This is a guest post by Sarah Vokey, associate at Robinson Heeney LLP.
Receiving an offer of employment is always exciting, especially when that offer is received following a job loss and while unemployed. Understandably, many people are eager to sign off on the offer that they are provided with and get started. However, it is important to remember that, once the contract is signed, the contract forms a binding agreement as to how the employment relationship will be governed and, with limited exceptions, employees will be held to the terms that they agreed to at the outset of the relationship.
As such, when presented with an offer and before signing the agreement, employees are well advised to carefully review the contents of the offer, seek advice, and negotiate provisions that may not serve them well in the future. While the tips below regarding the review of an offer are certainly not exhaustive, they highlight three areas that we often find require attention: termination provisions, language that serves to disentitle employees to earned bonus upon termination, and restrictive covenants.
It is not unusual for employers to include termination provisions in contracts that seek to limit an employee’s entitlement on termination to less than that which the common law would require or, worse, seek to limit an employee’s entitlement to only the minimums required under the applicable employment legislation. The purpose of severance is to bridge an employee to his or her next employment opportunity and proposed contractual clauses often do not provide enough notice for that to happen.
Although most people would prefer not to think about the end of the employment relationship at the beginning, termination provisions can have a significant impact in the future and should be read carefully and negotiated accordingly.
Another important issue to watch for when reviewing the initial offer of employment is whether the contract seeks to provide for bonus entitlement on the condition that an employee is “actively employed” or remains with the company on a certain date – usually the date that the bonus will be paid out.
If drafted properly, these clauses can be enforceable and effectively disentitle an employee to an otherwise earned bonus; however, they are often negotiable so that it is agreed that a pro-rated outstanding bonus will be paid to the employee upon without cause termination.
It is not unusual, especially when being offered more senior level positions, for employers to include restrictive covenants – usually non-competition and/or non-solicitation clauses – in the employment contract. While courts in Canada generally do not look favourably upon restrictive covenants, they will be upheld if they are reasonable.
From a practical perspective, litigation involving restrictive covenants tends to be lengthy and expensive. Given the intricacies involved with restrictive covenants and the potential risk involved, contracts with restrictive covenants should be reviewed by an employment lawyer who can provide the best advice regarding how to proceed in the circumstances.
Guest contributor bio
Sarah Vokey is an associate at Robinson Heeney LLP. She focuses exclusively on representing employers and employees, providing strategic and practical advice to clients in all areas of employment law including: recruitment and hiring, employment contracts, termination of employment, constructive dismissal, policies, human rights issues, harassment, violence, privacy, and employment standards. Sarah is also an experienced workplace investigator who conducts investigations on a variety of employment law issues across all industries.