Types of Employment Contracts in Ontario

In the ever-evolving world of work, understanding the different types of employment contracts is essential for both employers and employees. Whether you’re seeking job security or flexibility, this article will walk you through the various contract types prevalent in today’s job market. Take a look at different types of employment agreements, from permanent positions to temporary and everything in between.

What is an Employment Contract in Ontario?

An employment contract is an agreement between a worker and his/her employer that outlines the terms of employment. An employment contract may be verbal or written, and there is significant flexibility in its terms. 

However, there are certain minimum requirements that the terms of an employment contract must meet. For instance, an employment contract cannot contract out of legislated standards such as those in Ontario’s Employment Standards Act (“ESA”).

What Are the Different Types of Employment Contracts? 

There are a many types of employment contracts depending on the particulars of a working relationship. The two most common types of employment contracts are indefinite-duration contracts and fixed-term contracts. 

An indefinite-duration contract refers to a relationship of continuous service with no specific end date. This type of contract contains numerous rights and obligations, including the right to reasonable notice upon termination. Note that a well-drafted employment contract can limit an employee’s entitlements to legislated minimums, and in some other ways such as by having a probationary period.

In contrast, a fixed-term contract contains an end date for the working relationship. There are some situations where an employee is subject to a series of fixed-term contracts, or where their fixed-term contract is set to automatically renew. If this is your situation, seek legal advice as you may be entitled to more than what is outlined in your fixed-term contract.

What Are Some Important Elements of an Employment Contract? 

Although employment contracts are incredibly flexible, there are common terms that most employment contracts contain. Most contracts outline an employee’s job title and duties, remuneration, geographic work locations, and responsibilities with regards to confidentiality. Depending on the industry and how robust the employment contract is, there may terms relating to non-solicitation, social media use, non-disclosure, intellectual property, termination with and without cause, and dispute resolution, among others.

There are also certain terms that are implicitly part of every employment contract. These implied terms include both rights and obligations for both parties. For example, it is an implied term of an employment contract that an employee will perform his/her duties honestly. Meanwhile, an employer has a duty of good faith and fair dealing when dismissing an employee. Other terms may be implied if they are necessary for the contract to operate. 

What if You Did Not Sign an Employment Contract in Ontario? 

If you did not sign an employment contract, the implicit terms that are a part of every employment relationship continue to apply. Further, rules that have developed through common law, or judge-made law, also apply. For example, if you are terminated without cause, you would be entitled to reasonable notice upon termination. The length of notice you are entitled to at common law depends on numerous factors but is significantly longer than legislated minimums.

Furthermore, there are certain rights that an employer may not have if they have not incorporated in into an employment contract or agreement. For instance, an employer who has not incorporated a lay-off provision may not be able to lay off an employee without risking a claim that the employee was constructively dismissed.

At times, employers will present an existing employee with a written employment contract for the first time. If you are being asked to sign an employment contract despite already working for the employer, we strongly recommend you get the contract reviewed by an employment lawyer to understand its impact on your rights and obligations.

What Rights Does an Employee Have in the Workplace?

Employee rights come from various legislation as well as from the common law. For instance, the ESA contains rules relating to minimum wage, vacation pay, various leaves, as well as termination and severance pay. Employers cannot contract out of the ESA. However, certain industries and jobs are exempt from parts of the ESA. To assist employees in determining if they may be exempt from portions of the ESA, the Government of Ontario has created a special rule tool.

Employees also have rights under human rights legislation relating to a workplace free of harassment and discrimination. Individuals cannot contract out of their human rights. Other types of rights include those related to workplace safety and privacy.

Apart from the rights that cannot be contracted away, other rights and obligations may arise from your employment contract. For instance, an employer may have a clause outlining a length of time during which an employee is on a probationary period. An employer may be able to terminate a probationary employee without providing any notice of termination.

Contact Us 

If you are an employer who needs their employment contracts drafted or revised, or an employee who has questions pertaining to your employment contract, our team of experienced workplace lawyers at Achkar Law can help.

Contact us by phone toll-free at +1 (800) 771-7882 or email us at [email protected] and we would be happy to assist.