Congratulations. After countless interviews, you’ve finally been offered your dream job. All that’s left to do now, you’re told, is sign the company’s employment contract. You scan the document, and are quickly overwhelmed by the legalese. What to do? Do you sign now or risk losing the job if you don’t?
Such scenarios are playing out across Canadian workplaces. Written employment contracts are a standard practice for high-level executives positions, but experts say they are increasingly becoming a condition of hire for every level of worker. What’s more, such contracts are becoming more complex as employers seek to protect themselves from potential damages should the relationship go sour.
Blame it partly on the recession. A weak economy and the resulting layoffs had many companies paying out hefty severance packages, says Daniel Lublin, a workplace lawyer and partner with Whitten & Lublin LLP in Toronto who specializes in hiring and dismissals.
“It’s a factor of experience. They’re waking up to what can happen and they want to protect themselves and reduce the expense of terminations,” he says.
“It’s also just good employment hygiene,” says Janice Rubin, a partner with Rubin Thomlinson LLP in Toronto. “[A written employment contract] sets out clearly what the deal is. It may not eliminate misunderstandings, but it certainly reduces them.”
Typically an employment contract outlines both party’s rights, duties and obligations. It can be a one-page offer or a 10-page tome, Ms. Rubin says.
Whatever form it takes, an employment contract can be intimidating. Here’s what you need to know before you sign on the dotted line:
Review, review, review
Employment contacts are by nature filled with legal jargon difficult for the average person to comprehend. “Never sign anything you don’t understand,” Ms. Rubin advises.
But when presented with a contract, people often feel they are under pressure to act quickly or perhaps lose the job. “It’s extremely hard to say no to a potential employer, because you want the job,” Mr. Lublin says. What you need to remember, he adds, is that the company spent a lot of time and resources wooing you. It’s unlikely that it will rescind the job offer if you ask for time to review the contract.
While there are no provisions in law that give you a grace period to examine the document, “it’s a reasonable request to ask for time to review a contract, and obtain legal advice,” Ms. Rubin notes. “If they say, ‘No, you must sign now,’ that should give you pause. That should tell you a lot about your prospective employer.”
What the contract should cover
Besides basic elements such as your starting date, job title and duties and responsibilities, all aspects of your financial compensation should be clearly documented, particularly if your salary structure is complex, Ms. Rubin says. This includes base salary, raises you’re promised, commissions, bonuses, stock options, profit sharing and how you will be compensated for overtime. “If you look at commission, for example, you want to know not just how much but when it’s triggered; is it upon payment or when the deal is signed?” she says.
Make sure that the contact includes any special promises or considerations made to you. If you are being orally promised a promotion six months down the road along with a pay increase, or perhaps a move to the firm’s New York office within the year, get it in writing. “Figure out what is important to you and make sure it’s in the contract,” Ms. Rubin says.
Other clauses that an employer will likely include are terms of termination, including severance and any post-employment restrictions.
Negotiate for better terms
