Acclaimed author, Steven Covey, penned the lasting observation that “communication is the most important skill in life.” This adage holds truth in our personal and our professional lives. At work, if things are clearly defined, it leads to a much smoother experience for the employer and the employee.
Forbes summed it up well, stating, “Contracts and other agreements are a vital aspect of running a business, including when it comes to your employees.”
Celia, Partner at Fillmore Riley LLP, echoes this sentiment in our conversation. Whether it's an employer or an employee calling her for advice, one of the first questions she asks is if there’s a written employment agreement.
In her conversation on the podcast, Celia sums up key areas to consider when creating agreements:
An employment agreement helps both sides understand their entitlements and obligations, which is particularly useful if there’s ever a time you need to part ways.
Often, employers will call their local employment standards branch to ask how much they need to pay their employee upon termination. The problem is, that amount might not cover all of what the employee is actually entitled to.
“An employee might also have common-law entitlement, which goes above and beyond what’s set out in provincial employment standards,” says Celia.
Location of employment
Employers have the right to dictate where an employee’s work should take place. “Location of work is definitely something that can be in an employment contract,” says Celia.
There are provincial statutes that specify who qualifies for overtime, but apart from statutory entitlement, an employee could be entitled to overtime either by way of an explicit or implied agreement.
An employment agreement would ensure there’s no confusion around overtime, making clear who’s entitled to overtime, in what circumstances, and if pre-approval is required.
Terms of employment
Has the employee been hired on a permanent or term basis? This is something to set out in their employment agreement, as well as the start and end dates of their term, if it applies.
Probationary periods should be noted too, though this is an area where you really want to do your due diligence. You might choose a six-month probationary period, thinking you can terminate an employee within those six months and not face repercussions, but your provincial law might state that you only have 30 days before the employee is entitled to pay in lieu or advance notice of termination. This is the case in Manitoba, but regulations vary between provinces and territories. Employees may also be entitled to common law notice apart from statutory entitlements.
How much vacation and when they can take it, is important to include.
Depending on the business and position the employee holds, an employer may also consider including restrictive covenants in an employment agreement, such non-solicitation and/or non-competition clauses. When to include and the type of restrictive covenants to include in an employment agreement is nuanced and legal advice should be sought before including such clauses in an employment agreement.
What happens to company property when employment ends? Setting out the employee’s obligation to return company property is something to add to your employment agreement.
Along with an employment agreement, Celia recommends having an employee handbook that sets out your company’s policies — from dress code to a respectful workplace or harassment policy.
Many workplace safety and health websites provide templates with the mandatory provisions, though it’s beneficial to have a lawyer draft, or at least review, your company’s agreements and policies. Doing so helps ensure the policies are onside with the law and include all legally mandated policies.
Please note that the conversation in this podcast is for informational and learning purposes and does not constitute legal, financial or business advice.