An employment contract 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 contract may be unenforceable because they contain language that is considered vague or ambiguous, which is why when it comes to employment contracts their wording is crucial.

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

• Employee and Employer Information: Full names and addresses of both the employer and the employee.
• Job Title and Description: Clear details about the employee’s position, duties, and responsibilities.
• Start Date: The date when the employment relationship begins.
• Compensation: Information about the salary or wage, including details about payment frequency.
• Working Hours: The standard working hours and any provisions for overtime.
• Benefits: Description of any benefits provided, such as health insurance, retirement plans, etc.
• Probationary Period: If applicable, details about any probationary period for new employees.
• Termination Clause: Conditions under which either party can terminate the employment and any notice periods required.
• Vacation and Leaves: Details about vacation entitlement, public holidays, and any other leaves (sick leave, maternity leave, etc.).
• Confidentiality and Non-Compete Clauses: If relevant, any restrictions on the employee regarding disclosure of confidential information or non-compete agreements.
• Performance Expectations: Clear expectations for the employee’s performance and any performance review processes.
• Governing Law: Specify that the employment agreement is governed by the laws of Ontario.
• Dispute Resolution: Procedures for resolving disputes between the employer and the employee.
• Severability Clause: A clause stating that if one part of the agreement is found to be unenforceable, the rest of the agreement remains in effect.
• Amendments: The process for making changes to the agreement and whether changes must be in writing.

Depending on the industry, some employment contracts 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 contract is the first reference point in order to determine how to navigate or solve the issue. However, in the event that your employment contract 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 contract.  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 contracts should be clear and straightforward to prevent future disputes. From the employer’s perspective, here are some ways to reduce vague or ambiguous agreements:

• Consistent Legal Language: Using consistent legal language ensures uniform terms with employees. Having a reliable template as a guide is beneficial, saving the effort of drafting a new agreement from scratch each time.
• Team Collaboration: Collaborating as a team is advantageous, as a fresh set of eyes may catch details overlooked. Working together helps clarify any potential confusion. Establishing a fixed procedure for agreement drafting, approved by the company’s legal department or reviewed by an employment lawyer, is crucial.
• Glossary of Terms: Maintaining a glossary for internal and external parties reduces the risk of ambiguity. Not everyone may be familiar with the same terms, especially third parties. A glossary helps bridge this gap by providing clear definitions.

It’s essential for employees to comprehend what they are signing and avoid feeling pressured into signing an agreement with unclear terms. Here are tips on negotiating a better employment contract or addressing uncertainties in a signed contract:

• Thorough Review: Take the time to read through an agreement before signing, seeking clarification where needed. Avoid rushing to sign something not fully understood.
• Know Your Rights: Familiarize yourself with your rights under the ESA (Employment Standards Act).
• Seek Legal Guidance: If issues arise and you lack a clear understanding of the agreement’s terms, contact an employment lawyer. They can help interpret the agreement and guide you through your available options.

Conclusion

Employment contracts establish the terms of the employment relationship from the beginning. A clear understanding of this agreement is crucial for maintaining a healthy working relationship between both parties. Employing precise and unambiguous language is key to sustaining this relationship. In the event of an issue between the employer and employee, having clear language ensures that both parties are aware of the available options for resolving the matter.

Engaging a qualified and experienced employment lawyer can be beneficial. They can assist in drafting clear and enforceable contracts or review existing agreements to ensure they accurately reflect the parties’ intentions. This proactive approach helps minimize the potential for future disputes.

Contact Achkar Law

If you are an employer who wants their employment agreements or employee 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 (800) 771-7882 or email us at [email protected] and we would be happy to assist.

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