Why overlooking key hiring details can cost employers – insights from Roper Greyell’s Drew Demerse
This article was created in partnership with Roper Greyell LLP.
Many business owners view employment agreements as just another administrative hurdle—something to check off a hiring checklist. But treating these contracts as routine paperwork is a costly mistake.
A well-structured employment agreement does far more than document the basics—it establishes clear rights and responsibilities, defines expectations, and provides crucial legal safeguards for both employers and employees. Despite these advantages, many companies—especially startups and smaller businesses—overlook the importance of comprehensive agreements.
Drew Demerse has seen this play out many times in his career. A seasoned labour and employment lawyer, he started prasticing in 2006 and joined Roper Greyell LLP in 2008, drawn by the opportunity to work alongside a team of top-tier professionals handling some of Canada’s most complex employment law cases.
“Being at one of the preeminent labour and employment law firms in Canada means we get to work on the most interesting cases,” he says. “And one issue that comes up over and over is employers making preventable mistakes in their employment contracts.”
Contractual missteps are particularly dangerous when a business needs to part ways with an employee and Demerse, a partner at Roper Greyell, finds he’s “seen too many businesses call us when it’s already too late.
“They assume they’re protected, only to find out their contract is unenforceable—or worse, that they don’t actually have one.”
But employers need not fret: the most common pitfalls tend to follow a pattern, Demerse notes, and they are almost always preventable with the right approach.
A company finds the perfect hire, makes an offer, and assumes the employment contract can be finalized later. But if the employee starts working before signing the agreement, the employer may be in for a rude awakening.
“The problem is that a contract entered into after the start of employment may not be enforceable,” Demerse explains. “An employment contract, like any other contract, requires an offer, acceptance, and consideration. If the employee has already started work, there’s no fresh consideration, and critical terms—like termination clauses—could be invalid.”
Employers often don’t realize this until they need to terminate the employee and assume they are protected. But if the contract was signed after the employee started working, or worse, if there was no contract at all, the employer may suddenly find themselves liable for significant severance costs. What they thought was a clear agreement governing the employment relationship is, in reality, little more than a formality with no legal weight.
Even when a formal contract is drafted in advance, the way an offer is initially communicated can create unexpected complications. Employers frequently send enthusiastic emails confirming a candidate’s hiring details, listing the salary, benefits, and start date with the assumption that these are just preliminary details. But in some cases, those emails have been ruled as binding agreements—whether or not a more detailed contract follows.
A recent case in British Columbia illustrated this risk. An employer sent an email outlining the terms of a job offer, which the employee accepted in writing. Later, the company provided a formal contract that included additional provisions such as restrictive covenants and a termination clause. The employee signed the second contract, but when a dispute arose, the court determined that the initial email already constituted a legally binding agreement. Because the employer had not provided anything new in exchange for the additional terms, the formal contract was deemed unenforceable.
This is a mistake Demerse sees often, and he advises employers ensure the job offer explicitly states that employment is conditional on signing the formal agreement.
Some employers assume that as long as a contract includes a termination clause, they are protected. But in recent years, courts—particularly in Ontario—have made termination clauses harder to enforce. A string of legal decisions has upended how many Ontario employers approach termination clauses, casting doubt on their enforceability and forcing companies to rethink how they structure employment agreements.
Demerse highlights, “For example, in Ontario, an employer is required to continue benefits during the statutory notice period, whereas in British Columbia, they are not. If a termination clause doesn’t account for these nuances, it could be struck down, leaving the employer responsible for paying significantly more in severance.”
The increasing complexity of termination clauses has made it difficult for businesses to rely on a single contract template across multiple jurisdictions. While some companies attempt to draft a one-size-fits-all employment contract that can be used nationwide, Demerse has seen more businesses moving toward province-specific agreements to ensure compliance.
“We’re telling clients all the time that the law in Ontario has departed from the law in other parts of the country,” Demerse explains. “Employers need to tailor employment contracts to specific jurisdictions, or risk finding out the hard way that a clause they thought would protect them doesn’t actually hold up in court.”
Another major pitfall comes when businesses fail to anticipate how contracts will apply beyond an employee’s initial hire. When an employee is let go, employers often assume future bonuses will not be owed. But unless the contract or a bonus policy explicitly states otherwise, courts sometimes rule that employees are entitled to a pro-rated bonus for both time worked and the notice period following termination — what can amount to significant payouts they hadn’t planned for.
Similarly, contracts that are not designed to evolve with an employee’s career can create unintended legal gaps. If an employee is promoted within the company without signing a new agreement and their role and compensation have changed significantly the original contract may no longer be valid.
Demerse advises clients to think long-term when drafting contracts. If an employee is likely to advance within the company, the agreement should be structured in a way that remains valid as their role evolves. Otherwise, businesses may find themselves having to renegotiate contracts at every step, potentially losing legal protections along the way.
The best approach is to be proactive—ensuring that contracts are properly drafted, signed before employment begins, and regularly reviewed to align with current legal standards.
“The best time to fix an issue is before it becomes a problem,” says Demerse. “An ounce of prevention is worth a pound of cure—and in employment law, that prevention can save businesses from massive financial and legal headaches later on.”