15 Jan What are the biggest mistakes an employer can make when drafting an Employment Agreement?
Employment Agreements are extremely important as they outline the roles, responsibilities, expectations, limitations, and promises employees should expect for the duration of their work experience. Employers have a legal responsibility to uphold what has been outlined in the agreement, and if their employees are not given what has been promised, they could face legal action.
How the employer creates the Employment Agreement is extremely important in this case. If employers have a legal duty to uphold their promises, they need to ensure that every aspect of the agreement accurately reflects what the employee will experience in practice.
What are some of the biggest mistakes an employer can make when drafting an Employment Agreement?
A major mistake an employer can make is offering Employment Agreements that aren’t updated. An Employment Agreement must accurately reflect the current laws outlined in the Employment Standards Act, 2000 (ESA). The ESA outlines the mandatory minimums that employees are guaranteed during employment. Because the law is always adapting and changing to societal norms, it is important that employers are responding to these changes by regularly updating their Employment Agreements as needed.
Work roles also adapt and shift over time. If the employer has been providing the same Employment Agreement to the same position for years, it may not accurately reflect the responsibilities and expectations required for the job. This could be misleading to the employee, as they may be agreeing to a role that is different from what the employer is really looking for.
An employer should never make guarantees they cannot execute. Recruiting talent can be a difficult feat. You may be trying to match or surpass another offer that was provided to a candidate or create a highly competitive offer in the current market. Whatever the case may be, you cannot make promises that you may not be able to keep in the future.
An employer can also be responsible for any verbal promises made to the employee during the hiring process or while employed. Any verbal agreement provided by the employer and accepted by the employee is still considered a legal agreement unless there is a clause stipulating otherwise in the employee’s written Employment Agreement.
Creating an ambiguous termination clause could also create problems for the employer. If the employer fails to clearly outline the terms of the employee’s termination in the termination clause, the clause could be considered invalid, and the employee could be granted maximum entitlements instead of the mandatory minimums.
It could also be detrimental for the employer not to include “consideration” when drafting Employment Agreements. Consideration is a required quality of an employment agreement as it is the offer both parties are willing to contribute to the agreement. For example, the employer will offer compensation while the employee is committing to work. Consideration can become an issue when the employer is offering their current employee another Employment Agreement. This is a common practice when employers promote their employees to a new role.
When an employer provides an employee with a new Employment Agreement, they must provide new consideration additional to their original contract. Meaning, even when the employee is being promoted from within the company, the employer must still provide a new offer like a pay raise, more benefits, a flexible work schedule etc.
Lastly, not pursuing legal assistance when drafting an Employment Agreement can be a serious misstep. KCY at LAW will know exactly what you need to include in your Employment Agreement to ensure you are protected from a lawsuit. KCY at LAW can best understand and apply an employer’s demands while also creating an Employment Agreement that is most legally reasonable.
If you are an employer who wants to create new Employment Agreements, 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.