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EMPLOYMENT CONTRACT

THIS EMPLOYMENT CONTRACT (the "Agreement") dated this ________ day of ________________, ________.

BETWEEN:

____________________________________________ of ____________________________________________

(the "Employer")

OF THE FIRST PART

- AND -

____________________________________________ of ____________________________________________

(the "Employee")

OF THE SECOND PART

BACKGROUND:
The Employer is of the opinion that the Employee has the necessary qualifications, experience and abilities to assist and benefit the Employer in its business.
The Employer desires to employ the Employee and the Employee has agreed to accept and enter such employment upon the terms and conditions set out in this Agreement.

IN CONSIDERATION OF the matters described above and of the mutual benefits and obligations set forth in this Agreement, the receipt and sufficiency of which consideration is hereby acknowledged, the parties to this Agreement agree as follows:

Commencement Date and Term
The Employee will commence permanent full-time employment with the Employer on the ________ day of ________________, ________ (the "Commencement Date").
Job Title and Description
The initial job title of the Employee will be the following: ____________________.
The Employee agrees to be employed on the terms and conditions set out in this Agreement. The Employee agrees to be subject to the general supervision of and act pursuant to the orders, advice and direction of the Employer.
The Employee will perform any and all duties as requested by the Employer that are reasonable and that are customarily performed by a person holding a similar position in the industry or business of the Employer.
The Employer may make changes to the job title or duties of the Employee where the changes would be considered reasonable for a similar position in the industry or business of the Employer. The Employee's job title or duties may be changed by agreement and with the approval of both the Employee and the Employer or after a notice period required under law.
The Employee agrees to abide by the Employer's rules, regulations, policies, and practices, including those concerning work schedules, vacation, and sick leave, as they may from time to time be adopted or modified.
Employee Compensation
Compensation paid to the Employee for the services rendered by the Employee as required by this Agreement (the "Compensation") will include a wage at the rate of __________.
This Compensation will be payable every two weeks while this Agreement is in force. The Employer is entitled to deduct from the Employee's Compensation, or from any other compensation in whatever form, any applicable deductions and remittances as required by law.
The Employee understands and agrees that any additional remuneration paid to the Employee in the form of bonuses or other similar incentive remuneration will rest in the sole discretion of the Employer and that the Employee will not earn or accrue any right to incentive remuneration by reason of the Employee's employment.
The Employer will reimburse the Employee for all reasonable expenses, in accordance with the Employer's lawful policies as in effect from time to time, including but not limited to, any travel and entertainment expenses incurred by the Employee in connection with the business of the Employer. Expenses will be paid within a reasonable time after submission of acceptable supporting documentation.
Place of Work
The Employee's primary place of work will be at the following location: ____________________________________________.
Employee Benefits
The Employee will be entitled to only those additional benefits that are currently available as described in the lawful provisions of the Employer's employment booklets, manuals, and policy documents or as required by law.
Employer discretionary benefits are subject to change, without compensation, upon the Employer providing the Employee with 60 days written notice of that change and providing that any change to those benefits is taken generally with respect to other employees and does not single out the Employee.
Vacation
The Employee will be entitled to two weeks of paid vacation each year during the term of this Agreement, or as entitled by law, whichever is greater.
The times and dates for any vacation will be determined by mutual agreement between the Employer and the Employee.
Upon termination of employment, the Employer will compensate the Employee for any accrued but unused vacation.
Duty to Devote Full Time
The Employee agrees to devote full-time efforts, as an employee of the Employer, to the employment duties and obligations as described in this Agreement.
Conflict of Interest
During the term of the Employee's active employment with the Employer, it is understood and agreed that any business opportunity relating to or similar to the Employer's actual or reasonably anticipated business opportunities (with the exception of personal investments in less than 5% of the equity of a business, investments in established family businesses, real estate, or investments in stocks and bonds traded on public stock exchanges) coming to the attention of the Employee, is an opportunity belonging to the Employer. Therefore, the Employee will advise the Employer of the opportunity and cannot pursue the opportunity, directly or indirectly, without the written consent of the Employer.
During the term of the Employee's active employment with the Employer, the Employee will not, directly or indirectly, engage or participate in any other business activities that the Employer, in its reasonable discretion, determines to be in conflict with the best interests of the Employer without the written consent of the Employer.
Contract Binding Authority
Notwithstanding any other term or condition expressed or implied in this Agreement to the contrary, the Employee will not have the authority to enter into any contracts or commitments for or on the behalf of the Employer without first obtaining the express written consent of the Employer.
Termination Due to Discontinuance of Business
Notwithstanding any other term or condition expressed or implied in this Agreement, in the event that the Employer will discontinue operating its business at the location where the Employee is employed, then, at the Employer's sole option, and as permitted by law, this Agreement will terminate as of the last day of the month in which the Employer ceases operations at such location with the same force and effect as if such last day of the month were originally set as the Termination Date of this Agreement.
Termination of Employment
Where there is just cause for termination, the Employer may terminate the Employee's employment without notice, as permitted by law.
The Employee and the Employer agree that reasonable and sufficient notice of termination of employment by the Employer is any minimum notice required by law.
If the Employee wishes to terminate this employment with the Employer, the Employee will provide the Employer with any minimum notice required by law. As an alternative, if the Employee co-operates with the training and development of a replacement, then sufficient notice is given if it is sufficient notice to allow the Employer to find and train the replacement.
The Termination Date specified by either the Employee or the Employer may expire on any day of the month and upon the Termination Date the Employer will forthwith pay to the Employee any outstanding portion of the compensation including any accrued vacation and banked time, if any, calculated to the Termination Date.
Once notice has been given by either party for any reason, the Employee and the Employer agree to execute their duties and obligations under this Agreement diligently and in good faith through to the end of the notice period. The Employer may not make any changes to compensation or any other term or condition of this Agreement between the time termination notice is given through to the end of the notice period.

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Last Updated July 3, 2024

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What is an Employment Contract?

An Employment Contact outlines an employer's and employee's rights, responsibilities, and obligations. Once the employer offers the employee the job and both parties sign the Employment Contract, they become legally bound to its terms.

In Canada, an Employment Contract is also commonly known as a:

Employment agreement
Job contract
Contract of employment

Looking for an Employment Agreement in French?

Use our Contrat de Travail.

Why are Employment Contracts essential?

Written Employment Contracts are a vital component of the employer-employee relationship, even though they are not required under Canadian law. Despite not being required, using a written Employment Contract is the best way to create a record of the agreed-upon employment terms and protect the interests of both parties.

Simply put, verbal agreements do not suffice. Relying on a purely verbal Employment Contract should be avoided because it’s difficult—if not impossible—to prove its exact terms. If a dispute arises and an employer and employee don’t have a contract, they could recall the details of their arrangement differently and have trouble resolving the conflict.

Instead, written Employment Contracts provide a record of the job terms so that either party can use it as legal protection in case of a dispute or lawsuit.

Employment Contract law

In Canada, employment is governed by a combination of federal and provincial laws.

At the federal level, the Canada Labour Code applies to employers and employees involved in federally regulated industries, such as banking, telecommunications, and interprovincial transportation.

At the provincial level, each province and territory has its own employment standards legislation, which sets out minimum standards for things like minimum wage, hours of work, and termination of employment.

Types of Employment Contracts

Employment Contracts vary widely, depending on whether employers hire employees permanently or temporarily and on a full-time or part-time basis. Below, we explain the differences between the main types of Employment Contracts.

Permanent full-time Employment Contract

Many employees hold permanent, full-time positions. For an Employment Contract to be considered permanent, it can’t have a predetermined end date. In other words, permanent contracts are indefinite until one or both parties terminate the arrangement.

Defining full-time is less straightforward because there isn’t a legal requirement of hours that classifies full-time employees. That being said, full-time employees usually work 35 hours or more a week.

Permanent part-time Employment Contract

Working part-time is also very common. Employees on a permanent part-time contract do not work full-time hours and have no predetermined end date.

Part-time hours can range from minimal to moderate hours as long as the employee is not working full-time.

Fixed-term Employment Contract

Employees on a fixed-term contract have a prearranged end date for their employment. This means the contract automatically expires on a specific date, and no notice is required from either party to end the employment at that time.

Employees on fixed-term Employment Contracts may work on a full-time or part-time basis. Often, employees on fixed-term contracts are hired temporarily (e.g., seasonal jobs).

What is included in an Employment Contract?

When creating an Employment Contract, certain information must be included. By using our template, you can include the following information:

Employer and employee information
Start date
End date, if applicable
Work location
Work hours
Job title
Employee duties
Pay type (salary, hourly wage, and/or commission)
Pay rate
Payment frequency
Vacation time
Probationary period length, if applicable
Notice periods
Restrictive clauses

Restrictive clauses in Employment Contracts

A restrictive covenant or clause prohibits an employee from engaging in certain behaviours that could put an employer’s success at risk. For example, an employer may include the following clauses in an Employment Contract:

1. Confidentiality clause

A confidentiality clause restricts an employee from communicating any of their employer's confidential information gained during employment. They are important when an employee may come into contact with sensitive or proprietary information that is the exclusive property of the employer. It’s important that this clause states the confidentiality period and defines what constitutes confidential information.

2. Non-solicitation clause

A non-solicitation clause restricts an employee from recruiting any of the employer's other staff or contractors after the employee leaves. It aims to prevent an employee from interfering in the employer’s relationship with other employees.

3. Non-compete clause

A non-compete clause aims to prevent an employee from competing for business with their employer. This term may be in effect while the employee works for the company or for a certain time after leaving.

Typically, a non-competition clause prohibits the individual from:

Giving advice, money, or skilled labour to a competing business or individual
Directly competing for business as an owner, sole proprietor, partner, or otherwise

Non-compete clauses are not permitted in all provinces.

Employees versus self-employed workers

There are distinct differences between employees and self-employed workers in Canada.

Employees work for an employer and are under an Employment Contract. They typically have set hours, receive benefits such as sick pay and holiday pay, and are subject to taxes and national insurance contributions.

On the other hand, self-employed contractors are individuals who work independently. They sign an Independent Contractor Agreement or Service Agreement instead of an Employment Contract. Typically, self-employed contractors have more control over their work schedule and are responsible for their tax contributions. Generally, they are not entitled to receive benefits.

The distinction between employees and self-employed contractors is important for determining legal and tax obligations, so employers must ensure they only create Employment Contracts with employees.

Breaching an Employment Contract

When an employee breaches their Employment Contract, their employer's response will depend on the severity of the infraction. An employer may issue an employee a Warning Letter for minor infractions, such as:

Being frequently late
Failing to complete certain job duties
Missing work without proper notice

If an employee continues to breach their Employment Contract after receiving a warning, their employer may need to let them go with an Employment Termination Letter. In addition, some infractions can be grounds for immediate termination, such as:

Breaching a confidentiality policy
Not following health and safety policies
Breaching a drugs and alcohol policy
Misrepresenting qualifications
Threatening co-workers
Theft

Changing an Employment Contract

As an employer, changing an employment contract in Canada can be straightforward as long your employee agrees. You should always secure an employee’s consent in a Contract Addendum, also known as an Amending Agreement. It allows you to make one or more changes without invalidating the entire contract.

Suppose you need to change an employee's job description and duties significantly. In that case, using a Contract Addendum will prevent you from having to create an entirely new Employment Contract. A Contract Addendum must be signed by both parties and attached to the Employment Contract.

For changes specific to compensation, employers can use a Compensation Agreement.

Terminating an Employment Contract

Generally, it’s either an employee or employer who ends a working relationship. Employees who want to quit and end the contract provide their employer with a Resignation Letter. On the other hand, employers terminate Employment Contracts by providing the employee with an Employment Termination Letter.

However, sometimes an employer and employee mutually agree to end their working relationship. In that case, they may use a Termination Agreement to cancel the Employment Contract. It’s a useful tool because it ensures the release of all obligations outlined in the Employment Contract and records an employee's last official day.

Unlike an Employment Termination Letter, a Termination Agreement requires both parties’ signatures.

Free Employment Contract

Create Your Free Employment Contract

Employment Contract

QGpermTemp

Your Employment Contract

EMPLOYMENT CONTRACT

What is an Employment Contract?

Why are Employment Contracts essential?

Employment Contract law

Types of Employment Contracts

Permanent full-time Employment Contract

Permanent part-time Employment Contract

Fixed-term Employment Contract

What is included in an Employment Contract?

Restrictive clauses in Employment Contracts

1. Confidentiality clause

2. Non-solicitation clause

3. Non-compete clause

Employees versus self-employed workers

Breaching an Employment Contract

Changing an Employment Contract

Terminating an Employment Contract

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