Know the details of your employment contract before signing

By Tony Poland, LegalMatters Staff • In the excitement of accepting a new job offer it is important not to gloss over the details contained in an employment contract, says Toronto employment lawyer Jeffrey M. Andrew.

“When you land a job, it is the honeymoon stage of the employment relationship,” says Andrew, a partner with Cavalluzzo LLP. “The interview went well and it seems like it is a good fit. The employer is happy to have you. You don’t want to think about future difficulties. That is natural.

“However, I find many people only turn their focus to their employment agreement when things are going south,” he tells LegalMattersCanada.ca. “Suddenly they are unhappy with the job but they didn’t carefully read over their contract, they just signed it. Or if they read it, they didn’t concern themselves with what it actually meant and they didn’t get legal advice. Now, they may be at a disadvantage.”

Understanding the terms of your employment is essential, says Andrew.

‘Minimize any uncertainty at the front end’

“After you are hired, you have an employment contract whether it is verbal or written,” he says. “When working out employment agreements, you want to minimize any uncertainty at the front end.

“The details are important. You want to spell out your job title and what the duties entail,” Andrew adds. “You want to specify things such as how many weeks of vacation you are entitled to and how much vacation pay you will receive. What sort of salary or hourly wage comes with the position? What benefits are available and if bonuses are offered, how much will you receive and on what basis?” 

He says smaller companies may not offer a written employment contract but that does not mean they cannot be held liable if they fail to live up to the terms of what they offered the employee.

“Of course, because it is not written down, determining what the deal encompasses may not be easy,” Andrew says. “The problem with verbal agreements is people have different recollections about what they agreed to. As an employee, it is always better to get something in writing. However, if the employer is just telling you what the deal is, you need to keep good notes. Document who said what and what the offer was.”

He says an employment agreement could be a written contract that both parties must sign or a letter from the company that the employee is asked to countersign. 

The advantage of a written document is that it “leaves less room for ambiguity but it doesn’t necessarily eliminate disputes,” says Andrew.

Verbal promises could be made

“With some written contracts verbal promises are also made,” he explains. “If a term of employment is not included in the document, the risk is that the employer could later deny that they made any such commitment. Some employment contracts will state that the entirety of the contract is in the written document and it excludes any other representations. From the employer’s perspective, that is meant to ensure any verbal representations are not part of the deal.

“Employees must be careful about that. If the employer says, ‘Don’t worry, we will give you this or that, it won’t be a problem,” don’t assume you’re going to get it,” Andrew adds. “I have had cases where the employer admitted they offered something but that they shouldn’t have and because it was not in the written deal, they refused to give it.”

He advises employees to minimize verbal promises and to get it in writing.

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“Otherwise, you will find you are not going to get what you believed you agreed to or you could be facing uncertainty, unpleasantness and possibly a legal dispute with your employer which costs money and stress,” Andrew says. “To the extent you can, spell it all out in the contract.”

Some people are hesitant to ask too many questions or make demands when signing an employment agreement in case the employer rescinds the offer, he says,

“It is true you could be taking a risk if someone offers you something and you make a counter offer to improve the terms in your favour,” says Andrew. “In contract law, that is considered a rejection of their deal and the employer is not obliged to maintain that employment offer. They could tell you, ‘Thanks but no thanks.’” 

However, he says an employer would not be offering a contract if they were not interested in hiring you.

‘At least your eyes are open’

“You may be concerned that if you push back you will lose the job,” says Andrew.  “And the answer is you might, though this is unusual. But at least your eyes are open and you understand what you are agreeing to before you sign.”

Another issue potential employees should be aware of is signing a contract saying they will agree to the attached company policies when the policies are not actually attached, or you agree to policies you have not seen he says. 

An employer is unlikely to change established company policies to suit an individual worker, but it makes sense to find out what they are, says Andrew.

He says it is also becoming more common for employers to specify that they have the right to discipline workers without pay, lay them off, reduce their salaries or even change their duties in certain circumstances. 

“At common law, employers don’t have that right,” he says. “They may be able to make minor changes to your job but reducing your pay or your benefits or making significant changes to your duties could constitute grounds for constructive dismissal. However, if you accept it and it is in agreement, they have that right.

Think about the end of the relationship

While people don’t like thinking about it at the beginning of the employment relationship, they should give serious consideration to what will happen when it ends, says Andrew.

If you agree to limit your rights to those under the Employment Standards Act, 2000 (ESA) if you are terminated, your package will be significantly less than if you are able to sue under common law, he says.

“This is a very technical area. Many employment agreements that purport to limit you to the ESA are poorly drafted so courts have been setting them aside,” Andrew explains. “I still see agreements where the employer tries to limit the employee to the ESA and it is ambiguous or conflicts with the expressed requirements in Act. These contracts are likely to be found unenforceable.

“However, many times people fail to find out about their termination entitlements before signing. Then when the time comes, you are in a fight with the employer,” he adds. “That is why it is always prudent to get legal advice before agreeing to an employment agreement. Of course, that costs money and people often don’t like to spend it. But that advice could help you when the employment honeymoon is over.”

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