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Employment Contracts

This article sets out why employment contracts are important, basic terms, and other common provisions.

Do We Need an Employment Contract?

Employment contracts are not required but they are recommended for 2 main reasons. First, like any contract, an employment contracts set out the expectations and understandings of the parties. This helps avoid confusion and conflict in the future. Second, while all employers must meet the mandatory minimums as set out in Alberta Employment Standards and other regulations, there are instances where employers can be held to a higher common law standard (a standard set by the courts over time as they rule on various cases) if they do not have a contract that specifies the minimums. An example of this is notice or severance requirements. If you do not have a contract, you may be required to give the higher notices periods required under the common law.

What are the Basics?

Some employment contracts are very basic, while other employment contracts are so exhaustive that they become more cumbersome than helpful. At a bare minimum, the employment contract must comply with the mandatory minimums, as laid out in Alberta Employment Standards and other regulations. It is very important to ensure that the wording of the contract is clear - any ambiguities are read in favour of the employee.

All employment contracts should at least include the following:

The Contract Start & End Date – Is the contract for a fixe period? If there is no specific end date, be clear on what triggers the end of the employment.

Duties & Expectations – What are the job expectations? Are there other policies or guidelines to be referenced? Where will the employee work?

Pay & Benefits – Is the position paid hourly, or is it salaried? Are there a certain number of expected work hours? What benefits are included? In Alberta, there are mandatory minimum holidays and holiday pay, so be sure to comply with those.

Termination Provisions – How can the contract be terminated? By whom and how much notice is required by the parties. Some employers choose to provide examples of what actions warrant dismissal without cause: serious misconduct, incompetence, willful disobedience, habitual neglect of duty. This will be dependent on the nature of the employment relationship.

Also consider including:

Direct Report – Who will the employee report to? Do they have a supervisor? Where do they fit in the business hierarchy/matrix?

Company Standards – Is there a required uniform or required PPE? Depending on the worksite and work, is there safety equipment involved? Will the employer be providing or does the employee need to purchase before coming to work? Are there other specific standards the employee needs to adhere to?

What Else Should We Consider Including?

There are additional clauses that employers should consider to set expectations and mitigate risk. These are called “restrictive covenants” and can also typically be found in non-disclosure agreements (NDAs) and similar contracts. These clauses must be reasonable - if they are more restrictive than what is necessary in the circumstances, they may not be enforceable.

Confidentiality – If you have any sort of information you want to protect, include this. Confidentiality clauses should clearly spell out what confidentiality means, what information it pertains to, and what constitutes inappropriate disclosure. The clause needs to be more explicit than “all information is to be kept strictly confidential” and should be tailored to the business’s proprietary information.

Proprietary Rights – If your employees will be working with you to create new ideas, products, or processes, proprietary rights clauses are recommended. Future investors will often look for these clauses. A proprietary rights clause provides that all intellectual property related to the company, regardless of how or when it is created, belongs to the company.

Non-Solicitation – These clauses are typically used to mitigate the risk of former employees soliciting the business’s clients, suppliers, and employees.

Non-Compete Clause – A non-compete clauses prohibits an employee from competing against the company during their employment and typically for a brief period following their employment. To be enforceable, non-compete clauses cannot be too broad. They must be specific as to type of business and geographic region and time periods must be reasonable. In Ontario, non-compete clauses in employment contracts are now prohibited in most cases. This is not applicable in Alberta but gives a sense of the uncertainty surrounding non-complete clauses.

What About Vaccination Requirements?

In the health and medical fields, vaccination requirements have long been requirements for employment even prior to the COVID-19 pandemic. With the widespread availability of COVID-19 vaccines, many companies have chosen to require employees to receive COVID-19 vaccinations. Often, this is done with reference to employer’s duties under Occupational Health and Safety, and to minimize the risk of outbreaks at the workplace. Employers that have chosen to include these requirements as a condition of employment may also include it in job advertisements and employment contracts.


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