Employment Contracts in Ontario

What is an employment contract in Ontario?

An employment contract (or agreement) is a legally binding document that outlines the terms and conditions of an Ontario employee’s job, including responsibilities, compensation, and benefits. It’s a legal agreement between you and your employer that ensures both parties understand their rights and obligations.

Watch the video below from the Employment Law Show and read on to learn more about employment contracts and your rights in Ontario.

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What does an employment contract cover?

In Ontario, an employment contract typically includes details about an employee’s role, responsibilities, pay, working hours, vacation benefits, and workplace policies, among other things.

It can also cover concepts like:

• The amount of severance pay someone is entitled to when they lose their job
• The company’s ability to put someone on a temporary layoff
• Whether or not the business can make other substantial changes to an employee’s job, pay or hours of work.

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Clauses in an employment contract

The following are clauses that an employer may include in an employment contract for an employee working in Ontario, Canada:

• Termination clause

• Non-solicit clause

• Non-compete clause

• Probation clause

• Layoff clause

• Confidentiality clause

• Privacy clause

• Location clause

• Resignation notice clause

• Obsolescence clause

• Entire agreement clause

• Independent legal advice clause

• Ability to work clause

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Do I need to have a written employment contract?

You do not need a written employment contract in order to work for an employer in Ontario.

While a formal written agreement can clearly spell out the relationship between an employee and employer, It is not required by law. The working relationship can be defined by an implied employment contract or verbal agreement. These kinds of agreements are often much harder to prove and enforce.

Even without a written employment contract, rights for employees working in Ontario are still protected in various ways by:

• The Ontario Employment Standards Act (for provincially regulated employees)
• The Canada Labour Code (federally regulated workers)
• Ontario’s Human Rights Code (provincially regulated workers)
• The Canadian Human Rights Act (federally regulated employees)
• Common law (Ontario courts)

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What happens if I don’t have an employment contract?

If you don’t have a signed employment contract, don’t panic! Your basic workplace rights in Ontario are still protected by government legislation and the province’s courts. It is legal to work in Ontario without an employment contract.

However, you might find that in some cases it is more advantageous to work for a company without a signed employment contract. When there’s no comprehensive agreement in place, your employer’s ability to change specific aspects of your job in Ontario, such as your compensation, working hours, job responsibilities, and even your work location, becomes limited. Additionally, should you experience job loss, you could be entitled to a larger severance package in Ontario compared to what you might receive if you had signed a contract containing a termination clause.

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Can I refuse to sign a contract when I start a new job?

You can refuse to sign an employment contract before starting a new job in Ontario. However, it’s important to note that this choice could influence the company’s decision on whether to proceed with your hiring.

If you don’t want to accept a contract because it contains wording or clauses that you feel may hurt your rights, seek legal guidance before accepting it. The employment lawyers at Samfiru Tumarkin LLP can review your employment agreement. With extensive experience in analyzing thousands of contracts, our firm identifies areas of concern and can help shape terms that align with your needs.

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Can I have an employment lawyer review my contract?

You can – and should – have an Ontario employment lawyer at Samfiru Tumarkin LLP review your employment contract before you sign and return it to your employer.

An employee has the right to fully understand the contents of the agreement, how it will impact their employment, and to negotiate changes to the written document with their employer.

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Why are employment contracts good?

An employment contract is useful to establish some of the fundamental aspects of someone’s relationship with a company. It can provide a basis for things like salary, vacation time, length of service, job title and duties, and hours of work.

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Why are employment contracts bad for employees?

An employment contract or agreement can restrict, reduce or eliminate an Ontario employee’s rights in certain areas. The document may allow a company to make negative changes to an employee’s job, without their permission. If an individual doesn’t properly negotiate the terms of their agreement, it can give their employer more control over various aspects of the employer-employee relationship.

For example, an employment contract may contain a termination clause that cuts the amount of severance pay you get when you are fired down to the bare minimum amount. In some cases, this can reduce a potential severance package by tens of thousands of dollars.

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Are employment contracts enforceable in Ontario?

Employment contracts are generally legally binding in Ontario and serve as formal agreements outlining the terms and conditions of the working relationship between an employer and an employee. Both parties are expected to uphold the terms stipulated within the contract.

However, it’s important to note that not all employment contracts in the province are enforceable. Several reasons can lead to an employment agreement being considered unenforceable:

• Poorly drafted clauses: If the contract or specific clauses within it are poorly written or structured, they might not hold up in legal proceedings.
• Legislative or legal changes: Changes to provincial or federal employment legislation, as well as court decisions, can render certain contract clauses irrelevant or unenforceable. For example, non-compete clauses have been banned by Ontario government legislation.
• Basic employment rights: Contracts that violate fundamental employment rights established by government legislation or court decisions may be deemed unenforceable.
• Review and signing: Employees should review and sign the employment contract before starting the job. Failure to do so might raise questions about the enforceability of the contract.
• Timing of contract signing: If an employee is asked to sign the employment contract after their start date, its enforceability could be brought into question.
• Revised contract: When an employer asks a current employee to sign an updated employment contract, there should be a valid exchange for the employee. This could be in the form of additional benefits, increased pay, or bonus compensation.

Understanding the components that impact the enforceability of an employment contract is essential for both employers and employees. You should always talk to an employment lawyer at Samfiru Tumarkin LLP if you are uncertain about the legitimacy of your contract.

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Can an employer make a current employee sign a new employment contract?

You cannot be forced to sign a new contract against your will. Both you and your employer need to agree to the terms willingly. Your rights as an employee in Ontario are important, and they extend to situations where your current employer asks you to sign a new employment contract. It’s crucial to understand that while your employer can request this, you also have certain protections:

• Value in exchange: If your employer wants you to sign a new contract that significantly changes your existing terms, they must offer something valuable in return. This is known as ‘consideration’ and could be an increase in pay, a bonus, added benefits, a promotion, or other advantages for you.
• Preserving your rights: A new contract can’t undermine the rights you’ve already acquired under your current contract. Your employer can’t unilaterally make changes that negatively impact you without your agreement.
• Time for review: You must be given adequate time to review the new contract and its implications. Don’t feel rushed or pressured. It’s your right to fully understand the terms you’re agreeing to.
• Termination conditions: If the new contract contains termination clauses, they must align with Ontario’s employment standards and laws. Clauses that unfairly reduce the amount of severance pay you receive in Ontario when you lose your job could be contested.

Your employer should approach you transparently when introducing a new contract. You have the right to ask questions, seek legal advice, and voice concerns before making any decisions. Remember that your rights matter, and seeking guidance from an employment lawyer at Samfiru Tumarkin LLP ensures you’re fully aware of your options and protected under the law.

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Ontario employment contract lawyers

Whether you’re facing an employment contract before a new job, a revised contract from your current employer, or job loss in Ontario, consult the employment contract lawyers at Samfiru Tumarkin LLP. Our experienced team of employment lawyers specializes in non-unionized employee agreements. We review contracts, assess severance offers, and ensure you receive the compensation you deserve.

Comprehensive services for Ontario employees

Our employment lawyers have successfully represented thousands of non-unionized individuals in various regions across Ontario, Alberta, and B.C.

In addition to employment contract negotiations, we can assist you on a broad range of employment matters throughout the province, including:

For a comprehensive overview of employment, disability, and personal injury law, explore our Law Essentials page.

If you are a non-unionized employee who needs help with a workplace issue, contact us or call 1-855-821-5900 to get the advice you need and the compensation you deserve.