The basics of Canadian employment contracts

by Rachel Ravary and Brian P. Smeenk

So you’ve hired a new employee. Should you put it in writing? If so, what should it look like? What do you include? What is better left out? If you decide against an employment contract, what will the terms and conditions of employment be?

Those are some of the many questions that arise when you make an offer of employment. This week’s tips will give you practical advice on these and other questions about employment contracts for your Canadian operations.

Number 1 — Don’t assume that because you don’t have a formal agreement in writing, you don’t have an employment contract.

Every employer in Canada has an employment contract, whether written or unwritten, with each of its nonunion employees. An employment contract exists as soon as an individual agrees to provide services to an employer in exchange for remuneration of any kind. Sometimes, none or only some of the contract terms are in writing, but it’s still an agreement that can be enforced in the courts. Courts can fill any gaps in the express agreement by implying reasonable terms.

For employees represented by a union, the contract terms are contained in the collective agreement.

Number 2 — If you want to play it safe, get it in writing.

It’s up to you how much or how little of your agreement you put in writing. You can have a comprehensive, written employment contract, or you can put nothing in writing. Of course, if you take the more informal approach, you’re open to arguments about what promises were made. You may also be at the mercy of the courts that will imply what they believe the reasonable terms of employment should be. The safer course is to set out at least the key terms and conditions in writing.

Number 3 — Long or short? Simple or comprehensive? The choice is yours.

The form of your written agreement is really up to you. You can use a formal contract, or you can simply use an offer letter containing the key terms, which the employee signs and accepts in writing. Also, employment policies that are given to employees, especially those given at the time of hiring, will usually become implied terms of the employment contract.

Number 4 — An employment contract is not “until death do you part.”

You can still terminate employees even if they have a contract of employment. You must, however, give proper notice or pay in lieu of notice of termination. The courts will determine how much notice is reasonable unless your contract provides for a specific notice period. Contractual notice provisions will generally be enforced by the courts so long as they meet statutory requirements (or the Civil Code in Québec) and aren’t otherwise unconscionable.

Number 5 — Tailor the contract to your needs.

In addition to termination provisions, your contract should include any other matters that are most important to you and that will not likely be covered by the general policies you give to all employees. So you may want to include clauses dealing with:

• probationary period after hiring;
• salary and future salary increases;
• job title and scope of duties;
• possible changes in job or location;
• protection of the employer’s intellectual property; and
• post-employment obligations (confidentiality, nonsolicitation, etc.).

Number 6 — Timing is everything.

The timing of the employee’s signature on the offer of employment or employment contract is important. In order for the terms in the offer letter or employment contract to be enforceable, the employee must sign the document before he or she starts work. Even if you have to delay the employee’s start date, make sure to have him or her sign the document first.

McCarthy Tétrault has a great deal of experience in all matters relating to employment contracts in a wide variety of fields and workplaces. We can help draft an employment contract to address any situation.

Effective and streamlined bargaining preparation

By Daniel M. Pugen

It’s been a cold, wintry start to 2008 (at least in Canada). The cobwebs from New Year’s Eve have passed and New Years’ resolutions already have been broken. As February began, the groundhog indicated six more weeks of winter and Ontario employees were counting down the days until Family Day (February 18, 2008), Ontario’s new statutory holiday.

People are back from vacation and work is in full swing. Phones are ringing, faxes are churning, e-mails are popping up on computer screens. In the midst of the hum of the office as you think of the priorities for the year ahead, it occurs to you that your current collective agreement is set to expire in 2008.

Even if the expiration date is months down the road, it’s important to be prepared and ready for collective bargaining.

Collective bargaining takes up significant time, effort, and resources, and it often seems like you’re just settling one collective agreement before you’re back for the next round. As a result, it’s common that employers start too late to prepare for collective bargaining.

However, to get the best results, it’s important to be prepared as early as possible. What can you do at an early stage to prepare for bargaining? What can you do to streamline the bargaining process?

Below we have set out some tips and strategies that may help to ensure that your next round of collective bargaining goes smoothly (and in your favor), taking into account the Canadian legal regime for bargaining:

1. Do your homework. Consider:

• collecting and reviewing internal data on grievances/arbitrations;
• collecting data with respect to the bargaining unit and relevant cost issues, such as benefits costs, sick leave costs, or overtime costs;
• obtaining a legal review of the existing collective agreement and determining whether anything needs to be revised to reflect changes in legislation;
• gathering and reviewing current information on terms of settlement, including wage increase information, pay and benefit surveys, and the terms of other collective agreements in your industry; and
• reviewing the company’s short-tem and long-term business goals to ensure alignment of bargaining positions and goals.

2. Develop company goals and proposals for bargaining in advance.

3. Review with management all problems and concerns with the existing union agreement.

4. Develop a strategic plan for the bargaining process. To ensure you are ready for any steps the union may take, consider issues such as:

• whether you (not the union) should give notice to bargain;
• the timing of any required notices to government authorities;
• whether conciliation and/or mediation is mandatory prior to a strike or lockout;
• the length of time it takes to schedule conciliation or mediation with the government;
• how likely it is that a strike or lockout will occur (and therefore what contingency plans should be in place and when);
• depending on which province or federal jurisdiction you’re in, whether you can have replacement workers and what the complement of replacement workers could look like;
• whether your organization can continue operations during a strike or lockout;
• the best timing of a strike or lockout to occur; and
• what the labor board processes for dispute resolution will be.

5. Develop a communications strategy to deal with all types of communications, including:

• internally among the management team;
• during bargaining between the two negotiating committees;
• between the employer and the bargaining unit employees; and
• by the employer to third parties such as customers, clients, suppliers, and the media.

6. Prepare for the bargaining process and logistics. Where will the bargaining take place? How many people will be on the negotiating teams? How will employees on the union’s team be released from work? How will they be paid?

It’s most important to recognize that under Canadian labor laws, the required process will vary from one jurisdiction to another. There is variation in terms of notices that must be given to the government at various stages of the bargaining process and whether and when one must seek government assistance for conciliation or mediation prior to a strike or lockout.

These requirements will significantly affect the timing and pace of your bargaining process. You must therefore understand them and build them into your planning process at an early stage.

Managing absences related to injury and illness

by Daniel Pugen

An increasingly difficult task for HR professionals is managing absences related to injury and illness. How far can you go to make an employee prove he or she is legitimately ill or legitimately able to return to work without restriction? The following are some tips to help your Canadian business manage an employee’s absence from work as well as his or her return to work. (more…)

Six essential tips for running background checks in Canada

by Karen M. Sargeant

You have found the perfect employee. Your intuition tells you the candidate is exactly what you’ve been looking for. But will she really be the perfect employee? Reference and background checks are a good way to ensure that you have the right person for the job, but they’re not always straightforward.

Here are some tips to keep in mind if you decide to do a reference or background check in Canada:

1. Ensure that you are not violating human rights legislation. When conducting background checks for education, previous employment, and criminal records, you must comply with the human rights legislation in the applicable province, territory, or federal jurisdiction. (more…)

Handling work refusals

Your employees in Canada have the right to refuse tasks that may endanger them or others. Health and safety laws spell out not only your obligations but also what your employees must do when refusing work, so it’s important for you to understand how to handle such situations. Here are some tips to help you deal with work refusals: (more…)