Free Canada Employment Contract Agreement Template

A well-drafted employment agreement is essential for clearly defining the terms of employment, protecting both employer and employee, and ensuring compliance with Canadian labor laws. Without a proper contract, businesses risk misunderstandings, legal disputes, and financial liabilities.

What’s included in the Employment Agreement template?

This comprehensive contract template covers all essential employment agreement elements for Ontario, Alberta, BC. 

Key sections include:

1. Instructions
2. Recitals for New and Existing Employees
3. Employment
   1. Term
   2. Probation
   3. Position
   4. Place of Work (including occasional and full time remote work)
   5. Hours Of Work (including guaranteed hours and variable hours, meal breaks, and overtime)
4. Conditions of Employment
   1. Legal Entitlement to Work in Canada
   2. Representation
   3. Driving Requirements
      1. Driver’s Licence and Eligibility
      2. Loss of Driving Eligibility
      3. General Driving Rules
      4. Use of Company Vehicles
      5. Use of Personal Vehicles for Company Business
   4. Collection, Use and Disclosure of Personal Information
   5. Privacy, Monitoring and Surveillance
   6. Payroll
   7. Company Credit Card and Expense Reporting
5. Compensation
   1. Wage
   2. Incentive Program
   3. Allowances
   4. Expenses
6. Benefits
7. Leaves
8. Company Property and Equipment
9. Policies
10. Discipline/Suspension
11. Temporary Layoffs
12. Termination of Employment
    1. Resignation
    2. Termination by the Company
13. No Authority to Bind the Company
14. Return of Company Property
15. Company Interests and Employee Responsibilities
    1. Confidentiality and Non-Disclosure
    2. Conflict of Interest
    3. Non-Competition and Outside Activities During Employment
    4. Non-Solicitation
    5. Intellectual Property
    6. Non-Disparagement
    7. Enforcement, Remedies and Survival
16. Entire Agreement
17. No Reliance on External Representations
18. Applicable Law
19. General

Why a Proper Employment Agreement Saves You (alot of) Money

In Canada, termination costs are driven by one thing: whether you have a valid, enforceable termination clause.

If you don’t, courts default to common law reasonable notice. That is not statutory notice. It is often dramatically higher.

For a long-service employee in their 40s or 50s, common law notice can range from 6 to 24 months of compensation. That includes base pay and often benefits, bonus, commission, and other compensation components.

By contrast, the Employment Standards legislation in each province sets minimum notice or pay in lieu. In many cases, that ranges from 1 to 8 weeks, sometimes plus statutory severance depending on province and payroll size.

The financial difference is not marginal. It can be hundreds of thousands of dollars. A properly drafted termination clause limits notice to statutory minimums or a defined formula. That predictability protects you from:

• Unexpected common law notice awards

• Litigation costs

• Legal fees and settlement pressure

• Cash flow disruption

• Insurance premium increases

Without a valid clause, you are exposed. With a valid clause, your maximum liability is known and budgetable.

That certainty changes how you manage risk, how you price your services, and how you make strategic decisions about restructuring or performance management.

Why you need it

• 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.  

Who is this for?

• Small business owners – Hire employees with a legally secure contract.
• HR professionals – Standardize employment agreements to maintain compliance.
• Consultants & advisors – Provide clients with a professional, ready-to-use contract.

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. 
• 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.