The Basics of Employment Contracts

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The Basics of Employment Contracts


By Mark Swartz
Monster Contributing Writer

Here's a nasty scheme to be aware of. In North Vancouver, British Columbia, some job-seeking construction workers were stung. The targeted recruits didn't have their own tools. They were required to sign an employment contract, one that let the company deduct the cost of its tools from the employee's pay if that equipment was lost.
The company turned around and removed its tools from the worksite. Then it withheld wages from the affected labourers.
The employment contract signed by these job seekers came back to haunt them. So what should you know about this type of legal agreement, given that most people have to sign one when accepting a new job?
Employment Contract Basics
An employment contract is a legal agreement between a job seeker (or employee) and the employer. It specifies certain employment related rights - and possibly obligations. It can be written in document form. Or it can be a spoken agreement known as an oral contract. interviewed nationally recognized Employment and Labour Law specialist Howard Levitt, of leading law firm Lang Michener LLP, for more on the fundamentals of employment contracts. When does it benefit a job seeker or employee to ask for an employment contract?
Levitt: Almost never. When you are given an employment contract to sign, it will nearly always be more in the employer’s interest. This is generally true unless you are in very high demand or are at a senior level where you have negotiating power. Can you give examples of how an employment contract may not be in the employee’s favour?
Levitt: Normally an employment contract is drafted by the employer’s lawyers. They may try to place limits on some of your specific rights. This could include, for instance, minimizing severance costs if they terminate you; eliminating your “constructive dismissal” remedies if you are demoted; or prohibiting you, by way of a “non-compete” clause, from competing against them after you leave. How does a job seeker or employee know their rights if these are not set down in an actual contract?
Levitt: You actually have many employment related rights automatically. These are covered mainly by federal and provincial statutes. Among these: there is no probationary period when you begin a new job, no limit on damages you can collect if you sue your employer, and no non-compete agreement. It is the employment contract that limits your rights in such areas, if the employer designs it to do so. What do you generally advise job seekers and employees to do if they are presented with an employment contract to sign?
Levitt: Before signing, try to seek advice from an employment lawyer. An employment contract contains both stated and implied terms. The average person is unlikely to understand the implications of these. What might be a common clause included in employment contracts that sounds rather harmless but in fact is heavily weighted toward the employer?
Levitt: One such clause might state that the employee is entitled to employment standards severance. This may not seem like a big deal. However it means that if you are downsized, you will receive the lowest amount of severance pay allowed by existing government statutes - instead of what a court might grant you.
For an employee who has been lured away from a job with 20 years experience, and is subsequently terminated by the new employer after four years, this person would receive just four weeks severance pay, rather than the much larger sum of 16 months’ pay. Are there other clauses like this to watch for?
Levitt: An employer could stipulate their right to “change” your wages. This allows them to lower your pay as well as raise it. Or an employer could state that they own your intellectual property. If worded broadly enough, this could mean they own your ideas and inventions that you produce at home, even ones not at all related to your work. Sometimes a new employee is presented with an employment contract after they have already started working, or after they have worked at the same place for months (or even years). Are these new contracts valid?
Levitt: Normally the terms of the initial employment contract would prevail. Thus even if you sign this new contract, it may not be enforceable. Check with a lawyer first to be sure.
Caution Is Advised
It can be risky to sign an employment contract without first getting it looked at by a trained legal specialist. Fortunately there are many local resources across Canada where basic legal advice is offered at low cost or free. Consult your province’s Bar association for more details.
As for those North Vancouver construction workers who were defrauded in their employment contract, a complaint from one of the victims led to a police probe. WorkSafe BC also became involved after unsafe conditions were found at the site.

The Canadian Mounties deserve the final word on this one: they urge all workers “to be cautious about signing any employment contract and to carefully research any prospective employer.”