Anastasia Todamal,
Chartered Professional Accountant

Blog / News

Employment Contracts

For any business owner, you should be familiar with the terms and conditions of employment that apply to your employees. These terms and conditions can be easily set out in employment contracts for your staff.

Written contracts of employment can include wages and conditions for employees not covered by a federal agreement.

Although desirable, a written contract is not strictly necessary.  An oral agreement is enforceable as a common law contract.  However, it is recommended, at a minimum, that the following details be recorded in writing: 

  • Job title and classification
  • Employment status, ie part-time, casual
  • Working days and hours, overtime
  • Rate of pay and any allowances payable
  • Benefits & vacation
  • Probationary period, if applicable.

The contract could also include duties required of the employee plus policies and procedures that the employee is expected to follow. 

For the employment contract to be valid and to avoid disputes, both the employer and employee should fully understand the contract and agree to comply with its terms.  It should be signed and dated and the work to be performed by the employee must not be illegal. Employment contracts also contain implied or statutory obligations of both employer and employee. 

Employers have the following obligations towards their employees:

  • To pay their correct wages
  • To provide them with a safe and healthy workplace
  • To treat them with trust and respect and not wilfully do anything to damage the working relationship.

 Employees have the following obligations to their employers: 

  • To honour & carry out all reasonable instructions and laws
  • To perform their job with due skill and care, not being negligent or incompetent
  • To act in the best interest of the employer, not operating in competition with the employer and not doing anything that could deliberately damage the employer’s business.

If you choose to prepare written employment contracts for all staff, they should comply with Canadian Labour legislation and should be updated if any roles or conditions change. Signed contracts should also be kept in a secure location in consideration of privacy regulations.

Consider this...

If you’re tempted to delay preparing employment contracts because it seems unnecessary or too much hassle, think about this:  how much would it cost your business if you have no contracts or policies in place, a dispute arises and litigation and legal fees are incurred?  It’s not hard to have a formatted contract available to print at any time necessary.