Employment & Labour Law

The Importance of Employment Agreements

April 18, 2023

Person signing document representing the importance of an employment contract

At the foundation of every employment relationship is an employment agreement. Therefore, a comprehensive and fairly drafted contract can help ensure the employment relationship is well maintained and governed throughout its duration, particularly in anticipation of future conflicts or claims of wrongful dismissal or termination. As an employee, it is important to ensure that your rights are protected before signing any agreement.

Employer-employee relations are governed by the employment contract

An employment agreement or employment contract is a binding agreement between an employee and an employer that sets out the terms and conditions of the employment relationship. It outlines the expectations, obligations, rights and responsibilities of each party, including, among other things:

  • wages and other compensation;
  • responsibilities;
  • the length of the employment relationship;
  • probationary period details;
  • employer policies; and
  • termination and layoff policies.

It is critical to seek legal advice from an experienced employment lawyer before accepting the terms of the agreement and signing the contract. A knowledgeable employment lawyer will be able to provide an informed opinion on the terms and conditions of the contract, as well as any potential ramifications of signing.

What if there is no formal employment contract in place?

If an employment relationship is not governed by an employment agreement, the Alberta Employment Standards Code sets out the minimum employment standards which are legally binding on an employer. In the event of an employment dispute without a signed employment agreement, this piece of legislation may be relied on.

The Employment Standards Code only dictates the minimum employment standards, however, and often employment contracts provide terms and conditions which are beyond and better than those minimum requirements. Further, the Employment Standards Code generally does not apply to employees in federally regulated industries, self-employed workers, and independent contractors.

It is important to note that employment contracts must include the minimum entitlements guaranteed by the Employment Standards Code. If an employment contract attempts to minimize, or completely disregards, the Employment Standards Code standards, it can be found to be unenforceable.

Additional Alberta legislation that governs employment relationships

In addition to the Employment Standard Code, there are three other key pieces of legislation which may apply to certain employment situations and disputes, namely:

Are verbal agreements legally enforceable?

In some cases, an employer may have hired an employee based on terms and conditions which were verbally discussed between the two parties. While it is important to attempt to formalize these items in a written agreement, a verbal agreement is still subject to the minimum standards set out in the Employment Standard Code. Therefore, an employer is still bound by Alberta’s employment legislation.

Elements of a valid employment contract

Signing an employment contract does not automatically make it legally binding. In Alberta, an employment agreement generally must include an offer that has been made and accepted and allows both parties to receive a benefit. The employee must be allowed appropriate time to review the agreement and obtain independent legal advice. The contract must be signed by each party and must not be signed under duress or forceful pressure. Finally, the agreement’s content must be written in clear language and cannot include unconscionable or illegal terms.

It is important to note that the terms of an employment agreement may be negotiable and employees are encouraged to ask the employer questions about the agreement before signing it. Therefore, it is important to take time to ensure that you are comfortable with what you are signing.

Can employment agreements be amended?

An employment contract should reflect accurate details relating to the employment relationship. The employment agreement may be amended if a term, such as a salary or a role title, has changed.

An employment agreement also may be renegotiated between both parties. However, if an employer attempts to unilaterally and fundamentally alter the terms of the employment relationship contrary to the agreement, an employee may have a claim for constructive dismissal.

Before signing an employment contract, consult a lawyer

Having a lawyer review a contract is especially important when dealing with employment agreements, as it can help identify clauses that may have a negative impact on the employee and their rights. This can include identifying any restrictions that would prevent the employee from competing or working for another company, or any other conditions that might limit the employee’s freedom of action. Additionally, an employment lawyer can suggest and draft amendments to the contract if, for example, any verbally agreed upon terms and conditions were omitted from the written agreement.

A lawyer can also review the terms of the contract to ensure that the employee is fully compensated for their work and has adequate protection in the event of any disputes or changes to the agreement. An employment lawyer can advise on any taxation and compliance issues related to the contract.

The role of employment agreements in workplace disputes

In the event of a workplace dispute between an employee and employer, a valid employment agreement may be relied upon to help settle the dispute. Therefore, it is critical to ensure that each party has a full understanding of the meaning of each provision within the document.

If there is an issue relating to the interpretation of an agreement, legal proceedings may be commenced in order for a court to confirm the appropriate interpretation and determine whether the agreement is valid and enforceable.

Contact the Calgary employment lawyers at DBB Law for assistance drafting or reviewing employment contracts

The experienced employment lawyers at Dunphy Best Blocksom LLP in Calgary understand that an employment agreement is a crucial document governing the employment relationship. We also understand the significance of in the event of a dispute during the employment relationship. Whether you require assistance with drafting, reviewing or negotiating the terms of an employment agreement, our team can help. To speak with one of our lawyers regarding your employment contract questions, reach out to us online or call us at 403-265-7777.

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