Employment Contracts: What are they and how do they work?

15 Mar Employment Contracts: What are they and how do they work?

When Accepting a job offer, an employee will undergo an exchange of promise, where an employer and employee agree and understand the work the employee will provide. In Ontario, outlined in the Employment Standards Act (ESA), once the relationship between the employer and employee begins, the contract between parties is activated. There does not need to be an explicit verbal exchange or written exchange pertaining to a contract in Ontario. However, as an employee, whether the employment agreement is written, verbal, or implied, it is critical to understand what the agreement and your compliance actually means.

An employment contract is a written or oral agreement between an employer and employee that defines the relationship between parties. The agreement will summarize the job description expected of the employee, for example, outlining the hours of work the employee will be expected to complete.

The contract must follow the minimum employment rules defined by the ESA, and the employer may not work outside these minimum requirements in the contract.

The Agreement

The employment agreement requires two components:

1. A proper consideration from the employer and employee in order for the contract to be binding.
2. The agreement will be voluntary between both parties involved.

For an agreement to be considered by both parties, it requires that there is a meaningful promise that the relationship defined in the contract is agreed upon and that services will be provided. The agreement between the employer and the employee must also be voluntary, which means that without any pressure or coercion, the employer and employee want to agree to the job that is described in the agreement.

Written Contract

If the employee receives a written contract, the terms of the work agreement will be explicitly written and defined. This exchange will require the employee to read the document, consider whether the terms are acceptable, and voluntarily sign the document signifying that you have complied.

The employment contract will often include, but is not limited to:

• the name of the parties involved,
• the date in which the contract was agreed upon,
• the expected duration of the relationship,
• description of the services that the employee will provide,
• the hours of work
• pay and/ or benefits the employee will receive, including incentive programs, stock options (if applicable),
• offered holiday and sick days,
• disciplinary and grievance policies,
• the termination process,
• and information about pensions, and RRSP match programs.

The minimum terms the employer has outlined are protected under the ESA, so if the employer does not follow the terms, the employee has the right to what has been promised.

If you have any questions about employment contracts or the terms laid out in an agreement that you received, please contact KCY at LAW by filling in an online consultation request or contact us by phone at 905-639-0999 to book your consultation today!