A new year but same old employment agreements? It might be time to reconsider
A new year brings new resolutions. One resolution employers in Hamilton should consider is having their employment agreements reviewed to ensure they are still enforceable.
Since 2020, a number of decisions have been issued by courts that have rendered most employment agreements unenforceable — at least those that were created before 2020. This can have a significant impact on employers.
Let’s look at a quick example:
Joe has worked for ABC Corp., a smaller manufacturing company, for the past 30 years and is currently an assistant manager. ABC Corp. is restructuring and Joe’s position is being eliminated. He is terminated without cause.
Assuming that ABC Corp. is not a severance employer (meaning its total payroll is less than $2.5 million per year), Joe’s entitlement would be eight weeks’ pay if there is a valid employment agreement limiting him to the Employment Standards Act, 2000.
If that provision is invalid, however, Joe could be entitled to pay for up to 24 months. That’s a significant difference — 22 months.
For those employers without employment agreements, or who have not had them reviewed in the past few years, now is the time to book a consultation with an employment lawyer to review and update. The cost of failing to do so can be quite significant.
One final point — just because ABC Corp. doesn’t have to pay Joe for more than eight weeks with a proper agreement in place, it can still choose to do so. It just won’t be required to.
Another perk is that a proper agreement eliminates the need for lawyers on both sides following termination (benefiting everyone).
This article was originally published by The Hamilton Spectator.
