Contracts come in many different forms. They can be written or orally agreed upon. Provisions can be clearly expressed. Provisions can also be implied, especially when there is no written contract. Implied provisions include things such as employee loyalty and that the employer will give notice in the event of termination.
Most employment contracts are written. The principle of all written contracts is that there must be an offer (from the employer), acceptance (from the employee), and a consideration. For an employment contract to have consideration there needs to be a benefit for both parties that are entering into the contract. In the employment context, this is often the exchange of labour for money when the employee is first hired. Once they are already employed, the consideration can come in the form of a signing bonus, a vacation day, a personal day, etc. Failure to do the later, an employer is in violation of the contractual provision, and it makes the contract invalid due to the lack of consideration for the employee.
When an employee believes that the employer has violated their contract, they can start a lawsuit. Termination and dismissal benefits tends to be the key issue in this form of dispute. However, to be successful in a claim of a breach of the employment contract, the employee must prove:
- That a contract exists
- That the contract was breached
- That the breach caused damages (a monetary reward)
As part of damages, courts can order specific performance. Specific performance means that the party in breach must fulfill its contractual obligations. This can be significant if an employer breaches a fixed-term contract, which is a contract with a start date and an end date, as it may result in the employer paying out the rest of the contracted term. For example, if the City who owns a swimming pool facility hired a lifeguard on a one-year fixed term contract, but breaches the contract one month in, they may be ordered to pay the lifeguard the remaining 11 months of the contract. We have a previous blog on the dangers of fixed-term contracts if you are interested in this specific issue.
In early filings, if a court has reason to believe that a breach is occurring, they may put in place an injunction. An injunction is an order from the Court where the party in breach must immediately stop doing something that the complainant claims puts them into breach. Such an order can last until the judge has time to hear the case or when the case is settled. This could last months and could cost the employer a significant amount of money.
If the employer substantially alters a term of the contract, they could be held liable for contractual dismissal. If a contractual dismissal is found, employers may be required to pay common law notice. The amount of common law notice varies depending mostly on the age of the employee, how many years the employee worked for the employer, the position held, the availability of similar jobs, and the character of employment. The older the employee, the longer the employee worked and the higher the position, the longer is the notice period at common law. In 2018, the Ontario Superior Court of Justice, in Dawe v. Equitable Life Insurance Company, determined that, in the right circumstances, an employer can be ordered to pay up to 36 months of pay in lieu of notice.
How Suzanne Desrosiers Professional Corporation Can Help
Suzanne Desrosiers Professional Corporation can help employers by giving advice on their employment contracts, so they are not found in breach. We can also help draft your employment contracts on terms satisfactory to you, so you are less likely to accidentally breach them. For help with your contract needs you can reach us by calling us at 705-268-6492.