Ways to Protect Yourself

Written Employment Contracts & Termination of the

Employment Relationship

Norm GrosmanGrosman, Grosman, & Gale LLP

Suite 400111 Richmond Street West

Toronto, ON M5H 2G4Tel: 416-364-9599

Email: ngrosman@grosman.comWeb: www.grosman.com

Introduction…

• The Supreme Court of Canada’s take on the employment relationship

• Written contracts – the art of managing expectations

• A proactive approach; saving– Time– Money– Risk– Aggravation

• Leverage – when does it exist and who has it?

Written Contracts of Employment

• Unwritten contracts• Format

– Standard form– Letter agreement– Legal agreement

• The basics– Offer and acceptance– Consideration– Certainty of terms

Entering Into an Enforceable Contract

• New employees– Key steps

• Present with offer of employment• Routine explanation• Record explanation• Independent advice• Never minimize importance• Ensure document is: signed, dated,

witnessed and receipt of copy acknowledged

• Existing employees

Entering Into an Enforceable Contract

Advantages– Certainty– Limit liability– Clarify expectations– Building in

flexibility– Fix duration of

relationship– Limitation of

promises– Post termination

obligations– Psychological vs.

legal

Disadvantages– Certainty: that

locked in feeling– Ambiguity of terms– May cause

difficulties in hiring– May become stale

over time– Cost of

administration– Enforceability

• Minimum standards

• Consideration

Employment Contract Checklist

• Position√ Title√ Responsibilities√ Changes

• Location√ Initial/transfers√ Changes

• Term√ Probation√ Avoid contradiction

with termination provisions

• Compensation√ Base salary√ Review processes√ Fringe benefits√ Automobile√ Bonus plan√ Vacation√ Expenses

• Employee covenants√ Whole time and effort√ Diligent and faithful

services√ Rules and regulations√ Outside activities

Employment Contract Checklist• Termination provisions

√ With cause√ Without cause√ Resignation√ Return of property

• Restrictive covenants√ Competition√ Solicitation

• Renewal of contract• General provisions

√ Entire agreement√ Amendments√ Governing law

• Copy of agreement received

Ten Key Contract Considerations

1. A written contract or no written contract…That is the question

• Don’t panic. Your employment is based in the legal concept of contract. Is may be oral, written or partly both.

2. The one-way street• Many written employment contracts presented by

employers look after their interests; but who’s looking after yours?

3. Looking for leverage• If you have some leverage, recognize it, understand

it, utilize it – negotiate! Don’t settle for “standard form.”

Ten Key Contract Considerations

4. The letter “U”• Undue influence, unequal bargaining power, and

unconscionability can all undermine the enforceability of a written employment contract

5. Promises, promises, promises• Many employment contracts have a clause which

confirms that the written terms are the entire agreement between the parties. If the promise to promote, increase salary, grant stock options, etc. isn’t in writing, forget about it.

6. The old switch-a-roo• You employer comes to you well after you’ve

started work and presents you with a new, written employment contract. What’s going on and what’s in it for you?

Ten Key Contract Considerations

7. Nailing down the dollars• You will want to ensure all aspects of

compensation are clearly spelled out including base salary, salary increases, fringe benefits, bonus plans, stock options, profit sharing, commissions, car allowance and expenses.

8. If it goes south• Relationships, particularly employment

ones, are rarely forever. The employment contract allows you to plan for an orderly and fair break up. Termination provisions should never be ignored or minimized

Ten Key Contract Considerations

9. The next chapter• Will you have the freedom to move to future

employment of your choice or will restrictive covenants present a road block. Beware of non-competition and non-solicitation clauses.

10.How will I know?• When a prospective or current employer

presents you with an employment contract get experienced, competent advice. Make informed and practical business decisions.

End of Employment Relationship

• Resignation• Abandonment• Frustration• Termination

– For cause• Business cause• Legal cause

– Without cause– Constructive

• Suspension

Employment Standards Act

I. Notice of termination• 1-8 weeks• Varies with service (minimum 3

months)• No change in terms

II. Severance pay• Must have 5+ years service• Annual payroll $2.5 million+• Up to 26 weeks wages for regular

non-overtime work week

Reasonable Notice Criteria

• Length of service• Age• Break in service• Lack of employment opportunities• The specialist• Inducement• Character of employment• Education• Heath• Behaviour of employer (bad faith)• References• Mitigation

Negotiating

Putting together on offer1. Cause or no cause2. Contractual provisions3. The Termination Trilogy

• Reasonable notice• Elements of compensation package• Structure of offer

4. Outplacement5. Reference6. Restrictive covenants7. Release8. Employer philosophy

Q&A?

Thank you

Norm GrosmanGrosman, Grosman, & Gale LLP

Suite 400111 Richmond Street West

Toronto, ON M5H 2G4Tel: 416-364-9599

Email: ngrosman@grosman.comWeb: www.grosman.com