Your employment contract

Myth or fact?

An employment contract has to be in writing.
  • Myth
  • Fact

Starting a new job? Signing the paperwork can feel like something to get through quickly, so you can get on with the work. Resist that feeling. Take the time to read any employment contract put before you. Make sure you understand the terms. Negotiate on points that are important to you. We walk you through what to watch for in your employment contract, and how to protect yourself. 

What you should know 

If you work, you have an employment contract

A new job often involves signing a written contract. But it doesn’t have to. There’s always a contract between a worker and an employer. Even if nothing is in writing, an employment contract still exists. A worker’s agreement to work for an employer, and the employer’s agreement to pay the worker in return, forms a contract.

The terms of your employment contract

The terms of your employment contract may not all be in one written document (or they may not be written at all). For example, they may be expressed in:

  • the job advertisement

  • letters or emails you received from your employer before you start working

  • anything you’re asked to sign before or after you start working

  • announcements made by your employer on a notice board at work

  • an office policy manual or staff handbook

  • a collective agreement (if you’re a member of a union)

Your employment contract gives you and your employer certain rights and responsibilities. 

Some terms are spelled out. Typically, these explicit terms will cover things such as your job title and responsibilities, your pay, hours of work, and the term of your employment (if there is one).

Other terms are implied by the law into your employment contract. For example:

  • As a worker, you owe a general duty of loyalty to your employer. You must act in their best interests and protect their confidential information. 

  • You must carry out any reasonable and lawful instructions of your employer, within the scope of your employment contract.

(We have more on the responsibilities you owe your employer under the law.)

Other terms implied by the law into your employment contract affect your employer’s responsibilities. For example, they must direct the work you do, pay your wages, and provide a safe place to work.

There are certain legal rights you have as a worker, whether or not your employment contract mentions them — and even if the contract says something different. For example, regardless of the terms in the contract, the following apply:

  • human rights laws

  • health and safety standards

  • any rights you have under the Employment Standards Act, which sets minimum standards for wages and working conditions in BC 

More on this last point. In your employment contract, you can’t agree to give up any rights you have under employment standards law. If you’re protected by that law (see if you’re covered), any term in your employment contract that tries to get around the law’s minimum requirements is not valid. For example, the law sets minimums for overtime pay. Any term in your employment contract that provides for less overtime pay is not valid.

If your employment contract says you’re an “independent contractor”

An employer may ask you to agree you’re an independent contractor. They may include a term in your contract saying you’re self-employed and doing contract work for them. Some employers think this will mean you won’t be considered an “employee,” and so not covered by the Employment Standards Act.    

But calling someone an independent contractor doesn’t mean they are. Even if you sign something saying you’re an independent contractor, you may still be an employee under the law. We offer guidance on the factors in play to determine whether someone is considered an employee or an independent contractor under employment standards law.    

If there are post-employment restrictions

Some employment contracts include terms that restrict your activities after you leave the job. These are known as restrictive covenants

It’s easy to brush over these terms when signing an employment contract, as they don’t come into play right away. But pay attention. They often use language that heavily favours the employer’s interests. Carefully read terms such as these: 

  • A non-compete clause, which restricts your ability to do similar work after your employment ends. For example, you might be prevented from working for a competitor or in a certain geographic area for a period of time after you leave (typically three to six months, but some are longer).   

  • A non-solicitation clause, which prevents you from soliciting customers from the employer’s business after you leave. 

With clauses like these, restrictions that are overbroad are routinely rejected by the courts. The burden is on the employer to prove they’re reasonable. Still, these terms shouldn’t be taken lightly. You don’t want to take on the risk of a legal battle if you don’t have to. If you’re concerned about the wording of a restrictive covenant, consider raising it with the employer. Or seeking legal advice.

If the contract is for a fixed term

Some employment contracts are for a fixed term — for example, a two-year term or until a certain project is complete. These are in contrast to contracts that have no specified end to the relationship, and so are of indefinite duration. Indefinite contracts have a number of advantages. For example: they go on indefinitely. Someone has to take take action to end them.

If you have a fixed-term employment contract, the contract is for a specific period of time. Once your fixed-term contract is finished, your employer doesn’t have to give you notice to end the relationship. However, a fixed-term employment contract requires an employer to pay a worker to the end of the term. If your employer ends the contract before the term is finished, they may be liable to compensate your losses for ending the contract early. If this happens to you, you should seek legal advice.

If you're hired under multiple short-term contracts

If you’ve been working for the same employer under multiple short-term contracts, you may have the same rights as if you’d been hired indefinitely. The overall character of the employment is the determining factor for whether a contract is considered fixed-term or one of indefinite duration.  

Employment contracts can evolve over time

Although usually signed at the start of the relationship, the employment contract is not frozen in time. In fact, it typically evolves after you’re hired. If you get a raise, that’s a change to a term of your employment contract — your pay. A promotion represents (typically) a change to your job title and responsibilities, another term of your contract. 

Sometimes an employer wants to make a substantial change to your job situation that you don’t want. This can amount to what’s called "constructive dismissal." If this happens, you have the same rights as someone who’s fired without cause. See our guidance on when your job changes in a big way.

If you're presented with a new contract mid-stream

Alarm bells should ring if you're asked to sign a whole new contract mid-stream. If your employer presents you with a new contract, whether it's six months or three years into an employment relationship, be very careful to ensure it doesn't take away something you're entitled to. Consider seeking legal advice.

Protect yourself

Step 1. Review the employment contract closely

When presented with an employment contract, it’s natural to feel you’re under pressure to act quickly or perhaps lose the job. But take the time to read the contract carefully. 

Check that it lines up with the role you applied for (does the job title match the job posting?). Make sure it includes any special promises made to you. Let’s say you’ve been promised a promotion six months down the road, or a pay increase. Confirm those promises are included in the contract. 

Pay close attention to these terms:

  • Your job description. Does it match what you’ve been told your work will involve? The more broadly the duties are defined, the more flexibility your employer will have to require you to take on more work.

  • Your pay. Does it match what you expected? Make sure you understand exactly how you’ll be paid for your work, and how often. 

  • Place of work. Does it give your employer the ability to move you to other locations? Is working remotely at home a possibility?

  • Hours of work. What work schedule are you committing to? Are flexible working arrangements possible? Is overtime pay offered? (Even if it isn’t spelled out in the contract, you’re still entitled to overtime pay if you’re covered by the Employment Standards Act.)    

  • Time off allowances. What annual vacation is given? Is there an option to roll over any untaken vacation into the following year? Are there paid sick days? 

  • Termination. How much notice must either of you give to end the employment? The contract might say the employer can give less than what would be seen as “reasonable notice” in the absence of a contract.

  • Post-employment restrictions. Are there terms that prevent you from competing with the employer or soliciting their customers after you leave the job? These clauses are often drafted in language that heavily favours the employer’s interests. For more on this, see “What you should know,” above.  

Step 2. Make sure you understand it

Never sign anything you don't understand. If problems arise while you’re in the job, your employment contract will be the go-to document to help you resolve these.  

If you need help understanding what the contract says, consider asking for more time to review it. The employer must give you a reasonable amount of time to review and consider the contract before you sign. 

Keep in mind they’ve invested time and resources wooing you. It's unlikely they’d rescind the job offer if you ask for time to review the contract. As well, if they say, “No, you must sign now,” that should give you pause.  

Consider seeking legal advice

If there’s wording in your employment contract you don’t understand, or a clause you’re concerned about, consider seeking legal advice. There are options for free or low-cost legal advice

Step 3. Ask for changes to the contract

As with any agreement, employment contracts can be negotiated, depending on the issue and the strength of your pitch. If there is something you don't like or is missing in the contract, ask for changes.

Be specific with your request. For example, you might be concerned about a short notice period for the employer to end the employment. Ask if they would be open to specifying a longer notice period. Explain why that’s important to you. 

We offer tips for talking with your employer.

Common questions

My employment contract has a long probationary period. Is that allowed?

Many employers require a new worker to serve a period of probation when they first start work. This is a trial period allowing you both time to judge whether a long-term employment relationship is right for you. Three months is a common length for a probation period. If the contract offered to you asks for a longer period, ask what’s behind that. After three consecutive months of employment, your employer becomes liable to pay you severance. 

Note that if you are seen to be an “employee” under the law (see our information on what this means), you have all the rights of an employee during your probationary period. Your contract might include terms that only apply during the probationary period. But these terms can’t take away your rights under the law.

Terms like this are legal, but not always enforceable. A term that restricts your ability to work for a competitor is a form of restrictive covenant called a non-compete clause. Your employer can include a non-compete clause in your employment contract. Whether it’s actually enforceable is another matter. 

The law actually presumes a non-compete clause to be unenforceable. The burden is on the employer to prove the restriction is reasonable. The employer must show:

  • The restriction protects a legitimate business interest of theirs. 

  • The restriction is reasonable in terms of its time period, geographic area covered, nature of activities prohibited, and overall fairness.

  • The restriction is clear, certain, and not vague. 

Courts have often struck down non-compete clauses where a non-solicitation clause would sufficiently protect the employer’s interests. The broader the restriction of your post-employment activities, the less likely courts will enforce it.

My job offer was withdrawn. Do I have any rights?

Your rights depend on how the job offer was made. Let’s say the offer was made subject to conditions and those conditions weren’t met (for example, you had to provide references, but didn’t). In that case, you won’t have a claim against the employer. That’s because there never was a binding employment contract. There was only a conditional offer. 

If the job offer was unconditional, you may have a claim for breach of contract — if you accepted the offer. In that case, there is an employment contract. When the employer withdraws the offer, it’s as if you’re being dismissed without notice. See our guidance on notice requirements

If your employer withdraws a conditional job offer after you’ve met all the conditions, you may have a claim for the same reason. 

I’m having second thoughts after signing my employment contract. Is it binding on me?

Generally, a written employment contract will be enforceable by both parties if it is fair and properly drafted.

That said, there are factors that can make an employment contract unenforceable. For example, if it can be shown that the worker signed the contract under duress, or that the language is ambiguous or unclear.

It’s best to get legal advice in this situation. There are options for free or low-cost legal advice

Who can help

Helpful agencies

Employment Standards Branch
Can help you understand your rights as a worker in BC.
Employment and Social Development Canada
They can help if you work in a federally-regulated industry.

  • Reviewed in April 2020
  • This information applies to British Columbia, Canada
  • Time to read: 10 minutes

Reviewed for legal accuracy by

Mary Thibodeau, Moore Edgar Lyster LLP and Leanne M. Walsh, West Coast Workplace Law

Mary Thibodeau
Leanne M. Walsh

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