Employment Contract in Ontario
Employment Contract Lawyer
In the modern-day competitive labor market, an employment contract is not merely a document—it’s a binding contract that defines your work relationship from the very beginning. For workers, it states their rights, obligations, and remuneration. For employers, it is a risk management tool, a means of ensuring compliance with Ontario’s employment legislation, and a mechanism for safeguarding business interests like confidential information and client relationships.
Whether you’re starting a new job or hiring new staff, understanding the structure, enforceability, and legal implications of employment contracts is crucial. A single poorly worded clause—especially concerning termination, severance, or non-compete restrictions—can lead to costly litigation or regulatory penalties.
In the current job market, knowing the issues involved in employment contracts becomes crucial for employers and employees alike for the protection of their respective rights and liabilities. If you require help in designing specific solutions to fair, binding employment agreements, Pacific Legal Professional Corporation has dedicated employment contract lawyers working for you. We work on drafting, reviewing, and negotiating your concerns with a commitment to protect your best interests according to Ontario employment law.
In this guide, our Toronto employment lawyers break down the essential components of employment agreements, relevant case law, and why it’s critical to have an employment contract reviewed by a lawyer before signing.
What is an Employment Contract?
An employment contract is a written agreement that sets out the terms and conditions of employment between an employer and an employee. It typically covers everything from job duties and compensation to termination and post-employment obligations. While oral contracts may also be enforceable in limited circumstances, written contracts provide clarity and are much easier to enforce in court.
In Ontario, employment contracts must comply with the Employment Standards Act, 2000 (ESA), as well as other applicable workplace laws such as the Human Rights Code and the Occupational Health and Safety Act. Where a contract provides for lesser rights than those under the ESA, those provisions are considered void and unenforceable.
Key Components of an Employment Contract
An employment contract is the basis of an employment relationship. This lays out roles, responsibilities, and rights and thus minimizes the emergence of possible disputes. Such core provisions include the following:- Job Description and Responsibilities This provision provides an explicit and comprehensive description of the employee's roles and responsibilities to avoid any form of miscommunication and mismatched expectations.
- Compensation and Benefits This covers the monetary and non-monetary rewards, including the base salary, bonuses, commissions, health insurance, and retirement benefits.
- Working Hours Includes normal working hours, work-from-home policies, and overtime conditions. According to the ESA, employees must receive overtime compensation for more than 44 hours of work in a week unless exempted.
- Probationary Period
- Termination Clauses
- Restrictive Covenants These consist of:
- Non-Compete Clauses – Typically unenforceable unless narrowly defined and only apply to senior executives because of Ontario's Working for Workers Act, 2021.
- Non-Solicitation Clauses – More enforceable when reasonable in duration and scope.
- Confidentiality Clauses – Prevent disclosure of proprietary or sensitive information during and after employment.
- Layoff and Constructive Dismissal
- Ownership of Intellectual Property
- Dispute Resolution
- Ontario Employment Standards Compliance The employment contracts must also be in compliance with the provisions under the Employment Standards Act, 2000 (ESA), including minimum wage, overtime pay, and statutory leaves.
Most employers include a probationary period between 3-6 months to assess performance. Even during this time, though, employees have the right to ESA minimum notice (or pay in lieu).
Case law:
In Nagribianko v. Select Wine Merchants Ltd., 2017 ONCA 540, the Court of Appeal in Ontario affirmed termination of a probationary employee without common law notice, since the contract clearly provided for the period of probation and was ESA compliant.
Termination clauses should meet or exceed ESA requirements in order to be enforceable. A clause contravening ESA—even partially—may invalidate the entire termination provision, leaving the employer open to common law notice, which may entitle the employee to far greater compensation.
Case law
In Waksdale v. Swegon North America Inc., 2020 ONCA 391, the Court held that an invalid "for cause" clause made the entire termination clause unenforceable. This case was a major shift in employment contract interpretation in Ontario.
.Case law:
Ontario courts are not eager to enforce non-compete clauses. In Elsley v. J.G. Collins Insurance Agencies, [1978] 2 SCR 916, the Supreme Court held that such clauses had to be reasonable and safeguard legitimate business interests.
A temporary layoff not expressly stipulated for in the contract of employment may amount to constructive dismissal at common law.
Case law:
In Gent v. Strone Inc., 2019 ONSC 155, the Court held that the employer's temporary layoff, lacking express contractual or statutory authorization, constituted constructive dismissal, warranting damages for the employee.
Critical in creative and technology sectors, these clauses protect the employer's rights to inventions, designs, or products of work that are made in the course of employment.
Some contracts feature arbitration or mediation clauses to settle disputes without legal recourse. These must also conform to employee rights under ESA and must not pre-empt statutory protection.
Why You Should Have an Employment Lawyer Review Your Contract
Even experienced professionals sometimes miss clauses that significantly restrict their rights. Having your contract checked by an employment lawyer before you sign can assist:
- Make illegal or unenforceable clauses stand out
- Verify ESA and human rights compliance
- Guard your severance and benefits
- Negotiate improved terms
- Evade restrictive covenants that restrict future work
Ontario Employment Law Landscape
Ontario's employment law system is a mix of statute and common law. While the ESA sets out the minimum standards, common law often provides greater protection, especially in areas like termination notice and severance.Key legal frameworks include:
- Employment Standards Act, 2000 (ESA)
- Ontario Human Rights Code
- Occupational Health and Safety Act
- Common Law (court decisions)
Our Employment Contract Lawyer Services
Pacific Legal offers a comprehensive range of legal services, which are beneficial to both employers and employees. Our services are tailored to cater to the needs of business houses that seek protection of their business interests as well as individuals who seek fair treatment.Services for Employers
We assist in drafting clear and enforceable employment agreements that safeguard your business interests while adhering to Ontario's employment laws. 1. Employment Contract Drafting
We draft tailor-made contracts according to your business needs but ensuring your interests are protected.2. Negotiation Support
Our lawyers provide strategic advice and representation during contract negotiations to secure terms that align with your goals and legal entitlements.3. Addressing Restrictive Covenants
We evaluate the enforceability of non-compete and non-solicitation clauses, ensuring they are reasonable and comply with current legislation, including the Working for Workers Act, 2021.4. Review and Update of Contracts
Keeping your contracts updated with the latest legal and business landscape. Policy Integration: Integrate company policies into agreements to make them clear and enforceable.5. Dispute Resolution
Representation and advocacy in resolving a dispute6. Termination Guidance
Assisting the employer to navigate lawful and strategically appropriate termination processes to minimize the prospect of litigation.7. Ongoing Legal Support:
Beyond contract review, we offer continuous legal counsel on employment-related matters, helping you navigate workplace challenges and maintain compliance with evolving employment laws.Services for Employees
We meticulously examine your employment contract to identify any clauses that may limit your rights or fail to comply with the Employment Standards Act, 2000 (ESA). Our goal is to ensure that you fully understand the terms and are protected against potential pitfalls.
1. Evaluation of Contracts
We review employment contracts for equity and compliance with employment law.2. Negotiation Support
The support team will negotiate better compensation terms, benefit terms, and working conditions.3. Legal Consultation
A person will be better enabled to make decisions when given clear and precise information regarding their rights and obligations.4. Representation in Infringement or Favoritism
We advocate for our clients and strive for favorable outcomes in cases involving breaches or inequitable treatment in employment agreements.Specialized Services
We are dedicated employment agreement lawyers in this practice area. Here are the specialized services:- Review of Comprehensive Contracts: Analyze the contracts to verify against transparency and legal enforceability.
- Negotiation Support: Bargaining on the most excellent terms with contract negotiates.
- Document Preparation: Production of understandable, detailed, and enforceable agreements.
- Resolve Disputes: Offering solutions for employment disputes that occur through mediation, arbitration, and litigation.
Why Pacific Legal?
- Experienced Service Providers: Pacific Legal is here to work with years of experience in handling employment scenarios in Ontario.
- Customer's Needs: Our goals and solutions serve your goals and priorities.
- Clear and Detailed: This is because every clause or term shall be understandable as well as legal and enforceable.
- Comprehensive Support: Drafting contracts to dispute resolution, we address all your employment law needs.
- Commitment to Excellence: We strive to deliver the best possible results in the most ethical and lawful manner.
With Pacific Legal, you get a firm dedicated to offering plain, effective legal guidance geared to your individual circumstances. We work proactively to avoid conflicts and encourage good, honest employer-employee relations.
Contact Pacific Legal
Whether your employer needs to prepare an entire agreement or you have taken a look at an offer, a trusted ally is Pacific Legal Professional Corporation. Our employment contract lawyers in Toronto are here to help you navigate this very complex legal system and ensure that you are properly represented. Let us protect your rights and secure your future by contacting us todayOur Packages
Standard Employment Contract Package
If you need a quick, easy, and cost-effective contract.
- Templated and Standard Form Employment Contract prepared by our Employment Lawyers
- Professionally drafted and backed by experienced employment lawyers
- No legal advice time included
Basic Contract Review Package
Great if you already have a contract and want it reviewed quickly.
- Review of Employment Contract provided by you
- Contract maximum of 5–7 pages
- Legal advice provided in the form of a written legal memo
- Implementation of changes and revisions based on our Employment Lawyers’ advice
- No oral legal advice included
Intermediate Employment Contract Review Package
If you need a more extensive review of an existing contract.
- Review of Employment Contract provided by you
- Contract maximum of 7–10 pages
- Legal advice provided in the form of a written legal memo
- Up to 30 minutes of oral legal advice time included
- Implementation of changes and revisions based on our Employment Lawyers’ advice
DEALS & SUITS
Pacific Legal successfully negotiated master lease agreements for two major Manhattan hotels, securing a $14.3 million lease for a midtown property and an $11 million lease for a downtown hotel.
Pacific Legal assisted with the acquisition of a $40 million Ottawa apartment complex with 90 units in four buildings. This complex transaction involved many stakeholders (investors and lenders) and required
Pacific Legal played a key role in negotiating and closing a major cross-border acquisition where the acquirer was a U.S.-based entity and the target company was a technology company based in Canada.
Pacific Legal successfully resolved a challenging matter involving a reversal of funds issue for clients from Canada. Negotiations with a global multi-billion dollar payments service provider were dealt with over
FAQ
Although not mandatory, a written employment contract is strongly advised for both employees and employers. It makes the terms and conditions of employment very clear, avoiding potential misunderstandings and conflict. When there is no written contract, default provisions of the Employment Standards Act, 2000 (ESA) and common law are used, which could be different from the actual intention of either party.
No, employment contracts cannot offer terms less favorable than the minimum standards set by the ESA. Any clause that attempts to contract out of the ESA is considered void and unenforceable. For example, a termination clause providing less notice than the ESA minimums would not be upheld in court.
An employment contract should be signed before the employee commences work. If presented after employment has begun, additional consideration (e.g., a signing bonus) is necessary to make the contract enforceable. Failing to sign the contract before starting work can render certain provisions, like termination clauses, unenforceable.
A probationary period is a trial phase at the beginning of employment, typically lasting 3 to 6 months, during which an employer assesses an employee’s suitability for the role. During this period, termination can occur with minimal notice, provided it meets ESA minimums. However, the probationary period must be clearly stated in the employment contract to be enforceable.
Any significant changes to the terms of employment (e.g., salary reduction, demotion) require the employee’s consent. Unilateral changes without consent may constitute constructive dismissal, entitling the employee to severance or damages. It’s advisable to consult an employment lawyer if faced with such changes.
Ensure the termination clause complies with ESA minimums and does not attempt to limit your entitlements unlawfully. Clauses that provide less than ESA standards or are ambiguous may be deemed unenforceable, potentially entitling you to common law notice, which is often more generous.
Pacific Legal offers comprehensive services for both employees and employers, including:
- Contract Review and Drafting: Ensuring terms are clear, fair, and compliant with Ontario employment laws.
- Negotiation Support: Assisting in negotiating favorable terms before signing.
- Legal Advice: Providing guidance on rights and obligations under the contract and ESA.
