Monday, December 23, 2024

Howard Levitt: New year, new contract? Everything you need to know before signing on the dotted line

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Saxony’s State Premier Michael Kretschmer (2nd R) of the Christian Democratic Union (CDU), signs the coalition contract for a minority government in the eastern federal state of Saxony in Dresden, eastern Germany, on December 17, 2024. (Credit: JENS SCHLUETER/AFP via Getty Images)

By Howard Levitt and Jacqueline King

This is the time of year that many employees accept new jobs or employers want to start the New Year fresh by providing their employees new contracts to sign, often accompanied by a raise or bonus. In their excitement, employees often forget to review that contract carefully. The contract governs the relationship between the employer and the employee, with the exception, of course, of relevant legislation relating to human rights and employment standards.

So, what should you be considering when reviewing a new employment contract? The contract sets the foundation for the working relationship, outlining the rights, obligations, and expectations of both parties. Before signing, there are several critical factors to consider to ensure that your interests are protected and your rights respected.

Some key issues to keep in mind when entering into an employment contract include:

A primary consideration is how your employment status is defined within the contract. Employment can generally be classified as either full-time, part-time, temporary, or as an independent contractor. Each status has implications for benefits, job security and other protections. In Canada, misclassification — where an employee is incorrectly labelled as an independent contractor, say — can result in significant legal and financial consequences, including loss of benefits, overtime pay, and entitlement to certain rights such as severance.

  • Employees enjoy greater protections under the law, including access to benefits and stronger termination rights and protection against onerous working conditions.

  • Independent contractors, on the other hand, are not entitled to the same benefits or protections under the Canada Labour Code or provincial employment standards acts.

The contract should clearly define your role and responsibilities. While job descriptions can evolve, ambiguity in a contract can lead to misunderstandings about the scope of your work and even cause problems leading to constructive dismissal. Ensure that the duties outlined align with your professional expectations, and if the role includes managerial or professional designations, check whether those are commensurate with your experience and credentials. In some cases, the title may carry certain obligations or imply responsibilities that differ from your expectations.

The contract should clearly specify your salary or hourly wage, as well as any bonuses, commissions, or performance incentives. In addition to base compensation, the contract should detail the benefits package, including but not limited to:

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