Employment Contracts: Key Clauses For Ontario

Employers in Ontario (and all of Canada) should require employees to sign an employment contract before starting work. 

When signed, an employment contract defines, among other things, the employee’s earnings, the employer’s policies and restrictive covenants such as a non-solicitation clause and, most importantly, what happens in the event of termination.

If an employee does not sign an employment contract, they still have an implied employment contract with their employer in that they are bound to the “common law” rather than defined (i.e. written) terms and conditions. The common law is always better for employees, and worse for employers because the common law gives employees greater rights to which employment contracts can serve to displace.

Important Clauses In An Ontario Employment Contract

Here are some of the most important clauses to include in an a template for an employment contract in Ontario:

1. Termination Clause: An enforceable termination clause can limit an employee’s entitlement to termination pay from over 24 months to just eight weeks. 

2. Non-Solicitation Clause: A non-solicitation clause prohibits employees from soliciting or dealing with customers of the employer for a set period of time in a specific geographic area. In addition, a non-solicitation clause usually prohibits the employee from soliciting other employees to leave the employer.

3. Confidentiality Clause: A confidentiality clause reinforces and specifies the employee’s duty of confidentiality to their employer. A good confidentiality clause defines confidential information and trade secrets, clearing up any ambiguity as to which information must be kept secret.

4. Bonus Language: A solid bonus clause in favour of the employer will state that any bonus is purely discretionary and that no bonus will be paid beyond the statutory notice period in case an employee is terminated.

5. Severability Clause: A severability clause will reinforce that if any other clause in the employment contract is found void or unenforceable, the remaining clauses, will, nonetheless, continue in force.

6. Probationary Clause: A probationary clause gives the employer the right to terminate the employee without any notice or termination pay in case the employee is let go within 90 days or less.

7. Layoff Clause: Without a clause contemplating a temporary layoff, an employer may not be able to temporarily layoff an employee without constructively dismissing the employee.

goHeather employment contract templates contain all the above clauses as options (and more!). Try our Ontario employment contract template to see for yourself.