The Importance of Employment Contracts

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Human Resources
 Min read
September 10, 2021

Even before the COVID-19 pandemic, businesses often overlooked the importance of providing and enforcing an employment agreement between them and their employees. Now, this may have caused some consequences considering all of the unpredictable changes COVID-19 has left employers. Sometimes, employers are not aware that their current employment agreement documentation may be unenforceable and will only become aware of this after something goes wrong. 

Is a written employment agreement required in Ontario?

The short answer is YES, if you want to protect your business. Employment agreements are governed by the basic principles of employment law and also set the framework of the employer and employee relationship. 

Employment agreements can prevent significant losses and costs in the long-term. Written agreements clarify the rights and obligations of both the employer and the employee as well as increase flexibility for the employers. This can be seen where an employee is being terminated without cause, the length of notice or termination pay depends on what the employment agreement says or does not say. The employment agreement outlines the provisions of termination and can limit an employee’s entitlements to the minimum as stated in the Employment Standards Act. 

In cases where an employer does not have an established provision within the employment agreement limiting the entitlements to the ESA minimums, the employee being terminated may be eligible to several months of notice or termination pay.

Need to update or implement an employment agreement in your office? 

Typically, employment agreements are provided and signed by both the employer and employee before the employee’s first day on the job. However, the case might be that you are looking to introduce an employment agreement to an existing employee. 

It is impertinent to be extremely careful when implementing a change to an existing employee’s agreement. When revising and introducing a new employment agreement, employers must provide something in exchange for the employee to agree to the new terms of employment such as a bonus, raise, or other perks. 

With that said, it is crucial to seek guidance and advice from an HR expert or an experienced employment lawyer to ensure the new or revised employment agreements are enforceable. 

At EasyHR we can provide you with a free gap-analysis of your current employment and alternatively provide you with customized documentation.

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