Employment Contracts

Your employment contract is very important

The relationship between you and your employer is governed by the employment contract. Often employment contracts are not signed prior to the commencement of employment. An employment contract can exist even if it is not written. The terms of employment may be explicit as part of a written employment contract, or they may be inferred if the contract is oral. Some examples of express terms include: position and duties, term, remuneration, and termination clauses.

Even if an employment contract is oral and not set out in express terms, the employment relationship can be found by a Court to exist. Some examples of implied terms include: duty of fidelity and loyalty, employee’s duty to exercise skill and care, employer’s duty to provide work, and the employer’s duty to provide a safe workplace.

As the employer is normally in a position of power and the employee is simply looking for work, the employee is in a weaker position. As such the Courts tend to interpret provisions of employment contracts in a way that keeps fairness in mind due to the imbalance of power.

Furthermore, as an employee you might not know the law behind the employment contract you are entering into with your employer. You may believe that you have to accept whatever terms are proposed by the employer. For example, you cannot contract out of any Employment Standards Act minimums even if you sign an employment contract to that effect.

You also cannot be forced to accept a change to your contract imposed by your employer after you have started work which substantially changes the nature of the employment relationship. A change that alters the employment relationship substantially may amount to a constructive dismissal.

Your employer cannot change the terms of employment and force you to sign a new employment contract while making it seem that the only other option you have is to quit. Often employees are told directly, or it is made known to them indirectly and in a subtle way that they must accept the changes or quit. Your employer cannot put you in a situation where you must select between quitting and accepting their proposed terms.

Employee vs. Dependent contractor vs. Independent contractor

Another important aspect of your employment is how the relationship is classified. Often employers attempt to draft employment contracts which characterize the relationship in a way that makes you an “independent contractor” instead of an “employee”. The reason of this is that being an “independent contractor” as opposed to an “employee” affects your entitlement to notice pay and the obligations of your employer. The employer does not have to withhold and remit income tax or CPP and EI premiums if you are independent contractor.

Companies are also vicariously liable for tortious conduct of employees but are not liable for such conduct of independent contractors. As an independent contractor you can be fired with little or no notice. It is therefore important to know if your employment makes you an “employee”, an “independent contractor”, or a “dependent contractor”.

It is important to note that Courts look beyond the formalities of an employment contract. The nature of the relationship is analyzed in order to determine if you are an employee or a type “contractor”. As such you must be very careful if your employer tells you that you have been dismissed or that your relationship as a contractor is over. You may be entitled to various forms of relief, regardless of whether your contract classifies you as a “contractor”. Furthermore, even if you are an independent contractor the employer is not exempt from Human Rights Code obligations toward you.

Employers must also be aware that simply labeling an employee as an independent contractor in an employment contract may not be enough. A Court may find that a worker is an employee in effect even if they are being treated as an independent contractor. Employers must be aware of this especially when planning whether or not to collect and remit various deductions to the Canada Revenue Agency.

The information on this website is for informative purposes only. It is not legal advice. A lawyer can only be retained after a consultation. If you need a wrongful dismissal lawyer or if you have any other employment law issues, call me at: 416 323 3614