An Employment Contract is an agreement between an employer and an employee about the employment relationship. Some typical things that may be in an Employment Contract include:
Starting pay and whether it will be an hourly wage or salary
Bonus or other incentive pay
Benefits (e.g., health and dental)
Working hours and location
Job duties
Probation period
Part-time or full-time employment
Indefinite employment or fixed-term contract employment
Employer policies that must be followed
Relocations
Confidentiality obligations
Non-solicitation or non-competition obligations
Vacation
Severance and termination of employment
Executive or C-suite or other employee types.
Executives and “c-suite” jobs (like a Chief Executive Officer or Chief Financial Officer) are a category of employee. Like any other employee, they too need to have an Employment Contract. But their contracts will have some additional topics that other types of employees may not have, such as stock option or vested share compensation and minimum severance packages. If you’re hiring an executive or senior employee, we’ll help you customize your Employment Contract for the position.
Who needs it
Employers
Employees of any kind
Executives and similar senior employees
When you need one
When you offer a job to someone.
When you offer someone a job, you should have an Employment Contract ready to be signed. As soon as the person accepts the job, the employment relationship starts and so you will need the clarity and protections of a well-written Employment Contract.
Whether the person is an indefinite term or fixed term employee.
(read on to know the difference)
An “indefinite” term employee is someone hired with no set end date, which is probably what you think of as a normal kind of job situation. In legal terms, we call this indefinite term employment.
A “fixed” term employee is someone that is hired for a set period of time, like 6-months or 1 year. Sometimes this is called being a “contract” or “temporary” employee or worker.
Both types of employees – indefinite or fixed term – need an employment contract.
When the company merges with another one.
Companies sometime buy other companies and combine the two into one business. This is called a merger or acquisition (sometimes called “M&A”, for short). When the employees of the purchased company come over to the new company, they usually will be asked to sign an Employment Contract with their new employer.
Yes, our Employment Contract can be adapted to work for any employment situation – from full-time to part-time, to fixed-term or indefinite term, and executives or other types of employees. We’ll help you customize your Employment Contract how you need it.
Does this work for Executives and C-Suite Employees?
Yes, our Employment Contract can be used for executives and other senior, c-suite positions. We’ll help you customize your Employment Contract how you need it.
What's a fixed-term or temporary employee?
An “indefinite” term employee is someone hired with no set end date, which is probably what you think of as a normal kind of job situation. In legal terms, we call this indefinite term employment.
A “fixed” term employee is someone that is hired for a set period of time, like 6-months or 1 year. Sometimes this is called being a “contract” or “temporary” employee or worker.
Both types of employees – indefinite or fixed term – need an employment contract.
What's a probation period?
A probation period is when a new employee is hired on a trial basis. During this time, the employee can be let go without notice (or only minimal notice) and is being evaluated for good fit for permanent or longer term employment. The employer must act in good faith when evaluating the employee. Also, benefits (like health and dental) typically will start after the probation period, but sometimes the employer will start benefits right away.
What's the difference between an Employee and an Independent Contractor?
Employees and Independent Contractors sometimes look similar. They both do jobs for the company they are hired to work for, but there are some key differences.
Employee
Independent Contractor
Paid a wage or salary, sometimes with a bonus or other incentive pay
Paid per project, task, hourly, or by monthly retainer
Employer withholds tax payments
No taxes are withheld and the Independent Contractor may charges sales tax to the company
Gets unemployment insurance
No employment insurance benefits
Receives a T4 tax slip for employment earnings
Reports their earnings as business income
Works directly for the employer’s business
Usually may work for other businesses
Is owed severance or termination pay under employment law when dismissed without cause
Only gets a termination fee if the contract provides it
Is supervised by employer
Little day-to-day oversight of their working habits
A non-competition clause is a promise by the employee to not compete with the employer’s business.
Non-competition clauses are not always easy to enforce, especially if the employee wouldn’t easily be able to find employment or continue their career after agreeing to the clause. A non-competition clause should only be used where it really is necessary to protect the employer and it should be for the minimum necessary time and scope to protect the employer. For example, these clauses are usually time-limited (e.g., 3 months to 1 year), limited to a specific area (e.g., the city where the employee worked), and apply only to the employer’s specific type of business.
What's a non-solicitation clause?
A non-solicitation clause is a promise by the employee to not hire the employer’s other employees or contractors. It can also be a promise to not go after the employer’s customers and clients. Non-solicitation clauses are generally easier to enforce than non-competition clauses, but are still normally limited to a time period, like one or two years for example.
