Employment Agreements

Canadian courts believe that every employee is employed pursuant to a “contract of employment”.  This contract may be in writing or may be implied to exist by the court.  Where a contract is implied, it will not be of much benefit to an employer as the court will generally impose terms into the agreement that are favourable for the employee. In particular, unless otherwise specifically addressed in writing, employment contracts are generally deemed to contain the following “implied terms”:

  • Compensation – Every employment agreement contains terms related to compensation for services rendered.

  • Compliance with lawful directions – Employees are expected to perform the duties that are assigned to them, provided that such duties are safe and lawful.

  • Duties of Loyalty, Fidelity, and Honest Dealings – Both employers and employees are expected to deal with each other in an honest manner and to have the best interests of one another in mind.

  • Term – The employment agreement is generally considered to be of an indefinite term, unless otherwise specified.

  • Termination – The termination of the employment contract can arise in a number of ways. Most commonly, however, the termination of the employment contracts falls into two categories: (1) Terminations for Cause, and (2) Termination Without Cause. These concepts are discussed more here.

  • Fundamental Changes – Where the employer unilaterally alters a fundamental term of the employment relationship (for example, changes the employee’s position), the employee may choose to treat the contract at an end and argue that they have been constructively dismissed and sue for damages.

  • Statutory Entitlements – Entitlements under the Employment Standards Act, 2000, and other employment related legislation such as the Occupational Health and Safety Act, are considered to be incorporated into the employment contract unless an exemption otherwise applies.


When entering into a new employment agreement, there are many things that both employers and employees must consider in order to ensure that they are entering into a binding and enforceable agreement. For example, an employer must be mindful of the timing of employment agreement and, in certain circumstances, what consideration is provided to the employee in exchange for their agreement.


We would be pleased to discuss these issues with you and assist you with negotiating, drafting, and reviewing your employment agreement. To do so, please contact us today.