MIKAILA MAURO
BRITISH COLUMBIA – You’ve probably heard a lawyer say, “get it in writing”. This is often the response when dealing with employment relationships.
It’s common for companies, particularly those rapidly growing, to onboard new employees faster than they can keep up and before finalizing the terms of employment. A written employment agreement setting out those terms is not legally required in British Columbia, but it can ensure both parties have a clear understanding of their obligations, rights and restrictions moving forward. Failing to do this can result in large severance payments being owed, solicitation of your company’s clients and restrictions on your ability to organize your business.
Offers of employment can be made without presenting employees with a full written employment agreement, but to be a valid contract, a written employment agreement must be entered into prior to an employee commencing work. This provides that there was an offer (of employment), acceptance (to work) and consideration (being paid for the work) [1]. If the agreement is executed after an employee starts work then they can argue that the offer and consideration are no longer applicable, making the agreement void.
A written employment agreement generally includes terms of compensation, position, duration of employment, hours, probation period, vacation allotment, benefit entitlements and workplace policies. Importantly though, it can include protections and allowances for employers regarding confidentiality, restricting severance pay, placing employees on temporary layoffs or suspensions, making changes to the employee’s role or hours, and prohibiting solicitation of employees or clients following termination.
However, just because an employment agreement is in writing does not make its terms automatically enforceable. Restrictive terms that restrain trade or employment freedom are presumptively unenforceable unless the employer can demonstrate the terms are reasonable between the parties and consistent with public interest [2]. For example, any restrictive term that goes beyond what is reasonably required to protect the employer’s business interests will not be upheld by a court. Similarly, if a restrictive term is vague or ambiguous it is likely to be unenforceable as the employee cannot be expected to adhere to terms that aren’t clear.
A well worded written employment agreement can provide a framework for the obligations throughout the employment relationship as well as those applicable after the relationship ends. It can establish the notice or payment in lieu of notice owed to employees when terminated without cause, the bounds of confidentiality, and introduce specific requirements for employment depending on the level of an employee’s role. By setting out these terms in advance an employer can rely on them, which can support finality on termination and avoid litigation between the parties.
Without a written employment agreement, an employer runs the risk that terms of employment will be inferred based on the behaviour and conduct of the parties. Not only does this leave open various areas for disagreement both during and after the employment relationship but can negate an employer’s ability to impose restrictive covenants such as termination and non-solicitation clauses. Where restrictive terms are not expressly agreed, an employer is exposed to the courts imposing awards that apply common law factors. In the case of a termination, this may mean an employee is not only entitled to the minimum statutory requirements of notice or payment in lieu of notice [3], but common law entitlements that can be upwards of one month per year of service depending on a variety of factors including their age, length of employment, position held, education and market employability.
Rather than leave terms that affect your business up to chance, put it in writing with an employment agreement.
Mikaila Mauro is with Pearlman Lindholm Law Corporation.
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[1] Adams v. Thinkific Labs Inc., 2024 BCSC 1129.
[2] Quick Pass Master Tutorial School Ltd. v Zhao, 2022 BCSC 1846.
[3] Employment Standards Act, RSBC 1996], c.113 at s. 63.
