employment contract, you should first receive advice from an employment lawyer on what it means. For instance, if you know that your employment contract’s termination provision is unenforceable, there is no need to attempt to negotiate it.


If you have been subject of a wrongful dismissal, termination, lay-off,  or severed from your job, contact the employment lawyers at Share Lawyers. Our experienced Employment Law Firm can help you fight for your rights . We offer free consultations and there are no fees unless you win your case. Find out if you have an Employment Case!

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