WHAT IS AN EMPLOYMENT AGREEMENT?

An employment agreement is a legal contract that sets out the relationship between an employer and employee and outlines the rights and obligations of each party. In Ontario, employment agreements are governed by the Employment Standards Act which imposes certain employment standards regarding work hours, overtime, breaks and lunches, minimum wage, vacation and vacation pay, termination of employment and layoffs, and severance pay. Typically, an employment agreement will contain the following provisions:

  • Identification of the parties;
  • Details of the duties of the employee;
  • Details of compensation and payment schedule;
  • Details of vacation days and benefits packages, if any;
  • Intellectual property agreements;
  • Confidentiality agreements;
  • Non-solicitation agreements;
  • Details of equipment that must be returned to the employer upon termination of employment, if any;
  • Representations and warranties;
  • Indemnification clauses;
  • Employee conduct that may give rise to the employer terminating the employment agreement; and
  • Information on how disputes are to be settled.

It is important to note that if an employer breaches any terms of the employee agreement, the employee may be able to resign from their employment on the grounds of constructive dismissal, which may make the employer liable for any severance owed to the employee, as outlined in the Employment Standards Act. For example, if an employer includes in the employment agreement that the employee will earn an annual compensation of $90,000.00, then subsequently pays the employee $75,000.00 compensation, the employee may resign for reasons of constructive dismissal. If you are an individual or entity looking to hire employees, it is recommended to consult with an experienced employment or business lawyer to draft your employment agreement to ensure it protects the rights and obligations of both parties.

Disclaimer: The information contained in this article is not to be construed as legal advice. The content is drafted and published only for the purpose of providing the public with general information regarding various real estate and business law topics. For legal advice, please contact us.

About the Author:

Shahriar Jahanshahi is the founder and principal lawyer at Jahanshahi Law Firm with a practice focus on representing business star-ups and investors in the province of Ontario. For further information about Shahriar Jahanshahi, click here.

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