What should I do if I’m asked to draft my own employment agreement?Team
An employment agreement is a legal document that is often prepared by an employer and offered to an employee prior to the commencement date. Although it is uncommon and may be imprudent, an employer may request their employee to draft their own employment agreement. Employees who face such situations may feel lost and overwhelmed by the legal jargon involved in drafting one. To help, this article breaks down several important clauses that may be helpful in drafting an employment agreement.
What is an employment agreement?
An employment agreement is a contract between an employer and employee that governs the employment relationship. When an employment dispute arises, one that pertains to a term of employment, the employment agreement offers evidence of what has been previously agreed upon by the employer and employee. In most cases, such a dispute will be resolved in accordance with the agreed-upon terms and conditions of the employment agreement.
An employment agreement may contain provisions that pertain to any aspects of one’s employment, including the following :
- Positions, duties, and responsibilities
- Place of employment
- Date of commencement
- Term of employment
- Compensation and benefits
- Hours of work and overtime
- Probationary period
- Vacation time
While an enforceable employment agreement must abide by, in Ontario, the Employment Standards Act, 2000 (“ESA”), parties are granted the freedom to draft and include provisions that represent their best interests.
Why is it important?
The importance of an employment agreement lies in the stability and protection that it offers the drafting party. An employment agreement holds contracting parties accountable for their agreed-upon obligations and promises. As such, it is important that parties have a clear understanding of what they can be held accountable for upon signing an employment agreement.
When an employee is asked to write their own employment agreement, they are afforded a unique opportunity to structure the employment relationship in a way that best suits them. An employment agreement drafted by an employee is subject to the same restrictions that employers face: so long as the agreement does not contract out of the ESA or contravene its minimum standards, the contract will be enforceable.
It is likely, of course, that what is drafted by the employee will not be the final agreed-upon version of the agreement; very often the employer will reply with questions about certain terms. Given the imbalance of bargaining power between employers and employees, it is very unlikely that an employment agreement drafted by an employee will be deemed unconscionable by a court. Still, the employee drafting the agreement should still refrain from including provisions that are too one-sided, as they may provoke resistance and jeopardize the relationship itself..
What are some important provisions?
Although certain fundamental terms may be non-negotiable, an employee may negotiate an employment agreement that represents their best interests through the following provisions.
A termination clause may stipulate the entitlements that an employee is owed upon their dismissal. This provision is applicable in situations where an employee is dismissed without cause and is subsequently owed a reasonable notice period or pay in lieu of. A termination clause is only restricted by the minimum notice period requirement mandated by the ESA. An agreement that favors an employee may stipulate a termination entitlement that is greater than the ESA minimum and closer to the reasonable notice period under the common law.
A vacation clause may stipulate an employee’s entitlements to paid vacation time in a given period. The ESA mandates certain minimum requirements with regard to vacation time and vacation pay. These minimum requirements are not strict guidelines that must be followed. A vacation clause may grant an employee a greater benefit or right than the ESA minimum.
One term that is often neglected by employees is the probation clause. It is common for employers to include a clause that restricts an employee’s entitlements to certain compensations and benefits until the end of a probationary period has ended. This may include an employee being ineligible for medical, dental, or other benefits until the probation period has ended. An employee may benefit from a shortened probationary period or the removal of such a clause altogether.
What should I expect?
It is uncommon for an employee to be given the opportunity to draft their own employment agreement. When given the opportunity an employee should keep in mind that their drafts are not finalized until agreed upon by their employer. Therefore, this opportunity should be looked at as an employer’s openness to negotiating the terms of employment. It may be prudent in such instances to avoid proposing one-sided agreements, as they may be dismissed altogether. When drafting an employment agreement or responding to one it is always advisable to retain independent legal advice.
If you have any concerns regarding the drafting of an employment agreement, our team of experienced employment and human rights 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 will be happy to assist.