Hidden Risks in Contracts (Yes, Including Termination Clauses)…
Here's something that might not be the most exciting part of running your business and/or being a leader. But trust me, it's worth your time.
Employment Contracts.
They're not just boring legal documents gathering dust in the personnel files - they are your protection, your guideline, and your safety net when things get complicated. Under Canadian employment law, having clearly written contracts is your first line of defense against costly legal battles and misunderstandings.
Although the info I’m sharing with you today focuses on Canadian legislation, employment contracts are universal legal documents used in ALL businesses and should always be compliant.
Without proper employment contracts, you're basically taking a chance with common law principles, which typically favour employees in Canada. A well-drafted contract clearly sets out everything from compensation and benefits to work expectations, making sure everyone's on the same page from day one.
The Ontario Employment Standards Act (ESA) sets minimum requirements, but a contract can go beyond these basics while still complying with the law.
Now, about that termination clause - this is crucial!
Without a properly drafted termination clause, Canadian courts will default to "reasonable notice" periods that can be pretty generous (sometimes up to 24 months of pay). A valid termination clause can limit your company's liability to the minimum requirements under provincial legislation, potentially saving you thousands of dollars.
However, these clauses must be carefully worded, as Canadian courts have struck down many for even minor technical deficiencies.
Think of proper employment contracts as an insurance policy. They might seem like an unnecessary expense when things are going well, BUT they're absolutely priceless when you need them. Taking the time now to review and revise them can save you major headaches and serious cash down the road.
And while templates are available online (let's face it, everything is available online and AI is a huge help), this is an area where working with a professional familiar with the latest developments in employment law is worth every penny.
Because when it comes to protecting your business, cutting corners on contracts is penny-wise but pound-foolish!
When was the last time you reviewed YOUR employment contracts?
Perhaps it’s time!
Check out my FREE HR Audit Guide right here on the site under Resources to make sure all your HR needs are met. If they’re not, we should chat!
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