Ways to Protect Yourself
Written Employment Contracts &
Termination of the Employment
Relationship
Norm Grosman
Grosman, Grosman, & Gale LLP
Suite 400
111 Richmond Street West
Toronto, ON M5H 2G4
Tel: 416-364-9599
Email: ngrosman@grosman.com
Web: www.grosman.com
Introduction…
• The Supreme Court of Canada’s take
on the employment relationship
• Written contracts – the art of
managing expectations
• A proactive approach; saving
–
–
–
–
Time
Money
Risk
Aggravation
• Leverage – when does it exist and who
has it?
Written Contracts of
Employment
• Unwritten contracts
• Format
– Standard form
– Letter agreement
– Legal agreement
• The basics
– Offer and acceptance
– Consideration
– Certainty of terms
Entering Into an
Enforceable Contract
• New employees
– Key steps
•
•
•
•
•
•
Present with offer of employment
Routine explanation
Record explanation
Independent advice
Never minimize importance
Ensure document is: signed, dated, witnessed
and receipt of copy acknowledged
• Existing employees
Entering Into an
Enforceable Contract
Advantages
–
–
–
–
–
Certainty
Limit liability
Clarify expectations
Building in flexibility
Fix duration of
relationship
– Limitation of promises
– Post termination
obligations
– Psychological vs. legal
Disadvantages
– Certainty: that locked
in feeling
– Ambiguity of terms
– May cause difficulties
in hiring
– May become stale
over time
– Cost of administration
– Enforceability
• Minimum standards
• Consideration
Employment Contract Checklist
• Position
√ Title
√ Responsibilities
√ Changes
• Location
√ Initial/transfers
√ Changes
• Term
√ Probation
√ Avoid contradiction
with termination
provisions
• Compensation
√
√
√
√
√
√
√
Base salary
Review processes
Fringe benefits
Automobile
Bonus plan
Vacation
Expenses
• Employee covenants
√ Whole time and effort
√ Diligent and faithful
services
√ Rules and regulations
√ Outside activities
Employment Contract Checklist
• Termination provisions
√
√
√
√
With cause
Without cause
Resignation
Return of property
• Restrictive covenants
√ Competition
√ Solicitation
• Renewal of contract
• General provisions
√ Entire agreement
√ Amendments
√ Governing law
• Copy of agreement received
Ten Key Contract
Considerations
1. A written contract or no written
contract…That is the question
•
Don’t panic. Your employment is based in the legal
concept of contract. Is may be oral, written or partly
both.
2. The one-way street
•
Many written employment contracts presented by
employers look after their interests; but who’s looking
after yours?
3. Looking for leverage
•
If you have some leverage, recognize it, understand it,
utilize it – negotiate! Don’t settle for “standard form.”
Ten Key Contract
Considerations
4. The letter “U”
•
Undue influence, unequal bargaining power, and
unconscionability can all undermine the enforceability of a
written employment contract
5. Promises, promises, promises
•
Many employment contracts have a clause which confirms
that the written terms are the entire agreement between
the parties. If the promise to promote, increase salary,
grant stock options, etc. isn’t in writing, forget about it.
6. The old switch-a-roo
•
You employer comes to you well after you’ve started work
and presents you with a new, written employment
contract. What’s going on and what’s in it for you?
Ten Key Contract
Considerations
7. Nailing down the dollars
•
You will want to ensure all aspects of compensation
are clearly spelled out including base salary, salary
increases, fringe benefits, bonus plans, stock
options, profit sharing, commissions, car allowance
and expenses.
8. If it goes south
•
Relationships, particularly employment ones, are
rarely forever. The employment contract allows
you to plan for an orderly and fair break up.
Termination provisions should never be ignored or
minimized
Ten Key Contract
Considerations
9. The next chapter
•
Will you have the freedom to move to future
employment of your choice or will restrictive
covenants present a road block. Beware of noncompetition and non-solicitation clauses.
10.How will I know?
•
When a prospective or current employer presents
you with an employment contract get experienced,
competent advice. Make informed and practical
business decisions.
End of Employment Relationship
•
•
•
•
Resignation
Abandonment
Frustration
Termination
– For cause
• Business cause
• Legal cause
– Without cause
– Constructive
• Suspension
Employment
Standards Act
I.
Notice of termination
•
•
•
1-8 weeks
Varies with service (minimum 3 months)
No change in terms
II. Severance pay
•
•
•
Must have 5+ years service
Annual payroll $2.5 million+
Up to 26 weeks wages for regular nonovertime work week
Reasonable Notice Criteria
•
•
•
•
•
•
•
•
•
•
•
•
Length of service
Age
Break in service
Lack of employment opportunities
The specialist
Inducement
Character of employment
Education
Heath
Behaviour of employer (bad faith)
References
Mitigation
Negotiating
Putting together on offer
1. Cause or no cause
2. Contractual provisions
3. The Termination Trilogy
4.
5.
6.
7.
8.
•
•
•
Reasonable notice
Elements of compensation package
Structure of offer
Outplacement
Reference
Restrictive covenants
Release
Employer philosophy
Q&A?
Thank you
Norm Grosman
Grosman, Grosman, & Gale LLP
Suite 400
111 Richmond Street West
Toronto, ON M5H 2G4
Tel: 416-364-9599
Email: ngrosman@grosman.com
Web: www.grosman.com