Get it in writing

As a business owner, it is important to maintain control over your business operations and to achieve cost certainty. One of the most important factors contributing to the success of your business is your employees.

Having dedicated and loyal employees can make your life easier and can make your business more successful.

To this end, it is a good idea to create a written employment contract between your company and your employees. If your employment contract with your employees is not in writing, you and your employees may not agree on all of the terms and conditions of employment and you would not know. You might come to realize that your expectations differ from those of your employees once it is already too late.

Employment contracts are good for your business on a number of fronts. A written contract of employment can provide certainty for you, in terms of your legal position relative to your employees, especially upon dismissal of an employee. From the perspective of your employees, it can give them confidence to know that their terms of employment have been committed to writing. A properly constructed employment agreement tells employees they are working for a professional organization that takes its obligations seriously. In return, they may be more likely to take their obligations seriously, and less likely to have misunderstandings about what is expected of them. You will be able to better control the specific duties that your employees must fulfil, their rate of pay, the length of term for their positions, and disciplinary procedures including notice and termination.

Incorporating objective criteria into your employment contracts is always preferred, as it can eliminate subjectivity and differences in interpretation.

Although employment contracts are beneficial, each employment contract will need to be different in order to reflect both your company and each specific position within your company. Important factors to consider when thinking of making an employment contract can include, but wouldn’t be limited to:

• the actual position the employee holds within your company;
• the length of time the person has been working for you;
• the rate of pay and any future increases in pay;
• the employee’s duties and responsibilities;
• overtime pay and vacation pay;
• the applicable termination clause (in other words, what happens upon termination of the employee)

Creating an employment contract to meet the needs of each position may seem time consuming, but in the long run it can spare you costly disagreements and legal battles with your employees. The cost of creating a series of employment contracts could easily be less than the cost of fighting one disgruntled departed employee in the courts.

Having a carefully crafted employment contract can also assist you in disciplining your employees. The duties and responsibilities of your employees will be set out in writing. The expectations you have for your employees will be well documented. If objective criteria are referenced in your employment contract, it will then be a lot easier to discipline your employee and have him or her accept your decision and work toward resolving the problem. An example could be hours of work: without well-defined hours of work being part of your employment contract, do your employees think it is acceptable for them to take 15 minutes longer for lunch so long as they end up getting their jobs done? Do your employees even know what your expectations are?

If you plan on creating employment contracts for your company, I highly recommend that you do so in consultation with a lawyer in your province. Employment legislation varies from province to province, so choosing a lawyer in your own jurisdiction to assist you in meeting your legal obligations is very important.