The Employee’s job title should reflect their position with the Company. It should be sufficiently broad to encompass a range of tasks they will be required to perform. Examples of job titles include: Office Manager, Marketing Coordinator, or Vice President of Sales.
The Employee’s start date should be their expected first day of work. If their first day changes, this date does not need to be exact for the agreement to be effective. Note that any work-related training provided by the company should be on or after their expected first day, even if it is before they begin their regular tasks.
Temporary and Permanent Employees
A temporary employee will be working for the company for a fixed time period. This usually occurs if the company is hiring for a specific project or if funding for the employee is only available for a fixed amount of time. A permanent employee will work for the company on an ongoing basis with no fixed termination date.
Termination Date for Temporary Employment
The Employee’s termination date should be the Employee’s expected last day of work with the company. The employee can continue working for the company after this date if the company and the employee agree to extend this agreement or enter into a new Employment Agreement.
Full Working Effort
For full-time employees, it is common to include a clause clarifying that the company expects the employee to dedicate their full working effort to the company. This prevents the employee from working for anyone else while employed by the company. For part-time employees, this is normally not necessary.
Employees can be scheduled to work a minimum number of hours per week or their hours can vary according to the company schedule. For full-time salary workers, it's common for employees to work for a consistent number of hours each week (e.g. 40 hours per week). Flexible hours are more common in customer service or retail jobs.
On-Call workers are common in many industries. They are usually entitled to some compensation for being on-call, even if they don't end up coming into work. But the rules for paying on-call workers are complex and vary widely by industry. You should conduct research on this matter if you rely upon on-call workers.
In Ontario, the law is being clarified in this area in 2019. Effective January 1, 2019, the Ontario government is expected to add new legislation relating to on-call employees. If an employee regularly works more than three hours a day and is on call and available to work longer but works less than three hours, the employer must pay the employee at least wages equal to the employee’s regular rate for three hours of work.
Overtime pay should be available to any employee expected to work more than 44 hours per week, even if only occasionally. In Ontario, an employee can work up to 44 hours in a work week before overtime pay is required. Following 44 hours in a work week, the employee is required to be at 1.5 times the employee’s regular rate of pay.
The Company may choose to prohibit the Employee from working overtime hours and receiving additional pay unless the company has given advance approval to the employee.
More information, including information on how to calculate overtime pay and paid time-off in lieu of overtime pay, can be found on the Ontario government website here: https://www.ontario.ca/document/your-guide-employment-standards-act-0/overtime-pay
Description of Employment Duties
The description of employment duties should include all day-to-day tasks the employee will be expected to perform. This description should be broad enough to cover the tasks normally assigned to this employee and other general tasks. Not every task needs to be included in this description, as the employee will still be required to follow instructions from their supervisor.
Employees can be paid a salary (i.e. a fixed amount per year), or an hourly wage. The company will need to set its own policies for how and when employees are paid. It is best to keep these policies in writing and make them available to employees.
In certain industries, it is common for employees to receive shares or the option to purchase shares in the company. This is a form of compensation in addition to employees' regular pay. Offering shares to employees is an excellent way to increase employee retention and to let employees share in the company's growth and profits.
Employee equity can take many different forms. Employees can be given shares after working a certain number of years, or they can receive a small number of options every month. There are tax issues that should be considered before determining a company's employee equity strategy.
An annual bonus acts as an incentive mechanism to keep the Employee at the Company and allows Employees to share in the Company's overall success. The amount of the bonus can be based on a number of factors, including the Employee’s individual performance, the Company’s performance and Employee milestones. Bonuses are usually discretionary, rather than a guaranteed amount each year.
All full-time employees in Ontario are entitled by law to at least two weeks of paid vacation time per year, unless the industry is exempt. Exempt industries can be found here. This increases to at least three weeks of vacation time per year for employees with five or more years of employment with the company. Usually, vacation time must be pre-approved before it is taken. However, the company cannot prevent an employee from taking their full vacation time.
Employees are also entitled to receive vacation pay, which must be at least four per cent of the employee's gross wages. Hourly and part-time employees are entitled to receive vacation pay if they don't receive paid vacation time. Further information on vacation time and vacation pay can be found here:
In the Founded Employment Agreement, vacation days are drafted in a way to comply with your business's policy on carrying over days from year-to-year:
"Vacation time shall be granted, accumulated, and carried-over in accordance with the Company’s established vacation policies and applicable law."
If you choose 0 days of Paid Vacation or Equivalent Vacation Pay, the following clause will be shown in your agreement:
"The Employee is not entitled to vacation days or pay in lieu of vacation."
Flex Days are flexible paid days off. One big difference between Vacation Days and Flex Days in the Founded Employment Agreement, is that Flex Days cannot be carried over to the following year:
"Flex days may not be accumulated, carried-over from year to year, or taken on sequential days."
A benefits plan is something many companies choose to provide to their Employees to attract or retain qualified candidates. A benefits plan may include such items as personal health insurance, dental insurance and/or life insurance, typically through a group benefits plan provided through an insurance company.
A probationary period is a limited time where the company can evaluate the employee and can choose to terminate the employee without notice or compensation. It can be thought of as a type of “trial period” at the beginning of the employment relationship. The probationary period must be time-limited. It can only last a reasonable amount of time to allow the company to assess the employee.
The company can require employees to provide a reasonable amount of time between informing the company of their intention to quit and their last day of work. The typical requirement for notice is two weeks, but is often higher for senior employees who will take longer to replace. This period is intended to allow the company to transfer the departing employee’s work to another employee and find a suitable replacement. An employee cannot be forced to stay with the company against their will, so the time period for notice of resignation should be fair and reasonable to both parties.
Some companies choose to include a specific amount of compensation that an employee will be entitled to receive upon termination (calculated as the legal minimum plus a certain number of weeks of additional termination pay). More commonly, companies state that they will offer only the minimum amount of compensation that is legally required to their employees. They can then assess termination pay on a case-by-case basis.
Regardless of what appears in this part of the employment agreement, the company will need to closely consider the employee's compensation at the time of terminating their employment. Termination pay is calculated differently for each employee and must consider that employee's role within the company and their likelihood of being hired at another company in the same role.
A non-solicitation provision prevents the employee from attempting to recruit or hire the company’s employees, or to approach or solicit the company's customers, for a certain period of time. This is a way to ensure a former employee does not “poach” their former co-workers or customers and take them to a competing company.
A non-solicitation provision can only be enforced for a reasonable period of time because it may interfere with the freedom of employees to work where they choose. Accordingly, it will only be enforced for a fair and reasonable amount of time.
A non-competition provision prevents the employee from competing with the company for a specific amount of time and within a specific geographic area.
A non-competition provision can only be enforced for a reasonable number of years because it may interfere with the freedom of employees to conduct business or work where they choose.
A confidentiality provision requires the employee to treat certain information confidentially and not disclose it to anyone outside of the company. This can be used to protect trade secrets that the company discloses to employees. Including this provision is particularly important for employees who may be exposed to information that is not public knowledge.
Assignment of IP
If an employee is creating any Intellectual Property (IP) during their work, an assignment provision will clarify that all IP is owned by the company and not the employee. This could be as simple as creating training manuals for internal use or as complex as developing a new life-saving drug. In either case, it is prudent to assign ownership of all intellectual property to the company.