An Opportunity NOT to be Missed

• Matthew
  Woodley, Q.Arb

  Matthew
  Woodley, Q.Arb

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Many employers in Alberta are about to embark upon post-pandemic planning and hiring blitzes to deal with the anticipated re-opening.

Now is the time to review your existing employment agreements or offer letters to ensure that they reflect current best practices.

Hiring is beyond doubt the best time to clarify the terms and conditions of employment; it is an investment that will pay dividends in the future.

Here are three specific examples of things that can be included in employment agreements and offer letters that will help avoid legal risks, legal costs, and other expensive issues down the road:

1. Termination provisions

• In non-unionized workplaces, employers and employees can agree to limit an employee’s entitlement to notice or pay in lieu of notice in the event that the employer wishes to terminate the employee (for whatever reason). This must include specific, clear and current provisions to avoid these clauses being rendered inoperative.
• Clauses that were drafted even a few years ago may no longer be sufficient to avoid this risk. In the absence of these terms, employers may have to pay up to two years of an employee’s remuneration in the event of a termination.
• This single change now can save significant money later.

2. Layoff provisions

• The COVID-19 pandemic taught us that temporary layoff provisions can actually be useful, but there is a significant risk that a Court will find that relying on the Employment Standards Code provisions only will result in a constructive dismissal.
• The easiest and safest way to address this risk is to include a provision in employment agreements or offer letter specifically allowing the employer to temporarily layoff an employee.
• This tool provides flexibility and avoids risks, so consider making it a part of your template moving forward. Again, care must be taken in drafting these provisions.

3. Bonuses

• The law in Canada has changed dramatically with respect to whether or not a terminated employee is entitled to a bonus that would have been payable during a notice period.
• For many private-sector employers, this can represent a significant part of an employee’s remuneration. Court decisions now require a high level of precision and clarity around these issues.
• Employers should not assume that existing language will still accomplish this objective. A review of these provisions at this stage should be a high priority.

Before hiring one more employee, carefully consider these issues and get in touch with us if you have any questions.

Proactively reviewing (and if necessary, revising) your existing employment agreements or offer letters is an investment that will reduce your costs down the road, including costs on legal counsel.

This post is meant to provide information only and is not intended to provide legal advice. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this post to be outdated.