Much has been recently written about the “great resignation”, fueled by workplace challenges during the pandemic.
But most of those employees are not retiring; they are simply taking their talents elsewhere. For organizations benefiting from an influx of new talent, it is imperative to ensure the relationship is off to a good start.
From a legal perspective, there is no better time to establish the key terms and expectations in a new era of work.
Get it right the first time
Once an employee has started working, it is generally too late to establish key terms in the employment relationship.
That is because legal rights and obligations crystallize as soon as an employee begins working, regardless of whether a written contract has been entered into. In the absence of a written employment contract, there is an implied employment agreement at law with a host of terms and conditions – many of which are far more generous to the employee than what the employer intended.
Asking an employee to sign a contract after they have started working has the legal effect of asking them to agree to a new – and often less favourable – contract.
This legal principle applies even if the request for them to sign is merely days after they started working.
Even if the employee agrees to the written contract after beginning work, chances are that it is unenforceable if all the employee received in exchange for signing the contract was the opportunity to continue working. Employers can get around this by offering a raise, or some other benefit in exchange for the employee’s agreement to the new contract, but why not just get it right the first time?
In the haste of onboarding new talent, it is therefore critical that organizations ensure new employees sign contracts before commencing any work. Any contract signed afterwards risks being unenforceable.
Perhaps the most significant “implied term” of an employment agreement is that an employer will provide an employee with reasonable notice of termination at “common law”, absent just cause.
The reasonable notice period implied at common law is often dramatically greater than the minimum requirements set out in the relevant provincial and/or federal employment standards legislation.
Employers who wish to provide the minimum requirements only, or some other notice period, must clearly set it out in the employment contract.
Failing to establish an employee’s rights upon termination, prior to them starting work, will invariably entitle them to “common law notice”. This can be a very costly mistake – in the millions – in the case of senior executives with various forms of compensation. For example, it can be the difference between providing an employee with eight (8) weeks of their base salary and benefits only, versus providing them with up to 24 months of their base salary, bonuses, long-term incentives, benefits, vested stock options, and all other forms of compensation.
For this reason, it is critical that the employment contract not only clearly define the length of the notice period, but also clearly and unambiguously set out precisely what the employee is entitled to upon termination.
Termination provisions are the most litigated contractual terms in employment law, and increasingly so. It is therefore essential that they are drafted by experienced employment law counsel to ensure they withstand scrutiny.
Remote work has been a significant driving force behind the “great resignation.”
For many employees seeking new opportunities, where they work will be a key consideration.
Whatever an organization’s policy is with respect to remote work, it should be clearly established at the outset, through the employment contract and/or workplace policies.
Remaining silent on a company’s remote-work policy is a mistake in the post-COVID era. If an employee is onboarded remotely, not only are they likely to expect to continue to work remotely, but remote work will in fact become a term of their employment agreement if the organization is silent on the issue. Attempts to recall those employees into the office at a later date can be construed as a unilateral change to a fundamental term of employment, potentially leading to claims of constructive dismissal.
Many organizations are, quite reasonably, reluctant to commit a position on remote work, one way or another. In those cases, employment counsel can draft contractual language to grant employers the flexibility to recall employees back into the office or to permit them to work from home. Such language must be clear, both from a legal perspective, and so that an employee is not taken aback by the request to work elsewhere.
Like all relationships, a healthy employment relationship requires clear expectations from the start. It is also, by far, the best time for the parties to establish their legal rights and obligations.
John Hyde is the managing partner at Hyde HR Law in Toronto. He advises management on all aspects of employment and labour law, including representation before administrative tribunals, collective agreement negotiation, arbitrations, wrongful dismissal defence and human rights.
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