If your employer asks you to sign an employment contract, make sure your read the fine print.
Be careful before you sign on the dotted line.
Getting a new job is exciting. But before you start work, your employer may require you to sign an employment contract covering your compensation, working conditions and termination pay you if you are fired. If you do not fully understand what you sign, you could be in for some nasty surprises later.
Employment contracts were once quite rare, particularly for junior employees. However Alison McEwen, an employment lawyer with the Ottawa firm of Nelligan O’Brien Payne, says an increasing number of employees at all levels are asking her to review and advise them.
She says you may have more negotiating room than you think.
“If you have a unique skill set or you are a high-ranking individual, you may have greater bargaining power.”
Here are six of the many issues frequently covered in employment contracts.
Basic provisions: These things cover salary, hours of work and vacation pay. If working hours are 8:00 a.m. to 4:00 p.m. but you can’t drop your children at school before 8:30, don’t assume your supervisor will authorize flex hours once you start. And if the contract does not allow carry-forward of unused vacation you won’t be able to save up six weeks of vacation for an African safari.
Employee or independent contractor: You think you are being hired as an employee, but the contract says you are an independent contractor. Your employer says it’s a better deal because independent contractors run their own business and can write off more business expenses. However unless you are an employee you can’t belong to the pension plan, collect Employment Insurance benefits or claim termination pay if you are fired. You also have to pay both the employer and employee’s share of Canada Pension Plan contributions.
Overtime: Managers are exempt from overtime pay under Ontario’s Employment Standards Act (ESA). Your title is account manager but you don’t oversee other employees or participate in decision-making. So in spite of what the employment contract says, you may be entitled to overtime pay if you work more than 44 hours a week.
Employee benefits: Your contract says employee benefits like health and life insurance do not kick in until the end of a three-month probationary period. If you are worried about your family’s security when you leave one job to start another, you can try to negotiate immediate benefits eligibility. Whether or not you are successful may depend on the provisions of the contract the employer has with its insurer.
Intellectual property: Intellectual property clauses are becoming more common. Pay attention if contract provisions say that the company not only has rights to products you build at work, but projects you complete on your own time. That could mean if you develop a hot new smartphone app at home that goes viral, your company can claim both the ownership and the revenue stream.
Termination pay: Employer liability for termination pay is a huge issue. For example, if you are fired after 10 years without cause, you are only entitled to eight weeks of pay under the ESA. However, you can claim 10 months’ salary or more in a lawsuit for wrongful dismissal. Your employment contracts may limit you to only the ESA minimum or a higher amount which is still less than the amount a court may order.
McEwen says, “I tell clients to pick one or two contract provisions that are most important to them and see if they can negotiate a more advantageous arrangement. If you come back with a list of 15 items, you could talk your way out of a job.”