The most significant benefit to an employer is that an employment contract legally limits the rights of the employee. A termination clause, if drafted properly, limits an employee’s rights to notice or termination pay in lieu of notice. Under the Employment Standards Act the general rule of thumb is that an employee is owed 1 week per year of service to a maximum of 8 weeks. Under the common law, the general rule of thumb is that an employee is owed 1 month per year of service to a maximum of 24 months. While these are just general rules of thumb, the point for employers is that minimizing the termination pay owing to terminated employees is in their best interests.

Without an enforceable employment contract, the bad news for employers is that the common law applies. Don’t make the mistake that can cost you thousands in termination pay when you want to terminate an employee. Get a properly drafted employment contract and feel protected.

If your business is already employing individuals and did not get an employment contract signed prior to the beginning of the employment relationship, you can still be protected. At any time, an employer can request that an employee sign an employment contract. However, the wrinkle is that based on contract law the employee must receive a tangible benefit for the new employment contract to be enforceable moving forward. Generally, in a situation such as this, the employer would pay either a signing bonus or increase the employees pay to reflect fair consideration for the new employment contract.

Don’t wait to be in a position where you need to terminate an employee before realizing the thousands in termination pay you owe them. Contact us now for a free consultation and ask about how an employment contract can protect your business.

This blog is for educational and informational purposes only and does not constitute legal advice. Results of cases described on this website may not be typical and are not guaranteed. The accuracy of the blog posts is not guaranteed. Contacting Langer Law or using this website does not create a lawyer-client relationship.

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