Free Canada Employment Contract Agreement Template

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Overview

The Employment Contract Agreement template has been updated to incorporate language changes resulting from several important court cases where language in termination clauses was challenged by the employee and the court found in their favour.  Namely: 

• Waksdale v. Swegon North America Inc., 2020 ONCA 391 (CanLII)
• Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029   

The employment Contract Agreement template is an important document in your HR toolkit. The Agreement captures essential clauses that must be in all employment contracts that adhere to best practices such as vacation entitlement, termination obligations for both employee and employer, employee’s job description and employee’s acknowledgement of the Company’s Staff Policies.

When do you prepare an Employment Contract Agreement? If you are using ConnectsUs HR Kits & Templates, HR will prepare the Contract Agreement after completion of the Employment Offer Form. The Employment Offer form is an internal template that HR sends out to hiring managers and other stakeholders to complete after a suitable candidate has been identified. The Offer Form contains information such as reporting structure, incumbent legal name, position title,  salary and most importantly, approvals from the management on the offer. This process helps HR produce an error-free Employment Contract in a breeze and provides HR with peace of mind knowing that the offer has been approved by the management.

You will reap the benefits of having a well-written Employment Contract Agreement in place when a conflict arises. It takes the guesswork out of verbal promises made when the employee first joined the company which could have been years ago. In such a situation, just pull out the contract and look for the relevant clause! It’s that easy! The Contract Agreement also helps to protect your company from potential lawsuits as the employment terms and conditions have been clearly spelt out.  One of HR’s most important role is to help the company reduce legal liabilities and the Employment Contract Agreement template is your first step in the right direction!

How the Employment Contract Agreement is used?

As soon as the Employment Offer document is completed, signed off and returned to HR, prepare the Employment Contract Agreement using information in the Offer document. 

Once this Employment Contract Agreement template has been modified for your company:

• Review all edits to ensure legal compliance.
• Ensure the Contract Agreement is signed by a company representative who has signing authority on behalf of the company.
• If sending the Contract Agreement to the employee by email, always send a pdf or jpeg copy. Avoid sending the contract in Word document as changes can be made and previous amendments can be tracked.  
• Human Resources to present the Contract Agreement to the employee to review the terms and conditions of the offer before the employee joins the company.
• The Contract must be signed before the employee's first day at work.

Why use an Employment Contract Agreement?

Clearly articulating employment terms and conditions, and requesting confirmation that the employee understands and signs off on them:

• Acts as a 'pre-nup' in the employee-employer relationship to outline what's expected from each party during the employment relationship and what will happen once you part ways.  It's an agreed-upon set of rules that's established when both parties are on good terms and in the honeymoon phase. 
• Ensures that an employee knows what they can expect from your company.
• Ensures that the employee's terms & conditions are in writing so there are no misunderstandings.  The agreement clearly indicates that any oral promises or previous arrangements are nul and void once the employee signs the contract.
• Years, even weeks down the road, the parties often forget what they agreed upon and having your terms in writing is critical. 
• Employees are much more likely to respect your house rules when they've signed an employment agreement.
• Helps to ensure protection of your company. If an employee situation ends in litigation, you'll have a much better chance in court if you have your terms and conditions clearly laid out. 
• Helps to protect your company against the NOTMICS. 
• If used in conjunction with and if you include and attach your employee handbook as an addendum, you'll be clearly articulating conduct policies and expectations before the employee is hired that provides another layer of protection for your company.  See how all 3 documents fit together. 

What you risk by not using an Employment Contract Agreement?

If you don't use employment agreements when employees are hired:

• You are at the mercy of common law which highly favors the employee. For example, if you don't have a termination clause, your liability for terminating an employee may be very high when compared to a contained liability if it's pre-determined in the employment agreement.
• Consequences for misconduct are not clearly articulated.  
• If your rules and do's and don't's are not clearly laid out, you can't expect that employees will 'just know' as the courts will often conclude.  
• Your company confidential information is at risk. 
• You may be liable for overtime pay. 
• Without a contract, the employee may claim that you promised them a bonus or other compensation.