Be Careful with Employment Contracts

Employment contracts clarify performance standards and the terms of employment but can also cause a lot of grief if not managed properly.  It is very important to “pay attention to the details” in employment contracts, as these can have a significant impact if mistakes are made or terms are overlooked.

Some of the more common pitfalls are:

1. End dates missed – If you hire someone on a fixed term contract (i.e. May 1 to September 30) and they work beyond the stated end date with no new agreement, the temporary contract becomes a permanent arrangement and you must treat the person as a permanent employee.

2. Changes in status or position not reflected in contract –pay attention to the terms of the original agreement and make amendments when necessary.  If not properly defined, changes in position or terms that aren’t specifically detailed could lead to legal challenges if employment is terminated based on the original contract.  Common law provisions for termination notice for more senior positions are considerably more expensive than junior positions

3. Amendments to contracts require something new – court cases have established that when you are renewing or changing a contract for an employee, you must give them “consideration” in exchange for the new terms.  “Consideration” in this context is some type of superior benefit (a signing bonus, a slight raise, more vacation, etc.) compared to what was in the original contract.

Call Us to obtain qualified advice on wording in your contract.