How to draft a 'watertight' employment contract

Not all employers understand the illegitimacy of oral contracts…

How to draft a 'watertight' employment contract

Contracts, contracts, contracts. You could say they’re the very bane of HR’s life – ensuring they’re compliant, up-to-date, and watertight can seem like an almost impossible feat. And yet, employment contracts are probably one of the most important areas for HR leaders. Afterall, make one mistake and you could wind up on the receiving end of a hefty lawsuit.

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“It’s important for employers, especially those operating a nation-wide business, to remember that employment laws vary across provinces,” added Patrick Stepanian, legal manager at Peninsula Canada. “It’s the employer’s responsibility to stay up to date on the terms and provisions of any provinces they operate in. Additionally, for any job contracts to be considered valid, they must follow the minimum terms and entitlements set by the employment standard legislation in the province. Employers are free to offer more benefits to employers, but they cannot offer less than the minimum entitlements.”

Written verses oral contracts

Not all employers understand the illegitimacy of oral contracts. While leaders may opt to outline the requirements of a role orally, it’s essential that you write down, date and sign any official documents. The benefits of a written employment contract are, as Stepanian advised, are three fold;

  1. Outline responsibilities

Employment contracts should provide important job details such as duties, benefits, salary, etc. Having this in writing helps to clearly outline the role of the employee. Having all this in writing sets expectations and clearly outlines the role of the employee, making them aware of all their responsibilities in the workplace.  

  1. Resolve disagreements

Written contract that clearly defines the terms of employment and rules of the workplace can serve as a reference guide in case of any disagreements. Employment contracts often include dispute resolution procedures that help avert long legal battles, along with the time and high costs associated with them. 

  1. Avoid litigation

A well-written contract significantly reduces the risk of legal claims for the employer and protects the rights of the employee by ensuring they receive the minimum entitlements stated in the provincial employment standards.  

Correcting contractual mistakes

To err is human, as they say – and human error cannot always be avoided. While it’s essential that HR leaders take time and care when composing official documents, if a mistake slips through it’s important to act quickly and decisively.

“It really depends on what the mistake is, the overall significance of it, and when the error was discovered,” explained Maria Gergin, senior associate at Borden Ladner Gervais, told HRD. “For instance, if a contract states an employee would receive five weeks of annual leave but in reality they should only be getting four, you should assess what the insinuation was when they agreed to take the job.

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“I would advise that the employer sit down with the worker as soon as possible and explain the mistake in order that both parties can commit it to writing.”

HR’s checklist for a watertight contract

If in doubt, always seek legal advice before composing an employee contract. It’s better t be safe than sorry where the law is concerned. However, Peninsula also provided a simple guide for any employers that’re still unsure about the process;

1.            Provide the employee with enough time to review the contract 

2.            Have the contract signed prior to the first day of work 

3.            Always use clear, detailed language 

4.            Attach relevant documents to the employment contract 

5.            Employers should update their employment contracts and policies in compliance with changing legislation and legal requirements. 

“Well written employment contracts do a lot of the heavy lifting when it comes to protecting your business,” added Stepanian. “The above points just scratch the surface. Reaching out and speaking with an expert is highly recommended to ensure your business is secure and any new workers you bring on are set up for success.”

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