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Employer Advice – How to Create a Standard Employment Contract

Making Sense of the Employment Contract

When it comes to hiring new employees, employers should take the time to become familiar with the employment regulations of the province in which their business operates. An important part of this process is in formalizing the employment relationship between businesses and individuals with a contract. This agreement is the prerequisite of any employment relationship, whether made verbally or in writing. However, without a written agreement, the employment relationship is governed by common law. Most notably, the employment contract exists to protect you and your business.

3 Employment Contract Essentials

Here’s what you need to know about the employment contract.

  1. What is an employment contract? It is an agreement that sets the terms of the working relationship between employers and employees.
  2. Is an employment contract the same as a job offer? No. A contract is more detailed than a job offer, which is used to informally offer a position to a candidate.
  3. When is a contract legally valid? Whether written, stated verbally, or implied, every employment relationship is a binding contract.
How to Create a Standard Employment Contract

When creating a contract of employment for new hires, remember, this document serves a purpose to help address any foreseeable work-related disagreements by setting out performance expectations. The agreement is also the opportunity to expand an employee’s obligations to you, as the employer, in areas such as non-competition, non-solicitation, and confidentiality. While a contract cannot address every potential issue, at the very least, you should cover the minimum requirements set by the Employment Standards Act (ESA). You can use this check-list when writing your contracts:

  • Employment statement
  • Definitions
  • Terms
  • Duties and responsibilities
  • Compensation
  • Employee benefits
  • Leave entitlements
  • Notice of termination
  • Non-competition
  • Confidentiality agreement
  • Ownership of intellectual property
  • Governing Law

The last box to check off, is to formalize the contract with signatures and a date of effect. If you need help to apply this information to your employment contract for new employees or have employment-related questions, we offer complimentary employer advice through our team of HR professionals.