Employment contract

How BC law treats it

BC law does not require a written employment contract. An oral agreement, an offer letter or a detailed written contract can all be binding. Whatever the form, the Employment Standards Act, RSBC 1996, c 113 sets minimum standards for wages, hours, overtime, vacation, statutory holidays, leaves and termination pay, and section 4 makes any agreement to waive those minimums of no effect. The Act also requires employers to keep payroll records (s. 28) and give a written wage statement each payday (s. 27). Termination is where most disputes arise. Without an enforceable termination clause, an employee dismissed without just cause is entitled to reasonable notice at common law, assessed on factors such as age, length of service, character of employment and availability of similar work (Bardal v Globe & Mail Ltd (1960), 24 DLR (2d) 140 (Ont HC)). That is usually far more than the statutory minimum in section 63. A termination clause that provides less than the Act's minimums is void, and the employee then gets common law notice (Machtinger v HOJ Industries Ltd, [1992] 1 SCR 986). Changes to an existing contract, such as adding a termination clause or restrictive covenant after the employee has started, generally need fresh consideration to be enforceable. Restrictive covenants are read narrowly: a non-compete is presumptively unenforceable, and courts will not rewrite an overbroad covenant (Shafron v KRG Insurance Brokers (Western) Inc, 2009 SCC 6). Damages for bad faith manner of dismissal are compensatory, not a notice extension (Honda Canada Inc v Keays, 2008 SCC 39).

What it means for your business

A well drafted employment contract is the cheapest way for a BC business to control termination costs, protect confidential information and clients, and clarify ownership of work product. For founders and acquirers, key employee agreements are a standard due diligence item: weak termination clauses can mean large severance liabilities, and unenforceable non-competes provide no real protection for the buyer after a sale. Example: A Burnaby tech company hires a sales manager with a signed contract limiting termination pay to the Employment Standards Act minimum. Because the clause is drafted to always meet or exceed the Act, it is enforceable, and the company avoids a claim for many months of common law notice.

Risks and common mistakes

Having the employee sign the contract on the first day of work or later, without fresh consideration. Drafting a termination clause that could, in any scenario, give less than the Employment Standards Act minimums. Including a broad non-compete when a non-solicitation clause would be enforceable and sufficient. Using a template from another province or the US that ignores BC rules. Failing to update contracts when an employee is promoted or the role changes substantially.