Legalese: May 2014

For any business, it is important to maintain control over operations and know the costs of operating with a reasonable degree of 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 your business more successful. From my experience in acting for companies engaged in the rental industry, I know that the employees in the rental industry play a particularly critical role for their employers.

It is advisable that you enter into a written employment contract between your company and your employees. If your employment contract with your employees has not been committed to writing, it is likely that you and your employees will disagree on at least some of the terms and conditions of their employment. You may come to realize (when it is too late, like upon a termination or illness for example) that your expectations differ from those of your employees.

Employment contracts are therefore good for your business on a number of levels. A written contract of employment can provide certainty for you. From the perspective of your employees, it can give them confidence in knowing that the terms of their employment are clearly set out in writing. You will also be able to better control the specific duties that your employees must fulfill, better define their rate of pay and salary expectations, specify the length of term for their positions, and lay out discipline procedures including notice and termination. Incorporating objective criteria into your employment contracts is always preferred, as it can eliminate subjectivity and differences in interpretation. For example, if you provide annual bonuses to your employees you can incorporate the objective criteria right into the employment contract. That way, your employees will be less likely to be disappointed with their annual bonus and there will be fewer surprises.

Each employment contract will need to be tailored to your specific needs, 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:  

• The position of the employee within your company;
• the length of time the employee has been working for you;
• the rate of pay you have been paying them and any future increases in pay;
• the terms upon which a bonus may be payable;
• their duties and responsibilities;
• overtime pay and vacation pay;
• what happens in the event of a short-term or long-term illness or absence from work;
• discipline and how it is to be administered;
• the applicable termination clause (i.e. what happens upon termination of this employee)

Creating an employment contract to meet the needs of each position may seem time consuming, but in the longer term it will likely save you from costly disagreements and legal battles with your employees. The cost of creating a series of employment contracts could easily be less over time than the cost of fighting one termination or discipline battle in the courts.

Having a carefully crafted employment contract can also assist you in the disciplining of your employees. The duties and responsibilities of your employees will be set out in writing, so your expectations are well documented.