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What Is an Employment Agreement?

Posted:  Sep 10, 2018
In Canada an Employment Agreement or Employment Contract is used by an employer to outline employment terms for new employees. An Employment Agreement covers areas of employment such as job title and responsibilities, compensation, hours and more. It should also be noted that the relationship between the employer and employee is contractual, even if no written document has been signed.

Each province or territory in Canada has their own provincial labour laws. In British Columbia it is the BC Employment Standards Act. Every province is subject to human rights laws. The purpose of human rights laws and provincial statutes are to establish some basic conditions of the employer-employee relationship, such as minimum wage, maximum hours of work and minimum notice for dismissal. The relationship is further affected by common law rules, including rules dealing with unfair bargaining power and an employee’s duties of loyalty, confidentiality and good faith.
Many businesses create their own version of an Employment Agreement for new recruits to sign upon hire. However, if you own your own business or work by freelance contract, there are online services available which can help you create your own Employment Contract. If you’re ever unsure about an Employment Agreement you’ve been presented with, or if the one you’ve created is adhering to the human rights laws or your provincial or territorial labour laws, always seek legal counsel.
The essential features of an Employment Contract include: 
  • The names of the parties, 
  • The date when the contract begins,
  • The contracts duration or the employee’s status of employment such as full time, part time, fixed period or flexible employment, and
  • A description of the employee’s duties.
It is common for an employer to stipulate a probationary period at the beginning of a new employee’s hire. This probationary period does not need to be included in the Employment Agreement and can last anywhere from a month to several months. During this period the employer has the right to let the employee go without notice. It is always important to consider the type of employment an employee is being hired for when presenting them with an Employment Agreement to ensure that it covers all aspects and duties which the new recruit will be expected to adhere to.

Employment Contracts should also include the type of compensation an employee is to receive such as an hourly wage, a weekly/yearly salary, commission or a salary plus commission. The employer should also specify when the employee will be paid, such as once or twice a month, bi-weekly, or every week. How the employer intends to handle how overtime is to be paid or administered, such as “time off in lieu”, should also be covered.
Other clauses which may be included in an Employment Agreement may cover a non-competition clause, restricting an employee from competing with another business during their employment and for a restricted period of time after employment. As well, there may also be a non-solicitation clause which prohibits the employee from hiring or enticing employees or contractors away from the employer during or after their employment. And lastly, is it common to find a confidentiality clause in an Employment Agreement which prohibits the employee from sharing private information about the company during their employment or for a restricted period after employment is over.

The most important requirement of the Employment Contract is that it must be entered into voluntarily by both parties. The document must be signed and dated by both parties to show that it has been read and understood. There are many other aspects of the employer-employee relationship which can be addressed in an Employment Agreement, for legal advice about employment contract matters, always consult your legal representative.


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