Employment Contracts can be beneficial, but if not done properly, they can actually cause more harm than good.
For a contract of any kind, including employment, to be enforceable in court, three things must happen: an offer must be made, the offer must be accepted, and goods/services (called “consideration” in legal terms) must be exchanged.
In the employment context, an “offer” constitutes anything the employer or their representative says in the hiring process regarding the terms and conditions of employment. The “acceptance” is the employee saying “yes” (either in writing or verbally) and showing up at the workplace as arranged. The “consideration” is the work performed by the employee in exchange for the money and other benefits (as may apply) paid by the employer.
The contract does not have to be in writing to be enforceable. If the employee can establish evidence to support their agreement, the courts or Ministry of Labour will enforce it. It is always best to have your employment offers and contracts in writing.
Offers are binding. Note the part about “the representative” and “the hiring process”. This includes any “offers” made in the interview, so if a recruiter promises a candidate a raise every year, the new employee is entitled to that raise even if the employer never authorized the recruiter to offer it, nor did the employer ever offer a raise to their other employees. It is best to leave all discussions of compensation until you are very sure the candidate is the one you want to hire, and you have put everything in writing.
Today’s complex employment legislation requires written contracts to avoid confusion and expensive lawsuits.