A manager and an employee review an employment contract inside a BC lumber company office, with stacks of lumber visible outside, symbolizing real-world employment law issues in industrial workplaces.
28Oct

Employment Agreements: 10 Clauses BC Courts Strike Down Most Often

Employment agreements are the foundation of the employer-employee relationship. They define rights, responsibilities, and expectations, and they can significantly affect how terminations, bonuses, and disputes are resolved. But not every clause in a contract will hold up in court.

In British Columbia, courts closely examine certain employment contract terms to ensure they comply with the Employment Standards Act (ESA) and common law principles. Clauses that fail to meet these standards are often struck down, leaving employers exposed to liability and employees with stronger legal claims.

This article breaks down 10 types of clauses BC courts scrutinize most often, why they’re risky, and what both employers and employees should know before signing an employment agreement.

1. Termination Clauses

Termination clauses are the most frequently litigated provisions. Under the ESA, employees are entitled to minimum notice or pay in lieu of notice when their employment ends. If a contract tries to limit these rights or provide less, the clause is void.

For example, in Allen v. Ainsworth Lumber Co. Ltd., 2013 BCCA 271, a termination clause was struck down because it did not meet ESA requirements. Courts also interpret unclear clauses in favour of employees, meaning vague or ambiguous language often fails.

2. Probationary Periods

Employers often assume probation means “no notice required.” In BC, probation is still subject to the ESA and common law.

  • No notice or pay is required if termination occurs within the first 3 months.
  • After 3 months, ESA notice applies.
  • Even during probation, termination must be carried out in good faith and without discrimination.

In Ly v. British Columbia (Interior Health Authority), 2017 BCSC 42, the court confirmed that probationary employees are still entitled to fair treatment and honest evaluation.

3. Bonus and Incentive Pay

Bonus clauses are common sources of disputes, especially after termination. Courts ask: Would the employee have earned the bonus if not for dismissal?

In Paquette v. TeraGo Networks Inc., 2016 ONCA 618, and later in Matthews v. Ocean Nutrition Canada Ltd., 2020 SCC 26, courts held that employees may be entitled to bonuses during the reasonable notice period even if the plan says “active employment required”  unless the language is clear and unambiguous.

4. Mitigation and Set-Off Clauses

Clauses that reduce severance if an employee finds new work or require repayment of severance are often unenforceable if they attempt to contract out of ESA rights. Courts routinely strike these down as inconsistent with employment standards.

5. Overtime Provisions

Overtime is strictly regulated in BC. Employers cannot contract out of ESA overtime requirements.

Employees must be paid:

  • 1.5× their regular wage after 8 hours per day or 40 hours per week
  • 2× their regular wage after 12 hours per day
  • Any clause attempting to waive or reduce overtime rights will not be upheld.
Christopher Achkar - Employment Lawyer

As Christopher Achkar, employment lawyer and founder of Achkar Law, explains:

“Both employers and employees benefit from clear, enforceable employment agreements, yet too often, poorly drafted clauses lead to costly disputes. Before signing or relying on a contract, seek legal advice to ensure it protects your interests and complies with BC law.” 

6. Vacation Pay and Entitlements

Minimum vacation entitlements under the ESA are:

  • 2 weeks (4% vacation pay) after 1 year
  • 3 weeks (6% vacation pay) after 5 years

Contracts that offer less are invalid. Employers can provide more, but never less than the statutory minimum.

7. Confidentiality Clauses

Confidentiality clauses are generally enforceable if they are reasonable and narrowly tailored to protect legitimate business interests. However, overly broad clauses that restrict post-employment activity may be treated as unenforceable restrictive covenants.

8. Non-Compete Clauses

Non-compete clauses are rarely enforced in BC. Courts prefer non-solicitation clauses, which protect business interests without preventing an employee from working elsewhere.

In Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6, a non-compete was struck down for being vague and overly broad. Employers must prove the clause is reasonable in scope, geography, and duration.

9. Non-Solicitation Clauses

Non-solicitation clauses which prevent former employees from poaching clients or staff  are more likely to be upheld than non-competes. However, they too must be reasonable and time-limited. Overly broad or indefinite restrictions may not survive scrutiny.

10. Entire Agreement and Policy Clauses

Many contracts include “entire agreement” language stating that only the written contract applies. Courts examine whether key policies  such as harassment or safety policies  were properly incorporated. If they were not explicitly referenced and provided to the employee, they may not be enforceable.

Key Takeaways for Employees and Employers

  • Employment agreements must comply with the Employment Standards Act and common law.
  • Courts favour employees when clauses are vague, overreaching, or attempt to limit statutory rights.
  • Employers should draft clear, balanced contracts with legal support.
  • Employees should seek legal advice before signing, especially if the contract includes restrictive covenants or unclear bonus terms.
  • Yes, as long as they comply with the ESA and common law. Clauses that attempt to waive statutory rights are unenforceable.
  • The clause is void, and the employee may be entitled to common law reasonable notice, often far exceeding ESA minimums.
  • Not without your consent. Significant unilateral changes could amount to constructive dismissal.
  • Rarely. Courts usually reject them unless they are narrowly tailored and necessary to protect legitimate business interests.

How a Lawyer Can Help

An employment lawyer can:

  • Review and negotiate employment contracts before you sign.
  • Advise employees on whether clauses are enforceable.
  • Draft clear, compliant contracts that protect employers’ interests.
  • Represent you in disputes over termination, bonuses, or restrictive covenants.

In Summary

Employment contracts in BC are not “set it and forget it” documents. Courts closely examine key clauses, particularly those related to termination, probation, overtime, bonuses, and restrictive covenants.

Both employers and employees benefit from careful drafting, legal review, and a clear understanding of their rights and obligations.

Protect Yourself with Legally Sound Employment Agreements

The courts in British Columbia continue to strike down poorly drafted employment contracts, especially clauses that fail to meet ESA or common law standards. Even one unenforceable clause can expose your business to costly disputes, wrongful dismissal claims, or liability for unpaid entitlements.

At Achkar Law, we help clients across British Columbia:

  • Draft and review employment agreements that comply with the ESA and case law.
  • Update existing contracts to ensure termination, bonus, and restrictive covenants are enforceable.
  • Reduce legal risk through clear policies and tailored employment terms.
  • Defend against wrongful dismissal and contract disputes when they arise.

A few words in a contract can make all the difference between protection and exposure.

 Call toll-free: 1-800-771-7882 | Email: [email protected]

The article in this client update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Achkar Law Professional Corporation and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Achkar Law Professional Corporation. ©