5 Mistakes Employers Make when Drafting an Employment Agreement

If your company is growing, or you need to hire someone new to replace an employee who has left, you will be extending offers of employment and employment contracts to your new employees. It’s very important to make sure the employment agreement is solid and illustrates exactly what you are expecting from your employees. 

Here are 5 mistakes many employers have made when writing their employment contracts:  

It Violates the Employment Standards Act

This is actually, surprisingly, one of the largest mistake employers make in their contracts. More specifically, most employers do not address the termination clause appropriately. This will make the termination clause unenforceable, and it could mean the employee is entitled to reasonable notice of termination instead of the amount of termination notice as outlined in the contract. 

Whether a contract complies with the Employment Standards Act, is one of the first things a good employment lawyer will review in your contracts. 

There isn’t any consideration

An employment contract must have 3 things to be enforceable: offer, acceptance and consideration. Most contracts end up lacking the consideration element, especially if the employee already works for this company and they are being given a new position or new duties/responsibilities. 

In this case, consideration means something has to be bargained for, and each side has to give something up – usually money and labour. When it’s a new employee, this isn’t an issue at all. With existing employees, though, the employer often fails to provide the new consideration – like a raise in salary or new benefits – for the employee to agree to in the new contract. 

The contract has broad, restrictive covenants 

These components are often found in the form on non-compete or non-solicitation clauses. These statements have to be reasonable, or else they really are not enforceable. 

For employees, giving a non-compete clause that is too long can also increase the amount of time that is reasonable for them to give notice of termination because this clause can prevent employees from find new employment in the event of termination. It’s important to make sure these restrictive covenants are specific in terms of time, territory and scope. 

The language is too vague

An employer must communicate clearly what, exactly, the contract is for. If the employer uses language is too vague and clear language is not used, a court could find that it’s not enforceable and will rule against the employer’s interest in the event a legal case comes. 

There is a fixed term

When extending an employment contract to a new or existing employee, it’s important to make sure employers do not use any fixed term in the contract. 

If the employee is terminated before the term of the contract is done, the employer could be responsible for paying the wages of the terminated employee for the remainder of the contract.

Ending the contract before the term is over could prevent the employee from finding new employment, and so will be without wages for that time. For this reason, employers should never put a fixed term in the contract they are offering an employee – new or existing. 

Contact Minhas Lawyers today

As an employer, having good employment contracts in place should be a critical part of your operations – and having an employment lawyer on hand to make sure the contracts are enforceable and comply with existing legislation is critical. To speak to one of our employment lawyers, give us a call today.