THE EMPLOYERS' EDGE
Can I have existing employees sign written employment agreements?
While no two employers are alike, there are common workplace issues that arise for which the CCP team provides strategic legal advice. We have compiled a list of “Top Ten Questions” asked by employers and the answers to those questions on our new website as a resource for employers. Over the next several months, we will be featuring these “Top Ten” in our Employers’ Edge Blog.
Question: Can I have existing employees sign written employment agreements?
Yes, you can have existing employees sign new employment agreements. However, where such new agreements bring about changes to significant terms or conditions of employment (such as reductions in wages, notice of termination periods or vacation entitlements) you run the risk of facing a lawsuit for “constructive dismissal” – a type of wrongful dismissal – if you don’t do it properly.
To properly introduce new terms and conditions in a new employment agreement for current employees, the employer must provide “consideration”. This means the employee must receive something of value in return for his promise to abide and be bound by the new terms of the employment contract. A bonus or promotion can constitute effective consideration. In any case, the employee must be agreeable to the contractual changes being proposed.
Where additional compensation or a promotion is impractical or undesirable, it may be an option to lawfully terminate the existing employment relationship by providing the employee with his or her lawful entitlement to notice of termination, while offering new terms of employment that will take effect after the prior contract has been terminated. With this option, employers must be prepared to lose the employee if he or she is not agreeable to the new terms of employment.
What is clear from the law is that simply providing notice of the new terms of contract, without an employee’s express and valid consent or agreement, is not a lawful way of implementing written contracts of employment for existing employees. This is the case even if the amount of notice provided in respect of the new contract is equivalent to the amount of notice that the employer is required to give in order to terminate the employment relationship.
Transitioning employees on oral indefinite contracts of employment to written contracts of employment can be a worthwhile and value added business exercise. However, caution must be exercised in order to avoid liability and having trusted counsel in your corner experienced in employment law, like Crawford Chondon & Partners LLP, is always advisable.
Please Note: This blog has been prepared as an informational service for our clients and other interested parties. It is not intended to constitute legal advice, a complete statement of the law or opinion on any subject. Although we endeavour to ensure the accuracy of the content, no one should act upon the information provided without a thorough examination of the law after the facts of a specific situation are fully considered.