Workplace Contracts and Policies
Introduction
Workplace contracts and policies are vital tools used by employers to govern the terms of employment with an employer’s workers. Contracts and policies serve to set out rules and regulations governing the behaviour of workers in the workplace. In good times, they provide clarity of terms for both employers and employees, which ideally provides the groundwork for a smooth term and ending of a working relationship. In cases where disputes arise, workplace contracts and policies provide evidence of the working relationship and help to assist parties with resolving those disputes. On the other hand, contracts can also be used to the detriment of workers, such as by reducing the notice period to which they might be entitled upon termination or imposing restrictions on the employee’s post-termination conduct through non-solicitation and/or non-competition clauses.
What is a Workplace Contract?
A workplace contract is a written agreement between an employer and a worker that governs the working relationship between both parties for a non-unionized position. A workplace contract sets out the rules of engagement and should include the material terms of the relationship between the parties. Common examples of contract terms include whether the arrangement is an employment relationship or contractor relationship, the term of the position (permanent or fixed-term), job duties, probationary period, pay, benefits, hours of work, vacation, confidentiality, non-solicitation and non-compete provisions, and termination provisions. A well-drafted workplace contract is vital to recording the agreement between the parties, which can be particularly important in the event of a dispute. Contracts not only set out the terms of the agreement in a legally enforceable arrangement, but also provide rules for the end of the employment relationship.
While similar positions in the same workplace might have similar contracts, workplace contracts are typically specific to the individual who enters into them (for example, an employee with greater experience and more years of service may have a higher salary and more vacation time than an employee with no experience; this would be reflected in that employee’s individual employment contract). Generally, a change to the workplace contract requires consent of both parties for material changes. Changes to contracts also require fresh “consideration” (something of value – for example, a bonus or raise). Otherwise, an employee might claim constructive dismissal (where an employer makes unilateral and substantial changes to the terms of employment and, as a consequence, an employee is deemed to be dismissed).
Employment Contracts and The Saskatchewan Employment and Act
The Saskatchewan Employment Act contains minimum standards for most material aspects of an employment relationship. Employers cannot offer contracts to employees that contract out of the minimum standards required by the legislation. For example, the legislation requires minimum standards for the amount of vacation that must be provided to an employee every year. An employer cannot enter into a legally binding contract that provides less vacation than what the legislation provides, even if both parties agree. An employer can, however, offer greater benefits than those which are contained in The Saskatchewan Employment Act.
Other minimum standards set by The Saskatchewan Employment Act that must be adhered to by employers include (but are not limited to): payment of wages, hours of work, overtime, holiday pay, job-protected leaves of absence, illness in the workplace, and layoffs and termination.
A guide to Saskatchewan’s minimum employment standards can be found on the Government of Saskatchewan’s Employment Standards website: https://www.saskatchewan.ca/business/employment-standards
For more information, please see our page on Employee Rights in Saskatchewan.
Benefits of a Well-Drafted Contract
A well-drafted contract provides clarity to the parties during the term of the relationship and, perhaps even more importantly, in the event of a dispute or at the end of a working relationship.
For example, a common disagreement between parties can arise as to whether an employee is an employee or an independent contractor. A well-drafted contract can help provide clarity to the relationship as long as the terms are actually followed in practice (see more information below). For example, an independent contractor has different responsibilities than an employee. A contractor must make its own remittances to Canada Revenue Agency whereas an employer is required by law to make remittances on behalf of its employees. If an employer is treating a worker as an independent contractor and Canada Revenue Agency later determines that the worker is actually an employee, then Canada Revenue Agency will hold the employer responsible for any unpaid taxes, employment insurance premiums, Canada pension contributions, as well as penalties and interest. As another example, Employment Standards might pursue an employer for minimum employment standards such as payment of overtime, vacation pay, and holiday pay if a contractor later claims status as an employee and Employment Standards determines that the worker is in fact an employee. It is advisable to obtain legal advice regarding the likely status of a worker and have a well-drafted contract so that an employer does not mistake an employee for an independent contractor.
Another common benefit of an employment contract is a clearly drafted clause regarding termination of an employment agreement. Employers are required to provide notice to employees that are terminated without cause. While there are minimum notice periods prescribed in the legislation, the amount of notice that must be provided to an employee on termination without cause is debatable under the common law (ie judge-made law). As such, having a clearly defined agreement at the outset regarding how many months of notice an employer will provide to an employee on termination can save a lot of disagreement between the parties in the event that this occurs. Note that the common law is particular about how termination clauses should be drafted and a poorly drafted notice clause will unlikely be upheld by a court if challenged. It is advisable to obtain legal advice to ensure that the termination clause is well-drafted.
For terminations with cause, it can be helpful to list the type of conduct that would warrant termination for cause so that the employee has clear notice of this. Note, that conduct must be serious enough to justify termination of the relationship without any notice (for example, theft, serious or repeated insubordination, harassment, breach of confidential information).
Note that despite the drafting of a contract, the conduct of the parties is critical. If the parties carry on a relationship that effectively ignores the terms of the contract, then the conduct of the parties will be examined in determining a dispute instead of the written agreement. It is crucial then that the parties govern themselves in accordance with the terms of the contract.
An employer should always provide an employee with an opportunity to seek independent legal advice on the terms of the contract at the time of signing the contract to help ensure that the employee understands what they are signing and to make sure it is enforceable.
What is a Workplace Policy?
A workplace policy is a set of written rules established by an employer that governs general employee behavour in the workplace. Policies set out the rules and/or procedures that are to be followed for specific circumstances. Often, workplace policies come in the form of an employee/worker handbook. Common examples of workplace policies include policies on codes of conduct, operational procedures, progressive discipline, absenteeism, leave, technology use, personal use of company property, social media, accommodations, harassment, violence, uniform, and many more. Workplace policies are important for providing clear expectations, consistency in the workplace, and for ensuring compliance with provincial laws (for example, harassment and violence policies). If disputes arise over an employee’s behaviour, employment policies provide clear, written evidence of what is expected in the workplace.
It is important that an employer ensures that it actually follows its workplace policies once they are established. It can be difficult for an employer to enforce policies after-the-fact if it has a history of not following those policies in the workplace.
A workplace policy applies more universally to employees (and sometimes to others such as contractors) in the workplace than an employment contract. Typically, employment contracts refer to employment policies and contain a term whereby employees will agree to comply with all policies (and their updates) as set by the employer in the workplace. Employers can change policies unilaterally so they should not contain material terms of employment (for example, salary, notice provisions, material job duties).
Employers must ensure that workplace policies are easily accessible to employees, particularly if they try to later rely on those policies. New employees should be provided with copies of current policies when they start employment. Current employees should be informed when changes are made to company policies and be provided with an updated copy of those policies.
Benefits of Workplace Policies
Workplace policies benefit both employees and employers. For employees, it provides a consistent location for employees to review what is expected of them for different circumstances at the workplace. In turn, this helps ensure a more smoothly running workplace for employers.
In the event of conflicts, there are clear guidelines that both employers and employees can point to if a disagreement arises as to whether there is a situation that warrants discipline.
Note that like workplace contracts, it is important to actually follow the workplace policies that are set out in your organization.
Need Assistance?
Our office is experienced with reviewing, drafting and advising on contracts and workplace policies. Note that employment laws are governed provincially and may differ from jurisdiction to jurisdiction. It is important to obtain advice specific to your jurisdiction. Consult our team for your questions and for assistance with your contracts and workplace policies.
The above information is provided for information purposes only and does not constitute legal advice.