I often speak to employees who believe that since they do not have a written employment contract then they do not have a contract at all. If you have a job then you have a contract. If it is not in writing then it is an oral contract. Oral contracts of employment are just as “legal” as written contracts but the terms can be hard to prove. The better practice is to create a written document that both parties can review so that the terms are clear. This can be a formal agreement signed by both parties or it can be a letter confirming employment on certain terms.
So, what should the terms be? The Employment Standards Act (ESA) sets out certain basic requirements of employment contracts whether oral or written. A basic employment contract should cover the following:
– The names of the parties – it sounds obvious but legal names are required. The name of the employer in the community might not be the name of the individual or company that issues the paycheque.
– Start dates and end dates. There will always be a start date but there might not always be an end date. Employment contracts with an end date are known as “fixed term contracts”.
– Hours of work and duties – The ESA states that daily overtime is time-and-a-half after eight hours in one day and double time after 12. Weekly over time is time-and-a-half after 40 hours but only the first 8 hours in a day count towards weekly overtime.
– Holidays and benefits – The ESA sets out minimum annual vacation of two weeks after one year (not during) and three weeks after five years. Or, vacation pay of 4% after one year and 6% after five years.
– Remuneration – how much will you be paid? Minimum wage is BC is $9 an hour for liquor servers (who also get tips) and $10.25 for all other employees. Employees can be paid by the hour, the month, the year, on commission or a combination.
– Termination – it is a good idea to have a clause setting out how the employment contract can be terminated. Term contracts expire at the end of their terms unless renewed.
An employer can terminate the employment contract in one of two ways: with cause and without cause:
– “With cause” means that employee has done something to breach (break) the employment contract. Examples would include failing to show up for work or stealing from the company. Employees who are terminated for cause are not paid any severance and not given any notice.
– “Without cause” means that the employee has not done anything to breach the contract. In this case the employer is required to give notice or pay wages in lieu of notice. “Notice” is sometimes called “working notice” because the employees are expected to keep working until the end of the notice period. “Wages in lieu of notice” is also called severance.
> A written employment contract should set out the notice period e.g. 30 days’ notice.
> The ESA sets out the minimum amount of notice:
+ Up to three months is a probationary period and no notice is required.
+ Three to twelve months – one weeks’ notice.
+ One to three years – two weeks’ notice
+ After three years – one week for every completed year of employment to a maximum of eight years.
>If the employer terminates a fixed term contract without cause then the employee is entitled to be paid until the end of the term.
An employee can terminate the employment contract as well.
Giving notice means that the employee does not say that the employer has breached the contract but just wants to leave. If the employment agreement does not say how much notice to give then there is no official amount of notice but generally 2 weeks is considered normal.
An employee who believes that the employer has breached the employment agreement can resign and sue for notice. This is called a constructive dismissal.
Employees who quit are not entitled to any wages in lieu of notice.
Confidentiality and restrictive covenants – these issues are not addressed in the ESA but are common terms in an employment agreement. Employees may be asked to sign a confidentiality agreement covering the use of the employer’s information. Less frequently the employment agreement may contain a clause preventing an employee from working in the same business or for a competitor in the future. Those clauses are called “restrictive covenants” and must be reasonable to both parties.
Employers often get legal advice to draw up a standard employment contract for use in their business. Employees often get legal advice before signing an employment agreement. The Employment Standards website has a great deal of useful information and is a good starting place for employers and employees: http://www.labour.gov.bc.ca/esb/. All BC legislation can be found at http://www.bclaws.ca/ under “View Statutes and Regulations”.The information provided above is for educational purposes only. This information is not intended to replace the advice of a lawyer or address specific situations. Your personal situation should be discussed with a lawyer. If you have any questions or concerns, contact a legal professional.