Anything goes in employment contracts – Beware of dangerous terms
Date: March 11th, 2012
Author: Daniel Lublin
When it comes to employment contracts, all is fair in love and war, as pretty much anything can be incorporated into the agreement. Employees should, therefore, beware of the following terms:
Probationary periods: agreeing to a probationary period allows an employer to dismiss for reasons that are otherwise insufficient, as long as a proper audition is given. It needs only to show that, in its opinion, the employee was unsuitable for the position. If these considerations are fairly assessed, the employer can end the relationship with impunity by providing only minimum notice or pay.
Post employment restrictions: an employee’s only duty when leaving a job is to keep confidential information or trade secrets confidential – unless other specific post-employment duties or restrictions are written into the contract. If the contract is properly drafted, employers can prevent employees from soliciting clients, working for a competitor or even working in their industry following their departure.
Notice of termination: employees are entitled to be treated fairly upon termination, meaning they must generally receive a fair warning or severance. However, employers can contract out of these requirements, in which case employees will receive less far less than what’s considered fair.
Contractual changes: can the contract be modified or changed? Once the job begins, significant changes that negatively affect an employee are prohibited, without a sufficient warning or that employee’s consent. Courts will, however, look to the contract, and if a clause clearly provided for that change, the employee had basically already agreed to it and is left without a remedy.
Independent contractor agreements: is the contract even an employment contract? Often people believe they are being hired as employees but the contract they signed says otherwise. Independent contractors are not entitled to the protections of employment standards legislation and have very limited protections compared to employees.
Pre-employment promises: unless a contract requires it, employers have no obligation to raise salaries, pay bonuses, provide profit sharing or stock options, or increase vacation time. They must only comply, in good faith, with the bargain that was made. If there is something worth negotiating for, get it in writing before signing the deal.