An Enforceable Employee Contract Explained

Key Elements of an Enforceable Employment Contract

To be enforceable under Ontario law, an employment contract must include:

• Offer and acceptance: A clear offer of employment must be made by the employer and accepted by the employee before starting work.
• Consideration: There must be an exchange of value, typically, the job itself, in return for services. For existing employees, any new or updated agreement must offer something additional, like a raise or signing bonus.
• Intention to create legal relations: Both parties must agree to enter into a legally binding relationship, with a shared understanding of the terms.
• Compliance with Ontario laws: The contract must align with minimum employment standards set out in the Employment Standards Act, 2000 (ESA) and other relevant legislation.

Why Timing Matters

• Before the start date: To ensure enforceability, the contract must be signed before the employee begins working. If a contract is presented after work starts, it may be invalid without new consideration.
• For current employees: When introducing a new employment contract after someone has already started working, employers must provide additional compensation or benefits to make it valid.

Termination Clauses and ESA Compliance

Termination clauses are often the most heavily reviewed sections in legal disputes. Courts will not enforce them if they:

• Provide less than the ESA minimums
• Use vague or confusing language
• Attempt to limit an employee’s rights unlawfully

A well-drafted termination clause should be clear, specific, and ESA-compliant. If not, it may be thrown out, which could significantly increase the employer’s liability.