An employment contract is an integral part of doing business. It sets out the expectations for the employer/employee relationship and can guide the path to resolution in the event of a dispute. Unfortunately, employers never know the strength of their contracts until faced with a challenge. A legal dispute will put that contract to the test. The contract will likely be attacked by an employee and their legal counsel, scrutinized by a judge, and ultimately be used to determine whether your business survives the dispute.
Entrepreneurs can take steps to better ensure their contracts can survive such a challenge. Three tips that can help include the following.
#1: Know the business’ needs
An employment contract is, at its heart, a written contract that specifies the particulars of the relationship between the employer and employee. It should include provisions that address the relationship. Some examples include:
- Duties. This is the opportunity to clearly state the expectations of the job.
- Wages. An employer must pay minimum wage or more. This is true whether payment is at an hourly, salary, or commission-based rate.
- Vacation. After working with the business for one year, the law states that employers should provide employees with at least two weeks of vacation per year. After working five consecutive years, this minimum increases to three weeks.
- Leave from work. The statute also provides for unpaid absences in certain situations. This can include illness, injury, maternity or paternal leave, and bereavement leave.
- Severance. When employment ends, the employer must provide written notice and an equal amount of pay. The law refers to this as compensation for length of service. It is one week notice and/or pay for those who work at least three months, two weeks notice and/or pay for those who work at least one year, and three weeks notice and/or pay for those who work at least three years and an additional week for every year thereafter.
These provisions provide basic guidelines but can vary depending on the details of the situation. It is also important to note that they are just a sampling of what an employer needs to include within an employment contract.
#2: Know the governing law
There are two forms of governing law that can impact employment disputes. The British Columbia Employment Standards Act outlines the minimum requirements for employment in the province. The bullet points above are based off of the requirements under this law.
Common law can also apply and has different expectations. When it comes to termination of employment, the British Columbia Employment Standards Act generally has the set requirements noted above under severance. Common law has higher expectations. Under common law, the courts have more freedom to determine an appropriate award based on factors that can include length of employment, the employee’s age, and the employee’s position within the business. A well-drafted employment contract can better ensure resolution options are guided by the more predictable minimums set out within British Columbia Employment Standards Act instead of common law.
#3: Know the industry
Certain industries have special rules. Examples can include those who operate in the high-tech and medical fields. Companies in the high technology industry, for example, have different rules when it comes to hours of work to meet the need for flexibility. This allows employers to have average hours of work over up to four weeks in certain situations.
These are just a few considerations to take into account when putting together an employment contract. An experienced employment contract lawyer can draft these documents to your business’ needs and better ensure the contract can withstand a legal challenge.