How employment contracts protect your bottom line: Q&A

In follow up to our webinar, Legal Peace of Mind: How Employment Contracts Protect Your Bottom Line, featuring LawVo™, we've answered the most frequently asked questions about employment contracts.  

• Is a letter of offer the same as an employment contract?
• What is consideration?
• What are some examples of reasonable consideration?
• If you are giving an employee a promotion or salary increase, is this a good time to also review/update the terms of employment?
• Are you required to give consideration when company policies, such as items in the employee handbook, are changed?
• What if a long-term employee refuses to sign an updated employment contract? What are the options to get an existing employee on a contract?
• Can you change the terms in the contract, such as the number of hours, if business starts to slow down?
• Can you reduce employee hours if there is no written contract?
• Can you have a clause in your contract that says something along the lines of "in the event a clause is deemed unenforceable the remainder of the contract remains valid?
• Can you put terms in an employment contract that specifies the number of years the employee must work for the company?
• Do unionized employees need to sign employment contracts?
• When taking over an existing business with employees, are we required to terminate then rehire on a new employee contract?
• Are e-signatures legally valid?
• Can you present your employment offer by e-mail? Is this the same as having a contract?
• Do you have to provide benefits during the termination notice period even if you pay out in a lump sum?
• How much notice should a termination clause reasonably require from an employee resigning from a critical position?
• If we provided a letter of offer outlining certain terms but no comprehensive employment contract to an employee hired in 2024, can we draw up a contract now and ask them to sign it?
• What’s the difference between renewing an employee’s contract and signing a new contract for the same employee?
• Is there a difference between dismissals and layoffs?
• Can non-compete clauses be stricter (in terms of territory, duration, etc.) if a business is bought out?
• Does a non-compete clause apply to every region where a business—for example, a taxi company—operates?
• Can a non-compete clause be a separate document from an employment contract to ensure that any unlawful stipulation in the non-compete document will not invalidate the employment contract?
• Should on-call and/or self-employed workers be covered by employment contracts?
• If we acquire a second business location, can we add a clause to all current contracts stipulating that employees may be called upon to work in the new location in specific situations (for example, staff shortages due to sick leave)? What can we do if an employee refuses this new clause?
• When an employment contract stipulating a specific end date for an employee comes to term, does signing a new contract have to include consideration? Or is this situation different?

Is a letter of offer the same as an employment contract?  

A letter of offer and an employment contract are related but distinct documents in the hiring process.  

A letter of offer is typically the initial document provided to a candidate who has been selected for a position. It outlines the basic terms and conditions of the job offer. An employment contract is a more detailed document that formalizes the employment relationship between the employer and the employee. 

The letter usually includes key details such as the job title, start date, salary, work location, and any conditions of employment (e.g., background checks, reference checks). The contract includes comprehensive terms and conditions of employment, such as job duties, compensation, benefits, termination provisions, confidentiality agreements, non-compete clauses, and other legal obligations. 

The letter sets out the offer's terms; it is generally less comprehensive than an employment contract and may not cover all aspects of the employment relationship. The contract, however, is a legally binding agreement that both parties sign, outlining their rights and responsibilities. 

The candidate's acceptance of the letter of offer can indicate their intention to enter into an employment relationship, but it may not constitute a binding contract on its own. An employment contract is intended to be enforceable in court, providing clarity and protection for both parties. 

While a letter of offer can serve as a precursor to an employment contract, it is advisable to follow up with a formal employment contract to ensure all terms are clearly defined and legally enforceable. 

What is consideration?  

In employment law, "consideration" is about ensuring there's a fair exchange between you, as the employer, and your employee when forming or modifying a contract. It's what each party gives to the other to make the agreement legally binding. 

When you hire someone, you offer them a salary or wages in exchange for their work and services. This exchange—your payment for their work—is the consideration that makes the employment contract valid. 

If you want to change the terms of an existing contract, you need to provide something additional to the employee, such as a raise or a bonus. This is because you're asking them to agree to new terms, and there needs to be a fair exchange to make the new agreement enforceable. 

What are some examples of reasonable consideration? 

Here are some examples of reasonable consideration that an employer might offer to an employee when forming or modifying an employment contract: 

• Salary Increase: Offering a raise in the employee's base salary  
• Bonus Payment: Providing a one-time bonus or incentive payment  
• Additional Benefits: Enhancing the employee's benefits package, such as adding health insurance, retirement contributions, or paid time off  
• Promotion: Offering a promotion with increased responsibilities and a corresponding increase in pay or benefits  
• Stock Options or Equity: Providing stock options or shares in the company can be a significant form of consideration, especially in startups or growing companies.
• Training and Development Opportunities: Offering access to professional development courses, certifications, or training programs
• Flexible Work Arrangements: Providing options for remote work, flexible hours, or other work-life balance improvements
• Job Security: Offering a longer-term employment contract or assurances of job security  
  
  

If you are giving an employee a promotion or salary increase, is this a good time to also review / update the terms of employment? 

When an employee receives a promotion or salary increase, it can be an ideal time to review and update their terms of employment. This ensures that the job description accurately reflects any new duties and responsibilities associated with the promotion, clarifying expectations for both parties. Additionally, documenting the new compensation terms, including any changes to bonuses, commissions, or other financial incentives, is important.  

Are you required to give consideration when company policies, such as items in the employee handbook, are changed?  

Whether consideration is required when changing company policies outlined in an employee handbook depends on how those policies are integrated into the employment relationship and whether they affect the terms and conditions of employment. 

1. Non-Contractual Policies: If the policies in the employee handbook are not part of the employment contract and are stated as guidelines or general practices, changes to these policies typically do not require consideration. However, it's important to communicate these changes clearly to employees and ensure they understand the new expectations.
2. Contractual Policies: If the policies in the handbook are explicitly incorporated into the employment contract or significantly affect the employee's terms and conditions of employment (such as compensation, job duties, or working hours), then changes might require consideration. This is because such changes could be seen as altering the contractual agreement between the employer and employee. 

For significant changes that impact fundamental aspects of the employment relationship, it is advisable to provide consideration to ensure the changes are enforceable. This could include changes to policies that affect pay, benefits, or job security. 

Regardless of whether consideration is legally required, it is best practice to communicate any changes to policies clearly and seek employee acknowledgment or agreement. This helps maintain transparency and trust within the workplace. 

If you're planning to make changes to your employee handbook or policies, it may be beneficial to consult with a legal professional to ensure compliance with employment laws and to determine whether consideration is necessary. 

What if a long-term employee refuses to sign an updated employment contract? What are the options to get an existing employee on a contract?  

When a long-term employee refuses to sign an updated employment contract, it can present a challenge for employers. Here are some options for addressing this situation:  

• Understand the Employee's Concerns: Engage in a conversation with the employee to understand their reasons for refusing to sign the updated contract. There may be specific terms they are uncomfortable with, and addressing these concerns could lead to a resolution.
• Negotiate Terms: Be open to negotiating the terms of the contract. If the employee has valid concerns, consider whether adjustments can be made to address these issues while still achieving your objectives.
• Offer Consideration: Providing additional consideration, such as a salary increase, bonus, or enhanced benefits, can incentivize the employee to agree to the new terms. This demonstrates goodwill and can make the updated contract more attractive.
• Clarify the Importance: Explain the reasons for the updated contract and how it benefits both the employee and the organization. Highlight any positive changes or protections included in the new contract.
• Seek Legal Advice: Consult with an employment lawyer to understand your legal position and options. They can provide guidance on how to proceed and ensure that any actions taken are compliant with employment laws.
• Document Efforts: Keep a record of all communications and efforts made to reach an agreement. This documentation can be important if the situation escalates or if legal action becomes necessary.
• Consider Employment Status: If the employee continues to refuse to sign the updated contract, assess whether their continued employment without the new contract is feasible. In some cases, it may be necessary to consider terminating the employment relationship, but this should be approached cautiously and with legal guidance to avoid claims of wrongful dismissal. 

Can you change the terms in the contract, such as the number of hours if business starts to slow down? 

Changing the terms of an employment contract, such as the number of hours worked, requires careful thought and adherence to legal principles.  

Any changes to the terms of an employment contract, including hours of work, should ideally be made with the mutual agreement of both the employer and the employee. This involves discussing the proposed changes with the employee and obtaining their consent. 

If the change significantly alters the terms of employment, such as reducing hours and thereby affecting pay, new consideration may be required. This could involve offering something of value to the employee in exchange for agreeing to the change, such as a one-time bonus or other benefits. 

Constructive Dismissal: Unilaterally changing fundamental terms of employment without the employee’s consent can lead to a claim of constructive dismissal. This occurs when the changes are so significant that they effectively amount to a termination of the original employment contract, allowing the employee to resign and potentially seek damages. 

Before implementing changes, it’s advisable to consult with an employment lawyer to ensure compliance with employment laws and to mitigate any legal risks. 

Can you reduce employee hours if there is no written contract? 

Even if there is no written employment contract, the terms and conditions of employment are still governed by the Employment Standards Act in your jurisdiction, common law principles, and any verbal agreements or established practices between the employer and employee.  

If I hire someone seasonally, do I need to get the employees to sign a new contract every year? 

Whether you need to have seasonal employees sign a new contract each year depends on the terms of the original contract and the nature of the employment relationship.  

• If the original employment contract clearly specifies that the employment is seasonal and outlines the terms for each season, including start and end dates, you may not need a new contract each year. However, it is important that the contract is clear about the seasonal nature of the work and any conditions that apply.
• If there are changes to the terms and conditions of employment from one season to the next, such as changes in pay, duties, or work location, it is advisable to issue a new contract or an addendum to the existing contract to reflect these changes. This ensures that both parties are aware of and agree to the new terms. 

Even if the terms remain the same, it can be beneficial to have employees reaffirm their understanding and acceptance of the terms each season. This can be done through a simple letter of re-engagement or a short form agreement that references the original contract. 

Can you have a clause in your contract that says something along the lines of “In the event a clause is deemed unenforceable the remainder of the contract remains valid?” 

This is called a severability clause. A severability clause is a provision commonly included in contracts, including employment contracts, that ensures the remainder of the contract remains valid and enforceable even if one or more of its specific provisions are found to be invalid, illegal, or unenforceable by a court.  

The primary purpose of a severability clause is to protect the integrity of the contract. If a court finds a specific provision of the contract to be unenforceable, the severability clause allows that provision to be "severed" or removed from the contract without affecting the validity of the remaining provisions. 

While a severability clause is helpful, it does not automatically save a contract if the unenforceable clause is fundamental to the agreement. In such cases, the overall intent and balance of the contract may be affected, and the parties might need to renegotiate the terms. 

It is important to draft severability clauses carefully and ensure they are tailored to the specific contract. Consulting with a legal professional can help ensure that the clause is appropriately worded and effective. 

Can you put terms in an employment contract that specifies the number of years the employee must work for the company? 

You can include a term in an employment contract that specifies a fixed term or a minimum period of employment. However, drafting such terms requires careful consideration to ensure they are enforceable and do not infringe on the employee's rights. While you can require an employee to commit to working for a minimum period, enforcing this can be challenging if the employee decides to leave before the period ends. Courts may be hesitant to uphold terms that restrict an employee's freedom to leave a job. If you decide to include penalties or consequences for early departure, such as repayment of training costs, these must be reasonable and not punitive, as unreasonable penalties may be deemed unenforceable. Given the complexities and potential legal challenges, consulting with an employment lawyer is advisable when drafting these terms. 

Do unionized employees need to sign employment contracts?  

Unionized employees typically do not sign individual employment contracts in the same way non-unionized employees do. Instead, their terms and conditions of employment are governed by a collective agreement negotiated between the employer and the union representing the employees.  

When taking over an existing business with employees, are we required to terminate then rehire on a new employee contract? 

When taking over an existing business with employees, you are not necessarily required to terminate and then rehire employees on new contracts.  When a business is sold and the new owner continues to employ the existing employees, Employment Standards considers the employment continuous. This means that length of service is preserved, and the original hire date will be used for calculating entitlements like notice of termination and severance pay. 

Are e-signatures legally valid?  

E-signatures are legally valid. For an e-signature to be valid, both parties must consent to use electronic signatures and must intend to sign the document electronically. This intention is often demonstrated through the process of applying the e-signature. 

Can you present your employment offer by email? Is this the same as having a contract? 

You can present an employment offer by email, and it can be legally binding if it meets certain criteria.  

Sending an employment offer via email is a common and accepted practice. It allows for quick communication and provides a written record of the offer details. 

For an emailed offer to be legally binding, it must include all the essential terms of the employment agreement, such as job title, salary, start date, and any conditions of employment. The offer must be clear and unambiguous, and the employee must accept it, either by replying to the email with their acceptance or by signing and returning an attached document. Both parties must intend to create a legal relationship. This intention is usually inferred from the context and the language used in the email. 

The employee’s acceptance of the offer, whether by email or by signing a document, is crucial for forming a binding contract. Acceptance should be communicated clearly and unequivocally.  

As with any contract, there must be consideration—something of value exchanged between the parties. In employment, this is typically the employee’s work in exchange for the employer’s payment.  

While an emailed offer can be binding, it is advisable to follow up with a formal, comprehensive employment contract. This contract should cover all terms and conditions in detail and be signed by both parties to avoid any misunderstandings or disputes. 

Do you have to provide benefits during the termination notice period even if you pay out in a lump sum?  

When an employer provides termination pay in lieu of notice, they are generally required to continue providing benefits during the statutory notice period, even if the employee receives a lump sum payment. This means that even if you choose to provide a lump sum payment instead of having the employee work through the notice period, you must continue to provide benefits such as health insurance, dental coverage, and other employee benefits for the duration of the statutory notice period. 
 
If the termination involves common law notice (which may be longer than the statutory notice period), the continuation of benefits during this period can depend on the terms of the employment contract and any negotiations between the parties. It's often advisable to seek legal advice to determine obligations during the common law notice period. 

How much notice should a termination clause reasonably require from an employee resigning from a critical position?

Under the Civil Code of Québec, notice of termination should be given in reasonable time, taking into account the nature of the employment, the specific circumstances in which it is carried on, the employee’s responsibilities, and the duration of the period of work. A longer notice period may be justified for a critical or senior position, so the employer can find a suitable replacement and ensure a smooth transition.

Though the law doesn’t define a specific notice period, employers usually require 2 weeks to 1 month of notice for mid-level positions. For management or critical positions, the required notice could reasonably be 2 or 3 months, or even longer depending on the circumstances.

It’s important to note that any specific provisions regarding notice must be clearly stated in the initial employment contract to avoid ambiguity and ensure expectations are understood by both parties.

In New Brunswick, resignation notice periods aren’t generally specified in the law, while layoff notice periods often are. However, it is common practice to require notice be given in reasonable time, taking into account both the employee’s responsibilities and the employer’s needs in looking for a replacement.

For a critical position with important responsibilities, a longer notice period may be reasonable. For many positions, 2 to 4 weeks’ notice is typical. However, for strategically important roles such as management and critical project management positions, a notice of 4 to 8 weeks, or even longer, may be considered reasonable. This gives the employer time to ensure a smooth transition and minimize operational disruptions.

In any case, the notice period should ideally be clearly defined in the employment contract to avoid any ambiguity. 

If we provided a letter of offer outlining certain terms but no comprehensive employment contract to an employee hired in 2024, can we draw up a contract now and ask them to sign it?

Absolutely. An employment contract can be formalized at any time during the employment period. Though a letter of offer may contain certain essential terms of employment, it doesn’t replace a comprehensive employment contract.

Transitioning to a formal employment contract is often recommended to clarify the responsibilities, expectations, rights, and obligations of both parties. Here are a few points to consider when drawing up a new contract:

• Negotiation and mutual agreement: Make sure to discuss the contract with the employee and obtain their consent. This is a reciprocal process. The employee should have the opportunity to ask questions and negotiate terms as needed.
• Transparency and communication: Explain why the contract is being introduced and what it means for the employee. Clarity can help avoid future misunderstandings.
• Changes in terms: If the contract introduces significant changes to initial terms, these changes must be clearly explained to and accepted by the employee.
• Legality and compliance: Make sure the contract is in compliance with applicable labour laws, including the Labour Code, labour standards, and the Civil Code (in Quebec).
• Promulgation and legal consultation: It’s advisable to consult an employment lawyer to ensure the contract adequately protects the interests of both parties and complies with all legal requirements.

A carefully crafted and mutually agreed upon formal employment contract can strengthen the employment relationship and offer more structure and security to both parties. 

What’s the difference between renewing an employee’s contract and signing a new contract for the same employee?

In both Quebec and New Brunswick, renewing an employment contract and signing a new contract are distinct concepts. Though they can be easily confused, there are many differences between the two:

Renewing a contract:

• Continuity: When a contract is renewed, the initial contract has ended but its terms are extended for an additional period. Minor changes may be made to existing terms.
• Limited changes: Often, only dates or a few specific terms are adjusted. The rest of the contract remains unchanged.
• Formalization: Renewal is sometimes formalized through a letter or an addendum stating that the original contract has been extended.
• Stability: Renewing a contract can ensure job stability and continuity without introducing major changes.

Signing a new contract:

• New agreement: Signing a new contract is generally understood as entering into a new contractual agreement, even if employment continues with the same employer.
• Significant changes: A new contract may introduce substantial changes to working conditions, responsibilities, compensation, or other aspects of employment.
• Negotiation process: A new contract offers the opportunity to discuss and renegotiate terms and conditions.
• Termination of the previous contract: The new contract generally replaces the previous contract. This may be explicitly mentioned. NOTE: If the original contract was substantially modified, be sure to provide termination notice for the contract as required by labour standards. For instance, an employee in Quebec who was hired 2 years ago is entitled to 2 weeks’ notice before the previous contract is terminated, especially if there is a change in salary.

In short, whether you should renew a contract or sign a new one often depends on how extensively you or your employee want to alter the terms. Renewing the contract usually makes sense when both parties want to ensure continuity. To incorporate substantial changes, the employee must agree to a new contract and the previous contract must be terminated with notice. It is advisable to have new contracts reviewed by a lawyer to ensure compliance with applicable legal standards. 

Is there a difference between dismissals and layoffs?

Quebec’s labour standards differentiate between dismissals and layoffs, which can have different legal implications.

Dismissal: A dismissal generally refers to termination of employment for reasons related to an employee’s conduct or performance. An employee can be dismissed for serious misconduct if the employer has a valid reason (such as theft or gross insubordination). If an employee is dismissed for a reason other than serious misconduct, the employer must respect the employee’s rights, including any notice periods and severance required by law or the employment contract. In Quebec, if the duration of employment exceeds 2 years, the employer must show proper cause for dismissal.

Layoff: A layoff often refers to a permanent termination of employment for financial or structural reasons, such as a business downsizing or closing. Layoffs are unrelated to employee conduct, and the employer must generally provide notice or severance pay as required by law. In both Quebec and New Brunswick, no notice is required for a temporary layoff of less than 6 months. However, if the layoff exceeds 6 months, the employer must pay the severance owed to the employee.

In New Brunswick, “dismissal” and “layoff” are sometimes used interchangeably but may also refer to distinct concepts with different legal implications.

Dismissal

• Often for cause: Dismissal generally refers to termination of employment for disciplinary reasons or for reasons related to the employee’s conduct, performance, or skills.
• Legal consequences: In some cases, dismissal for cause means the employer can terminate the contract without providing notice or severance, but this must be justified. Without sufficient documentation or justification, it’s very likely the dismissal will be challenged.

Layoff

• Often through no fault of the employee: Layoff usually refers to termination of employment for reasons unrelated to conduct or performance, such as restructuring, finances, or job cuts.
• Required notice and severance: The employer is generally required to provide reasonable notice or severance pay for layoffs, except in cases of force majeure. The amount of severance pay is often determined by the employment contract or provincial labour standards. As mentioned above, notice is not required for a temporary layoff lasting less than 6 months.

Can non-compete clauses be stricter (in terms of territory, duration, etc.) if a business is bought out?

Yes, if a business is bought out, non-compete clauses may be stricter in terms of territory, duration, or other conditions. This is often because protecting the business’s intangible assets—including customers, expertise, and other sensitive information—takes on greater importance. Here are a few points to consider:

• Context of the buyout: When a business is sold, the buyer may want to ensure that the previous owner can’t set up or join a competing business immediately after the sale, which warrants tighter restrictions.
• Expanded territory: The non-compete clause may cover a broader geographical area, especially if the business operates in multiple locations or targets a specific large-scale market.
• Extended duration: The duration of the non-compete clause may be extended to give the buyer time to integrate the business and strengthen its market position without fear of immediate competition from the previous owner.
• Legal justification: Though non-compete clauses can be more stringent in the event of a buyout, they must still be reasonable and justified. Courts will often examine these aspects to ensure the clause does not unreasonably restrict business or employment. The stipulated duration, territory, and scope of activity must be proportionate to the interests being protected.
• Contract negotiation: The parties can negotiate these terms when drafting the contract of sale to ensure they are balanced and in compliance with existing laws.

NOTE:
Non-compete clauses help employers protect themselves. However, to enforce such a clause, an employer must take the employee to court and will likely have to demonstrate the harm suffered. According to article 2089 of the Civil Code of Québec:
 
The parties may stipulate in writing and in express terms that, even after the termination of the contract, the employee may neither compete with his employer nor participate in any capacity whatsoever in an enterprise which would compete with him. However, the stipulation shall be limited as to time, place and type of employment, to what is necessary for the protection of the legitimate interests of the employer.
The burden of proof that the stipulation is valid is on the employer.

• In writing: To be valid, a non-compete clause must be explicitly written into the employment contract.
• Limited in duration: Employers can’t restrict an employee’s freedom for an excessive period of time.
• Limited to a particular job/position: Limitations must be placed for a legitimate purpose—for example, to protect trade secrets or confidential information. Employers can’t prevent employees from using their skills, knowledge, and experience for the benefit of another business.
• Proportionate: Courts tend to be more tolerant of significant restrictions placed on employees when the business has serious and important reasons to do so.

It is advisable to consult a specialized lawyer to ensure the provisions of your buyout agreement or non-compete clause are valid, proportionate, and of reasonable duration.

Does a non-compete clause apply to every region where a business—for example, a taxi company—operates?

For a business like a taxi company, a non-compete clause could potentially apply to every region where it operates. However, its validity and enforceability depend on several important factors, including the reasonableness of the clause. Here are a few points to consider:

• Reasonableness: To be enforceable, a non-compete clause must be reasonable in its duration, territory, and scope. For a company operating in several regions, it may be reasonable to limit competition in these areas to protect the business’s commercial interests.
• Justification: The clause’s scope must be warranted by a legitimate interest, such as protecting the company’s customer base, reputation, and other business assets in the relevant regions.
• Proportionality: The courts will assess whether the non-compete clause goes beyond what is necessary to protect the business’s interests. The clause must not unreasonably limit the ability of an employee or vendor to earn a living.
• Regional specificities: The non-compete clause must comply with provincial legislation and case law in every region where the business operates.
• Negotiation: The non-compete clause must be negotiated to ensure balance between protecting the company’s interests and fairness to the individual.

NOTE:
Non-compete clauses help employers protect themselves. However, to enforce such a clause, an employer must take the employee to court and will likely have to demonstrate the harm suffered. 
 
For taxi companies in particular, the territorial scope of a non-compete clause may depend on the company’s structure and the nature of its operations in each region. It is advisable to consult a labour and business lawyer when drafting non-compete clauses.

Can a non-compete clause be a separate document from an employment contract to ensure that any unlawful stipulation in the non-compete document will not invalidate the employment contract?

Yes, a non-compete clause can be a separate document from the main employment contract in both Quebec and New Brunswick. When treated as separate documents, specific non-compete provisions can be negotiated more flexibly without affecting the terms of the employment contract.

If a court deems a non-compete clause unlawful or unenforceable, the main employment contract will not necessarily be invalidated provided the 2 documents are effectively separate and the terms of the employment contract are independently valid. However, each document must be assessed for validity separately.

It's important to note that for a non-compete clause to be valid and enforceable, it must usually meet certain criteria, including reasonableness in duration, geographic scope, and professional scope. Otherwise, the clause may be found to excessively restrict freedom of employment.

An employee’s duty of loyalty in Quebec

In Quebec, the law requires all employees to act with honesty and loyalty in the interest of their employer, even if an employment contract has not been signed. Employees must:

• act honestly for the entire duration of their employment;
• act with discretion and exercise sound judgment when performing job duties;
• put their employer’s interests ahead of their own; and
• protect all confidential information obtained in the course of work.

The duty of loyalty is based on the principle that an employer must be able to trust their employee, both in and out of the workplace.

This duty applies to all employees, regardless of sector or position. However, more stringent standards may apply to management and high-responsibility roles.

An employee’s duty of loyalty does not end when their employment does. A former employee still has certain duties toward their former employer, such as keeping information obtained during employment confidential. However, the law is less stringent on the duty of loyalty than what may be provided in a non-compete agreement.

Should on-call and/or self-employed workers be covered by employment contracts?

In Quebec, it is strongly recommended to draw up written employment contracts even for self-employed and on-call workers. Though not formally required by law, a written contract can offer clarity and legal certainty to both parties. It sets out clear expectations, responsibilities, working conditions, and terms of payment, which can prevent future misunderstandings and disputes.

Contracts for self-employed and/or on-call workers may specify the following:

• Nature of the work: The specific tasks to be performed by the employee.
• Availability: Expectations around the employee’s availability for calls or projects.
• Compensation: How and when the employee will be paid (hourly rate, per project, etc.).
• Contract duration: If applicable, the period during which the worker agrees to remain available/on call.
• Non-compete or confidentiality clause: To protect the company’s interests, if necessary.

A detailed contract can also clarify the employee’s status within the business: whether they are considered self-employed or a full employee, which has implications for taxes and benefits.

Self-employed worker status according to the CNESST

In Quebec, the CNESST defines a self-employed person who is considered a worker as someone who meets the following conditions:

• They do not have any employees.
• They carry out an activity that is similar or related to that of the client.

A self-employed person is not considered a worker by the CNESST if any of the following applies:

1. They work simultaneously for several people; for example, a delivery person who transports packages for several contractors.
2. They carry on their activities in the context of an exchange of services with another self-employed worker.
3. They perform work for several people in turn on an ad hoc basis (fewer than 420 hours annually), and provide the necessary equipment themselves.
4. They perform tasks sporadically as requested by the client.

A self-employed worker who hires employees takes on the status of employer and is subject to the associated obligations.

Even someone recognized as a self-employed person by a government department or other public body (such as the Canada Revenue Agency) may still be considered a worker by the CNESST under the Act respecting industrial accidents and occupational diseases. See the CNESST website for details and case law.

Given these definitions, it is essential to validate the worker’s conditions of employment before concluding that they are self-employed. If the CNESST determines that your workers are in fact employees, you may be required to retroactively pay all unpaid source deductions and other amounts.

The only way to change an employee’s status is to adjust their working conditions and characteristics so they meet the criteria for a self-employed worker.

If we acquire a second business location, can we add a clause to all current contracts stipulating that employees may be called upon to work in the new location in specific situations (for example, staff shortages due to sick leave)? What can we do if an employee refuses this new clause?

It is possible to add a clause to an existing employment contract stipulating that employees may be called upon to work in a new business location, but it requires a detailed, often individualized approach. Here are some steps to follow and key considerations to bear in mind:

• Communication: Before modifying any contracts, communicate transparently with your employees. Explain the reason for the change and how it might affect them.
• Negotiation and consent: Any change to an existing employment contract usually requires the employee’s consent. Be prepared to negotiate with each employee. To secure their agreement, consider highlighting benefits or proposing compensation.
• Drafting the amendment: If the employee agrees to the changes, a written amendment must be signed by both parties. It must clearly specify how this new clause will be applied.
• Legal considerations: Make sure any obligation to travel is reasonable, including geographically, and that it doesn’t interfere with employees’ family obligations. If the obligation constitutes a significant departure from the original terms of the employment contract, the employee must be provided with a notice of termination for the original contract within the timeframes prescribed by Quebec’s Act respecting labour standards and New Brunswick’s Employment Standards Act.
• Usual place of work: Travel time may be considered paid work time if the employee has to go to a location other than their usual place of work at the employer’s request during normal working hours. Other considerations include:
  • Whether the employee uses a company vehicle or has to transport equipment for the employer
  • Whether the employee has to travel outside normal working hours and whether they work in transit (compensation will depend on the employer’s internal policy)
  • Whether additional expenses are incurred while travelling, such as gas, parking, or meals—the employer may be required to reimburse these costs depending on the situation and interpretation of labour standards
  • Whether an employee uses their own vehicle for travel required by the employer—the employer may be required to pay a mileage reimbursement often based on the rate recommended by Revenu Québec or the Canada Revenue Agency.
• Plan for refusal: Consider how the discussion will go if an employee refuses to accept the terms of the amendment. Seek to understand their reasons and find workarounds or alternate arrangements. If an agreement cannot be reached, other organizational solutions—such as reassessing the employee’s role—may be necessary. If dismissal is considered, the employer must be able to demonstrate proper cause in the event of a complaint (if the employment period lasted more than 2 years).

When an employment contract stipulating a specific end date for an employee comes to term, does signing a new contract have to include consideration? Or is this situation different?

When an employment contract has a specified end date, it is generally considered to be a fixed-term contract. At the end of the contract term, a new contract can be negotiated without the need for consideration, provided the employer and employee agree on the new terms. However, there are a few things to bear in mind:

• Implicit renewal: If an employee continues to work after the end of the fixed-term contract without signing a new one, the employment relationship may be considered to have continued under an open-ended contract unless a new fixed-term contract is quickly introduced.
• New fixed-term contract: It’s a good idea to clarify the terms of a new fixed-term contract and make sure the employee understands and agrees to them upon signing.
• Changes to the terms: If the new contract makes any changes to the employee’s working conditions, it may be a good idea to offer consideration, though it is not legally required.
• Consultation: Clearly explain and make sure the employee agrees to any new terms before the new contract is signed.

NOTE: If work associated with a fixed-term contract is completed before the end of the term, the employer may have to pay the employee for the full term. It is recommended you consult a lawyer to ensure each contract is drafted properly and in compliance with local laws and regulations.