Time to update your employment agreements? Key considerations for Indigenous employers

Periodic review of template employment agreements can help ensure that employment relationships properly reflect operations and remain compliant with the applicable labour and employment legislation.

In non-unionized workplaces, an employment agreement governs the employment relationship. A clear and enforceable employment agreement protects an employer’s interests, minimizes risk and liability and establishes clear expectations for both the employer and the employee. When a dispute arises, the outcome often hinges on the language and content of an employment agreement.

The absence of a written employment agreement is likely to result in a dispute over the terms that were understood to have been agreed upon between the parties. Unfavourable implied terms may be found based on conduct between the employer and employee. Likewise, ambiguous language in the employment agreement may be interpreted in favour of the employee. A properly drafted employment agreement can help mitigate these risks.

Jurisdiction

For Indigenous employers, it must be determined whether the employment relationship falls under Provincial or Federal jurisdiction. There is a common misconception that all employment relationships with an Indigenous Nation or organization are Federally regulated. This may not be accurate in every circumstance. Whether the employment relationship is subject to Provincial or Federal legislation will depend on several factors and is ultimately driven by the circumstances of each organization. Please see our previous article for further information on what jurisdiction governs employment matters for Indigenous Nations or organizations. Should an employment agreement fail to recognize the correct employment jurisdiction, provisions of the agreement may be found to be unenforceable.

Compliance with statutory minimums

To ensure the employment agreement is enforceable, the terms and conditions of the employment agreement must meet or exceed statutory minimum requirements. While employers cannot provide less than this baseline, they can exceed it if they so choose. For provincially regulated employers in Saskatchewan, this is The Saskatchewan Employment Act and its associated regulations. For federally regulated employers, the applicable employment legislation is primarily the Canada Labour Code and its associated regulations.

Probationary periods

Employment agreements can include a probationary period, which allows an employer to determine the suitability of an employee for its workplace. A probationary period provision will outline a period of time in which the employee may be dismissed for their unsuitability with the organization. This provision allows a mechanism for the employer to remove an employee who is not suitable for the position and helps avoid claims of wrongful dismissal. To be enforceable, such probationary periods must be in compliance with the applicable employment standards legislation.

Changes to employment terms

Changes to operations, such as internal restructuring, will often lead to required changes in compensation, job titles, hours of work and/or employee duties and responsibilities. While employers have the right to make changes to an employee’s role, these changes must be reasonable and clearly communicated and, where such changes are considered to be a substantial change to the fundamental terms or conditions of employment, reasonable notice is required unless expressly agreed otherwise.

Employment agreements should clearly outline the circumstances under which changes can occur. If an employee feels that a significant change in their job duties is unreasonable or unjust, they may claim constructive dismissal. By addressing potential changes and the process for modifying job responsibilities in advance, employers can mitigate the risk of such claims.

Termination

When reviewing employment agreements, the employer should pay particular attention to the termination provision. Overly restrictive, vague or ambiguous termination clauses may be found to be unenforceable. Subject to specific jurisdictional restrictions, termination provisions are a helpful tool in an employment agreement for limiting payments arising to employees upon termination without cause.

In the majority of circumstances, there are three sources that are considered when assessing an employee’s entitlement to notice on termination of employment without cause:

1. Common law reasonable notice
2. The statutory minimums in the applicable employment legislation
3. The employment agreement

Common law notice has been developed through case law and is assessed based on several factors including the employee’s age, length of service and character, as well as the seniority of the position, among others. Typically speaking, the longer term, older and more senior the employee, the higher the common law notice entitlement.

For senior-level roles, common law notice is often discussed in months per year of service. This can be a substantial potential liability for employers when considering termination without cause. Employees are permitted to contract out of their right to common law notice through carefully worded termination provisions. As a result, it is recommended that employers clearly define what payments and obligations arise upon termination without cause within their employment agreements. Given that termination provisions are both complex and frequently challenged, we recommend employers seek regular periodic review to ensure that the provisions are and remain enforceable.

Additional clauses

It is recommended that employment agreements include provisions pertaining to employee duties and responsibilities, hours of work, vacation, compensation and benefits, as well as confidentiality. The agreement can include provisions on the ownership of inventions and information, the right to impose temporary layoffs and important pre-conditions on the offer of employment, such as criminal record and vulnerable sector checks.

Key takeaways

Periodic reviews of employment agreements assist in ensuring that employment relationships remain compliant and clearly define the intended employment relationship. Should an employer wish to place an existing employee on a new employment agreement, it is recommended that they seek legal advice to ensure that the terms of the new agreement are enforceable between the parties.

Our Labour and Employment team understands the importance of properly drafted employment agreements. With years of experience advising employers on how to tailor contracts to their specific needs, we are here to provide practical legal advice and answer any questions you may have pertaining to your organizationsemployment agreements.

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