What is an Employment Contract in Canada?
An employment contract is a legally binding agreement that establishes the terms of the relationship between an employer and an employee. In Canada, these contracts are governed by a combination of statutory minimums (Employment Standards) and Common Law (judge-made precedents). While most workers fall under provincial laws, those in specific industries like banking or telecommunications are governed by the Canada Labour Code. Every valid contract must provide at least the minimum protections required by law; any clause that falls below these standards is legally unenforceable.
CHOOSE YOUR PROVINCE
Common Law vs. Statutory Minimums
This is the most misunderstood part of Canadian employment law.
- Statutory Minimums: Every province has an Employment Standards Act (or Code) that sets the absolute “floor” for rights like minimum wage and basic notice.
- Common Law: In every province except Quebec, “Common Law” is a body of law built by court decisions. It often grants employees significantly more severance — sometimes up to 24 months — than the statutory minimums.
- The Contract Trigger: A primary purpose of an employment contract is for an employer to try and “limit” your rights to the statutory minimums, effectively removing your right to higher Common Law compensation.
Essential Clauses in a Canadian Employment Agreement
Regardless of where you work in Canada, your contract should clearly define:
- Termination Clause: Specifies how much notice or pay you receive if let go.
- Restrictive Covenants: Includes non-compete and non-solicitation rules (these are highly technical and often unenforceable in 2026).
- Probationary Period: A limited time (usually 3 months) where you can be let go without notice.
- Consideration: A legal requirement that you must receive something of value (like a job offer or a bonus) in exchange for signing the contract.
Why You Should Never Sign Without a Review
Employment contracts are written by company lawyers to protect the company, not you. A single poorly worded sentence in your termination clause could cost you tens of thousands of dollars in future severance.
Our employment lawyers at Samfiru Tumarkin LLP has reviewed thousands of contracts across Canada. We ensure your agreement is fair, legal, and preserves your right to full compensation under Common Law.