A guide to employment contracts: Rudner and MacDonald
An employment contract is a critical agreement that covers more than salary and vacation, and there are a number of considerations to keep in mind before signing, Toronto employment lawyers Natalie MacDonald and Stuart Rudner tell Global News.
“It’s the bedrock of the employment relationship as it contains all the terms and conditions upon which you’ll become employed,” says MacDonald, co-founding partner of Rudner MacDonald LLP, and author of Extraordinary Damages in Canadian Employment Law.
“You need to know and understand everything in that contract because it guides you through your employment relationship.”
Rudner, co-founding partner of the same firm, says that’s not to say everything written in the letter of offer is set in stone.
“If they want you, they’ll negotiate within reason,” he says.
Rudner and MacDonald agree there are some key things to remember when negotiating an employment contract to avoid any pitfalls.
First, Rudner says it’s valuable to consult an employment lawyer to point out any problems in the contract.
“A termination clause is a perfect example,” he says. “Everyone who is let go is entitled to reasonable notice. But it’s a myth that you’re entitled to one month per year of employment. That’s not a law.”
Rudner points to Ontario’s Employment Standards Act, 2000, which guarantees severance payment for one week per year of employment and caps it at eight weeks. This means an employee with 20 years of service could be let go with only eight weeks pay, the article says.
“A lawyer will help you identify that clause and ask for it to be amended,” he says.
Second, Rudner says potential employees have to educate themselves about the industry standard for salaries to assist with negotiation of their own pay.
“The company will either say yes or no, but they won’t reject you,” Rudner says.
He cautions to examine the compensation clauses carefully.
“A lot of organizations are offering variable compensation these days, with commissions or bonuses. They try to fold these into the compensation package by saying you’ll be paid a base of a certain amount and you’ll be eligible for a 40 per cent bonus. But that’s discretionary and it’s not guaranteed.”
Third, unless it’s writing, nothing is guaranteed, Rudner says.
“All you’ve received is a promise to consider it,” he says.
Fourth, it’s important to look for a probationary clause.
“This gives you no job security at all, and means you can be terminated at any time and for any reason within that time frame,” Rudner says.
Fifth, it’s critical to ensure everything in the contract is explained. He recalls a client whose “rather detailed” offer had glaring omissions.
“It didn’t actually specify the job title, duties or location of employment,” he says, which gives the employer room to make drastic changes without consulting the employee.
Sixth, MacDonald says it’s important to know when to negotiate and when to back away. She says your bargaining power is predicated upon how much the company wants to hire you, but that doesn’t mean you should sign anything without ensuring the contract meets the legislated employment standards.
“You can always argue for more,” she says. “But remember, you can also always walk away from it. If you feel that a company isn’t going to consider your needs appropriately, don’t take the job. That’s not a company you want to work for.”