[BY WARDS PC LAWYERS]
General tips and information about employment law:
WRITTEN EMPLOYMENT AGREEMENT NOT MANDATORY, BUT ESSENTIAL:
Employment agreements need not be in writing, but they should be. If they are not, the general law in Ontario will apply for termination, including implied terms at law (which can be modified by a written agreement, often to the employer’s benefit). A written employment offers clarity and certainty to both parties. Both are better served by a written agreement and it is highly recommended.
Generally, even for written employment agreements, there is an implied term at law that employment can be terminated abruptly and summarily for cause (which is a judicially-determined test and a fairly high onus on employers, requiring proper progressive discipline steps prior to termination).
Employment in Ontario is not ‘at will’, like in many jurisdictions in the United States. In Ontario, if there is no cause for termination, an employer can terminate a non-union employee’s employment only if reasonable notice of termination is provided, or compensation equivalent to that reasonable notice.
Sometimes an employer may make fundamental changes to the employment and, if so, it may give rise to a potential ‘constructive’ dismissal, which is different from ‘wrongful’ dismissal (because there is no outright termination). It is generally implied that an employer cannot unilaterally alter or change the employment relationship fundamentally, without consent by the employee.
These types of implied terms can be modified or overridden by a written employment agreement, being another reason they should be utilized, particularly from an employer’s perspective.
Employees also have implied duties for employment, such as confidentiality and loyalty generally. Employers must behave in “good faith” generally – an implied duty. Both parties have a duty to deal honestly with each other during the performance of the employment relationship. If an employer does not, it can give rise to additional claims by an employee and damages payable by the employer in certain circumstances.
MEDIATION AND ARBITRATION CLAUSES:
Typically clauses requiring mediation or arbitration in employment agreements are enforced by Ontario Courts, subject to certain conditions that existed when the employment agreement was entered. Ontario’s Arbitration Act, 1991, governs arbitrations in Ontario. Mediation is generally governed by mediation agreement signed by the parties who are mediating. Arbitration is a common out-of-Court procedure utilized for employment termination in a unionized setting. Mediation is a common tool utilized by the parties to try to voluntarily settle their termination issues as an alternative to litigating them.
ALTERING OR CHANGING EMPLOYMENT AGREEMENTS DURING EMPLOY:
Generally, employers should incorporate into a written agreement a right to make changes to a non-union employee’s duties, role, responsibilities and compensation. If they do not, any such changes could amount to a ‘constructive’ dismissal. Even if that right is reserved by the employer, if the change imposed is fundamental, the employment agreement may not offer the protection envisaged by the employer – it depends on the circumstances. Changes that are minor in nature, or at least not fundamental to the relationship, can often be made by employers without risk of being sued (or at least losing, if sued), even if a written employment agreement is not entered. Fundamental changes must generally be agreed to by the employee or, alternatively, the employer must terminate the existing employment relationship and attempt to negotiate a new employment contract, creating risk to the employer in terms of wrongful termination. It is wise for both parties to consent to fundamental changes in the employment relationship before they take effect.
Changes to a written agreement for employment, during the employ, are generally unenforceable unless “fresh consideration” is given to the employee, which can take different forms, but often is a payment of money or increase in the employee’s compensation.
Employers must be careful in using short-form letters offering employment, if they intend to have the employee subsequently sign a more fulsome employment agreement (often limiting the employee’s rights or modifying the existing law in Ontario). Generally, the employer will be held to the terms of the initial offer letter, rather than the employment agreement signed afterwards and during employ, unless “fresh consideration” is satisfactorily given to the employee.
Jason Ward – WARDS PC LAWYERS
This WARDSPC BLAWG is for general information only. It is not legal advice, or intended to be. Specific or more information may be necessary before advice could be provided for your circumstances.
More information? We're here to help - firstname.lastname@example.org www.wardlegal.ca