Beware of employment contracts
Date: July 24th, 2011
Author: Daniel Lublin
Most contain employer-friendly terms
It’s possibly the worst fraud in workplace law – corporations, with expensive lawyers and deeper pockets, insisting that employees sign one-sided contracts that reduce their legal rights. And employees, without bargaining power or an understanding of the law, not realizing their interests have been undermined. This is the tale of one nameless client who may learn this lesson the hard way.
In a file I have, the employee worked for her company for nearly 20 years. Some time ago she was told that she would have to sign a contract simply to “confirm her employment,” which is unnecessary, of course, but was said to her in an effort to encourage her to just sign it. Fearful of antagonizing her employer and concerned that she could lose her job, the employee signed her name and continued work as before. Many years later, she was fired as part of a restructuring and offered a severance package well below the minimum for someone of her age and tenure.
It was a simple win – or so I thought when I first reviewed her case. But (and there is always a but in workplace law) the contract she signed specifically limits her damages to only one week’s pay, which is just the minimum and well below what is fair. Although the conclusion to this case will be based on other factors that are involved, there is one certainty: without the contract, her case would be stronger.
What most employees do not understand is that they do not need a written employment contract in order to protect their rights. This is because the law implies a number of favourable terms designed to defend them, such as the requirement not to change the terms of their job, from which constructive dismissal arises; the prohibition against dismissal without fair notice, which is otherwise a wrongful dismissal; and the ability to work for competitors and solicit clients following departure. However, modern employment contracts are replete with employer-friendly terms, and most employees believe they have little or no choice but to sign them.
What should employees do? First, review any new contract with a lawyer and don’t be reluctant to negotiate terms. Seldom are employment offers withdrawn if a contract is not agreed to. Second, challenge the enforceability of these contracts where the facts present that argument. I have won in court by raising the inference that a contract was signed without proper consent – such findings are not exceptions.