Employment Agreements

Why Should Employment Agreements Be Detailed and Specific?

An employment agreement is a crucial tool to protect both employers and employees, as it provides a written account of the agreement between the parties involved. This allows both the employer and employee to have a clear understanding of their duties, responsibilities, and obligations within their employment relationship. With this being said, some agreements may be unenforceable because they contain language that is considered vague or ambiguous, which is why when it comes to employment agreements their wording is crucial.

Employment agreements can be very flexible, but there are common terms that most employment contracts contain. Most agreements outline:

 

  • The employee’s job title
  • The term of the employment (fixed or indefinite)
  • The employee’s duties
  • Remuneration
  • Responsibilities of both parties

 

Depending on the industry, some employment agreements may contain additional terms in relation to non-solicitation, non-disclosure, intellectual property, termination for cause, and termination without cause, amongst others.

 

What is the principle of contra proferentem?

 

Generally speaking, any time an issue arises during the employment relationship the employment agreement is the first reference point in order to determine how to navigate or solve the issue. However, in the event that your employment agreement contains language that is ambiguous or vague, it will make it difficult to determine how it should be interpreted. For this reason, the courts rely on the principle of contra proferentem, which is Latin for “against the offeror”, to resolve the ambiguities that have arisen. Where an employer drafts an employment contract on a take-it-or-leave-it basis, the contra proferentem rule would require that, where ambiguity exists, the more favorable interpretation be granted to the non-drafting party.

 

The Ontario Court of Appeal in Amberber v IBM Canada Ltd., 2018 ONCA 571, affirmed that ambiguity needed more than merely competing interpretations. Rather, ambiguity required an objective evaluation of whether two or more reasonable interpretations existed. Ambiguity also needs to be genuine after reading the clause as a whole, rather than after interpreting parts of the clause individually. 

The basis of contra proferentem  is that ambiguous terms should be interpreted against the person who pushed for the ambiguous term, and who drafted the employment agreement.  This principle encourages those who draft the contract to apply diligence and seek clarity and avoid ambiguous or vague agreements.

Contra proferentem in Ontario is often used in the employment context, particularly with respect to termination clauses and restrictive covenants, where employers tend to unilaterally impose employment terms on an employee, and where the power imbalance is significant. Where the courts interpret restrictive covenants or termination clauses against the drafter, these clauses are generally found to be void and unenforceable

Employment agreements should be clear and straightforward to avoid any disputes in the future. From an employer’s point of view, here are some ways to help minimize vague or ambiguous agreements:

  1. Having consistent legal language will allow the company to have uniform terms with employees. It is always good to have a template that you can rely on as a guide. This is a great help as you would not be required to draft a new agreement from scratch every time one is needed.
  2. Working as a team is always beneficial since a new set of eyes may notice something you did not. Working as a team may help you clarify any confusion that can arise. It is important to have a fixed procedure when drafting an agreement and this should be approved by someone in your company’s legal department or revised by an employment lawyer.
  3. Having a glossary of terms for internal and external parties will help eliminate the risk of ambiguity. Keep in mind that not everyone is familiar with the same terms you might be accustomed to. Third parties may not understand the language you use, so having a glossary might help solve this issue. 

 

Employees should always understand what they are signing and should never feel pressured into signing something they do not fully understand. Here are some tips on how to negotiate a better employment contract or what to do if you’ve already signed an employment agreement that you are not clear about as it contains vague terms:

 

  1. Do not rush to sign an agreement you do not understand; take the time to read it through and ask questions or clarification where needed.
  2. Familiarize yourself with your rights under the ESA.
  3. If an issue arises between you and your employer and you do not have a clear understanding of what are the next steps to take as you do not understand the terms put in place in the agreement you signed, contact an employment lawyer to help interpret the agreement and guide you through what your options are.

 

Conclusion

 

Employment agreements set the employment relationship from the start. Having a clear understanding of this agreement will help both parties maintain a healthy employment relationship. Using correct wording that is not considered vague or ambiguous will help maintain that relationship, as in the event that an issue arises between the employer and employee both parties will know what options they have available in order to resolve this issue. A qualified and experienced employment lawyer can help you draft clear and enforceable contracts or help review agreements that already exist to ensure they state the parties’ intentions and can try to limit the exposure to future disputes.

 

Contact Us

 

If you are an employer who wants their agreements or policies drafted or updated, or an employee seeking to clarify your rights, our team of experienced employment lawyers at Achkar Law can help. Contact us by phone toll-free at 1 (866) 508-2548 or email us at [email protected] and we would be happy to assist.

 

 

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