Canadian HR Reporter

C O L U M N S 54 www.hrreporter.com T O U G H E S T H R Q U E S T I O N Have a particularly difficult or interesting question? Why not share it with us? Email: sarah.dobson@keymedia.com Have a question? WHAT MAKES A CONTRACT OF EMPLOYMENT VALID? Q What makes an employment contract valid? A It is best practice for an employer to use written employment contracts to set out the terms of the employment relationship. The contract may outline the entitlements, obligations and restrictions of both parties. Understanding the implications of a properly drafted employment contract helps employees and employers to clarify and set the parameters of their working relationship and ensure the enforceability of the contract. Any contract should ideally be in writing and signed before the commencement of employment. However, the terms in an employment contract may be implied. This means that, although not expressly written or stated by the parties, the implied term is reasonably expected by them. For instance, it is implied in every contract of employment that an employer will provide the employee with reasonable notice in the event of a termination. It is also implied that an employer may terminate the relationship without notice if there is just cause. Another example of an implied term is that employees will perform their duties with reasonable skill and diligence. These implied terms of the employment contract can be modified through clear, unambiguous, written wording that is legally sound, provided that such modifications do not breach statutorily imposed minimum standards. One common area for such modifications is termination provisions that attempt to curtail an employee's entitlement to common law notice. For such modifications to have effect, they must be drafted clearly and must not be in violation of current employment standards legislation. Some of the more common terms included in employment contracts are: • Changes to the employee's contract of employment in such areas as remuneration, duties, job title and geographic work location. Unless terms are clearly set out, changes to the essential terms could result in constructive dismissal if the employee refuses the changes. • the amount of reasonable notice to which the employee is entitled in the event that the employer terminates the employee • competition by the employee either during or after the period of employment • soliciting by the employee of the employer's staff or clients, either during or after the period of employment • discussion or disclosure by the employee of the employer's confidential information. Similar to other commercial contracts, an employment contract's validity is not determined solely by the written or oral consensus of both parties. For the contract to be valid and enforceable, it must meet some basic conditions. At the most fundamental level: • there must have been an offer and acceptance of the contract • the contract and its terms must not be unconscionable or illegal • there must be "consideration" (some benefit for each of the parties) for entering into the contract. A duly drafted and signed employment contract may be deemed invalid by a court. For example, if an employer were to change the existing employment contract so as to eliminate an existing contractual or common law right of the employee (such as benefits, vacation time or termination notice), consideration may not be present so as to constitute a valid contract, thus rendering it invalid. Even if the employee signs the contract, the terms may not be able to be legally enforced by the employer at a later date. It could be that an employer may send an employment candidate an offer letter that details only the essential terms of the hiring contract. The candidate is required to accept the abbreviated contract as such, with an expectation of subsequently signing a more fulsome employment contract. If the terms of the employment contract attempt to significantly alter the basic terms of the offer — such as changing the offer from a contract of indefinite duration to a fixed- term contract, changing previously offered termination notice to the statutory minimums or adding restrictive covenants — there may be a lack of consideration in the contract, thus rendering it invalid. CHRR Employment contracts can provide certainty to the employment relationship, but case law is littered with contracts that were declared unenforceable. Melanie Samuels of Singleton Reynolds explains the key elements of strong employment contracts Melanie Samuels partner and co-chair of the Employment and Labour Group, Singleton Reynolds in Vancouver

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