Ways to Protect Yourself Written Employment Contracts & Termination of the Employment Relationship Norm Grosman Grosman, Grosman, & Gale LLP Suite Richmond Street West Toronto, ON M5H 2G4 Tel: Web:

Introduction… The Supreme Court of Canada’s take on the employment relationship Written contracts – the art of managing expectations A proactive approach; saving –Time –Money –Risk –Aggravation Leverage – when does it exist and who has it?

Written Contracts of Employment Unwritten contracts Format –Standard form –Letter agreement –Legal agreement The basics –Offer and acceptance –Consideration –Certainty of terms

Entering Into an Enforceable Contract New employees –Key steps Present with offer of employment Routine explanation Record explanation Independent advice Never minimize importance Ensure document is: signed, dated, witnessed and receipt of copy acknowledged Existing employees

Entering Into an Enforceable Contract Advantages –Certainty –Limit liability –Clarify expectations –Building in flexibility –Fix duration of relationship –Limitation of promises –Post termination obligations –Psychological vs. legal Disadvantages –Certainty: that locked in feeling –Ambiguity of terms –May cause difficulties in hiring –May become stale over time –Cost of administration –Enforceability Minimum standards Consideration

Employment Contract Checklist Position √ Title √ Responsibilities √ Changes Location √ Initial/transfers √ Changes Term √ Probation √ Avoid contradiction with termination provisions Compensation √ Base salary √ Review processes √ Fringe benefits √ Automobile √ Bonus plan √ Vacation √ Expenses Employee covenants √ Whole time and effort √ Diligent and faithful services √ Rules and regulations √ Outside activities

Employment Contract Checklist Termination provisions √ With cause √ Without cause √ Resignation √ Return of property Restrictive covenants √ Competition √ Solicitation Renewal of contract General provisions √ Entire agreement √ Amendments √ Governing law Copy of agreement received

Ten Key Contract Considerations 1.A written contract or no written contract…That is the question Don’t panic. Your employment is based in the legal concept of contract. Is may be oral, written or partly both. 2.The one-way street Many written employment contracts presented by employers look after their interests; but who’s looking after yours? 3.Looking for leverage If you have some leverage, recognize it, understand it, utilize it – negotiate! Don’t settle for “standard form.”

Ten Key Contract Considerations 4.The letter “U” Undue influence, unequal bargaining power, and unconscionability can all undermine the enforceability of a written employment contract 5.Promises, promises, promises Many employment contracts have a clause which confirms that the written terms are the entire agreement between the parties. If the promise to promote, increase salary, grant stock options, etc. isn’t in writing, forget about it. 6.The old switch-a-roo You employer comes to you well after you’ve started work and presents you with a new, written employment contract. What’s going on and what’s in it for you?

Ten Key Contract Considerations 7.Nailing down the dollars You will want to ensure all aspects of compensation are clearly spelled out including base salary, salary increases, fringe benefits, bonus plans, stock options, profit sharing, commissions, car allowance and expenses. 8.If it goes south Relationships, particularly employment ones, are rarely forever. The employment contract allows you to plan for an orderly and fair break up. Termination provisions should never be ignored or minimized

Ten Key Contract Considerations 9.The next chapter Will you have the freedom to move to future employment of your choice or will restrictive covenants present a road block. Beware of non- competition and non-solicitation clauses. 10.How will I know? When a prospective or current employer presents you with an employment contract get experienced, competent advice. Make informed and practical business decisions.

End of Employment Relationship Resignation Abandonment Frustration Termination –For cause Business cause Legal cause –Without cause –Constructive Suspension

Employment Standards Act I.Notice of termination 1-8 weeks Varies with service (minimum 3 months) No change in terms II.Severance pay Must have 5+ years service Annual payroll $2.5 million+ Up to 26 weeks wages for regular non- overtime work week

Reasonable Notice Criteria Length of service Age Break in service Lack of employment opportunities The specialist Inducement Character of employment Education Heath Behaviour of employer (bad faith) References Mitigation

Negotiating Putting together on offer 1.Cause or no cause 2.Contractual provisions 3.The Termination Trilogy Reasonable notice Elements of compensation package Structure of offer 4.Outplacement 5.Reference 6.Restrictive covenants 7.Release 8.Employer philosophy

Q&A? Thank you Norm Grosman Grosman, Grosman, & Gale LLP Suite Richmond Street West Toronto, ON M5H 2G4 Tel: Web: