Podcast

Episode 2: Common Traps in Employment Contracts Podcast
Leckers Law
The Employee Rights Podcast

Episode 2: Common Traps in Employment Contracts Podcast

by napkinmktg | Employee Rights and Entitlements , Employment Contracts

Employment contracts are often one-sided and favour employers. In this podcast, Bram Lecker, Principal of Lecker & Associates and experienced employment lawyer, discusses how Ontario’s employment laws treat employment contracts.

What should employees pay attention to before signing contracts? Bram provides insight to how employers attempt to limit their liability with terminations, glaring short comings often found in contracts drawn by multinational corporations and the requirement for material considerations when new owners impose fresh contracts on staff when the business changes hands. Bram also discusses non-compete clauses that can limit an employees ability to seek alternative employment.

Transcript: Common Traps in Employment Law

Bryan Goman:  "The Employee Rights Podcast" is presented by Lecker & Associates, employment lawyers representing Ontario workers for over 35 years.

Today on the podcast, we'll be speaking with Bram Lecker, Principal of Lecker and Associates, about common traps in employment contracts. I'm Bryan Goman, and this is The Employee Rights Podcast.

Bram, thanks again for doing this. Once again, today we're talking about common traps and employment contracts. Should all employees ask for written contracts?

Bram Lecker:  Actually, quite to the contrary. The law in Ontario and most provinces in Canada is a very progressive regime of judge‑made and statute law, which is highly protective of employees and is essentially implied into every employment relationship.

When you get terminated, especially not for cause, the employer is obliged to pay two levels of compensation. One, a minimum statutory level, which in Ontario is called the Employment Standards, Severance and Termination pay, and as well an umbrella coverage called Common Law Entitlements, which are based on your age, length of service, and type of position.

The courts will always strive to pay somebody compensation on a reasonable basis, very much in tune with how long it’s going to take the person to find a job given age, length of service, and type of position. It is implied into every contractual relationship without anything being in writing. Contrary to conventional wisdom, you can have a contract that’s not in writing.

It’s not in an employee’s interest to seek out a written contract because most of the time, the employee is going in with an inequality in bargaining power, and is not able to negotiate terms of severance that would be equal to what the court would give them in the event of no contract at all.

Bryan:  In a lot of cases, the employers do hold a lot of the power. They will make signing a contract, an employee contract, a condition of your employment. What are some of the terms that employees should be wary of and what can they negotiate?

Bram:  It ranges from either the commercial or pedestrian rights that are spelled out in a contract. Things like your hours of work, location of work, job description, your salary, and especially bonus.

Those are all things you should look at very carefully because going forward, the employer will rely on that if there’s any dispute or gray area. You have to check that out very carefully.

That’s a value judgment as to how much you want to give your services in return for whatever pay they’re offering. It ranges to things like looking at what benefits are contained in the employment. You shouldn’t assume that there’s benefits coverage or that the benefits coverage is comprehensive to things like pension rights and retirement provisions.

The main thing that you have to be wary of ‑‑ a buyer beware situation ‑‑ is the termination provisions, which seek to protect an employer from the kind of liability for severance that I was speaking about before. Written contracts are usually designed and offered by employers to limit their exposure.

Bryan:  What are some of the problems you see with contracts, and specifically those that are drawn up by multinational corporations?

Bram:  Not to trash the Americans at all, the reality is that the US culture was always very different from Canadian business culture in its regard for employee rights. Many jurisdictions in the United States are what we call at‑will or right to work jurisdictions.

What that essentially means is an employee could work for a company like the old, now‑defunct Sears Corporation out of Illinois ‑‑ and Illinois is an at‑will state ‑‑ for 30 years, and be 60 years old, and have a senior position. In Canada, that’s going to get you 24 months of severance. In US, you’d be lucky to look at two weeks, or in that particular estate.

Any company that is used to that corporate culture will try and protect themselves from liability when operating in Canada.

Bryan:  Businesses get sold all the time. What happens to existing employment contracts? Can a new employer change terms and demand employees sign new contracts with new terms?

Bram:  A very good question. It’s one of these areas that’s somewhat gray at the present time, but this is where the law is right now. Yes, an employer can impose a new contract when purchasing either the assets or shares of an existing company. In order to do that, they have to show that there’s something we call fresh consideration.

In other words, there was an improvement in the relationship to entice the person to sign a new relationship. One, Company A buys Company B. They go to the old employees of Company B and say, “We want to extend your employment, but we want you to sign employment contracts.”

All the old employees, their seniority has to be protected. That’s in Canada, that’s by statute. In terms of the additional protections, the common law protections which I alluded to earlier, the employer, once again, will try and limit those protections as much as they can.

They can do so successfully if they offer either a signing bonus or retention bonus, or additional benefits, or change pensions in a superior way. There’s got to be some consideration for the signing of the agreement. If they do that, they can successfully lock the old employees into the new contracts, unfortunately, in my view.

Bryan:  When signing a new agreement, whether that’s with a completely new company, or maybe a company that’s purchased the previous company, what do you need to watch out for in terms of non‑compete clauses?

Bram:  There’s two scenarios here. Let me just clear one of them. It would be very difficult for an employer, without very good cause, to come to their existing employees and say, “I want you to sign a non‑competition contract,” which limits their ability to go elsewhere and find new employment. That would be very, very difficult.

In a situation where you’re new to the employment relationship, like we were just talking before, and so one of the provisions, it could be very problematic because, once again, working together with determination clause, in the event of a breakup in this marriage, you want to go out and find another position.

The law, in fact, encourages you to do that. If you haven’t watched the terms of the contract very carefully, you’d be faced a provision which purportedly says that you can’t work for another company in the same business, selling the same products in a given geographical area, or for a given time period.

In a lot of cases, that would put a very difficult set of obstacles to an employee seeking a position. Fortunately, and once again, speaking to the issue of how Canadian courts protect employees, the Canadian courts are very, very circumspect and conservative about enforcing these agreements.

They don’t like to, in any way, restraint trade as it’s always been seen, and especially they don’t like to unduly restrict somebody’s ability to seek alternative comparable employment.

It’s still something that should be looked upon very, very carefully because if they’re well drafted in the proper circumstances, especially if somebody is party to certain ‑‑ as we say ‑‑ proprietary or technical information, it could cause somebody a big problem. It’s something to be very much beware of.

Bryan:  Taking all these common traps into consideration, what can someone do to protect themselves?

Bram:  It’s pretty easy. Before you sign, because after you sign, it’s too late. You’ve signed and you’re bound by the contract. Prior to signing, while you’re considering the offer, go to speak to a lawyer.

Go to speak to someone who is proficient in this area, who knows all the traps, who’s dealt with them, and especially, is familiar with the termination and the non‑competition provisions, to be able to tell you this is going to be binding on you.

Some aren’t, some are technically deficient and can be voided down the road. Some raise double red flags, pirate flags, and you’ve got to be very, very careful to make sure that you don’t fall into a position where you work for a company for 10 years. Something happens. You either become ill, or they just lay you off.

Instead of having the protection which the courts normally provide you, the company dusts off the contract you signed before. It says, “Look, we’re just going to give you the minimums, one week per year to a maximum of eight weeks because that’s all we have to. You signed this agreement.”

Like a marriage contract that you take out of the shoe box, the reality is it’s a very serious thing. By signing it 10 years before, you limited your rights. Go to see a lawyer, at least, walk into the situation with your eyes open and know what you’re signing away. That’s the important thing.

Bryan:  Bram, thanks very much.

Bram:  Thank you.

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I’m extremely grateful for all the help and guidance I received with my employment matter. Matthew Fisher was incredibly knowledgeable, supportive, and genuinely dedicated to fighting for me. They took the time to explain everything clearly, answer all of my questions, and guide me through every step of the process. Eslita was excellent — very responsive, organized, and proactive with communication, which made everything feel smooth and well-managed. I truly appreciate the time, effort, and care that went into my case. I would absolutely recommend Matthew to anyone who needs someone knowledgeable and committed to fighting for their rights.
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Awesome Team ⭐⭐⭐⭐⭐ "Thank you so much to Soniya Ponniah and Ashley Hussey at Lecker & Associates. You provided wonderful support, guidance, and clear communication throughout this employment law matter. Your exceptional legal counsel and strategic management led directly to a successful and highly agreeable resolution. I highly recommend your legal services. Thank you again!"
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⭐⭐⭐⭐⭐ Excellent Employment Law Firm I had an excellent experience working with Lecker & Associates regarding an employment matter. From the beginning, I was treated with professionalism, respect, and genuine care. I would especially like to thank Ms. Soniya Ponniah and Ashley Hussey for their outstanding guidance, communication, and support throughout the entire process. They took the time to answer my questions, kept me well informed, and made sure I understood each step along the way. Their professionalism and attention to detail gave me confidence that my matter was in capable hands. What stood out to me most was how responsive, knowledgeable, and respectful they were. Dealing with an employment matter can be stressful, and having experienced professionals supporting and guiding you makes a significant difference. I am extremely grateful for the service I received and would confidently recommend Lecker & Associates to anyone seeking professional and knowledgeable employment-law assistance. A sincere thank you to Ms. Soniya Ponniah, Ashley Hussey, and the entire Lecker & Associates team for your exceptional service, professionalism, and support.
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I had a helpful and informative consultation with Nathan Whittingham. He was professional, attentive, and took the time to explain my options clearly. The consultation is a paid service, but I found the guidance valuable and appreciated his time and professionalism.
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Mr. Whittingham has incredible to work with regarding my employment matter. I have been thoroughly impressed by his legal knowledge, insight, professionalism and strategy. He’s been instrumental in helping me navigate my issue. Nathan has helped me every step along the way while we traverse the case. Ultimately helping me find a tailored legal solution that best fits my case. I can’t recommend Nathan Whittingham enough along with the rest of the Lecker and Associates team. Thank you for helping me navigate this stressful legal situation.
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Matthew was very hands-on throughout which is exactly what I expect. The communication was prompt, and professional. Eslita was always available if I had questions or needed to reach Matthew. Highly recommend this team.
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I had the pleasure of speaking with Nathan Whittingham regarding my previous employment experience. He was very helpful and understanding of the issues I am facing, and he provided valuable advice on several related topics. I would be very pleased to have him represent me as my paralegal in the future.
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Fifteen years ago, through no fault of my own, I found myself unemployed and facing a severance package. Uncertain about what to do, what my rights were, and under pressure from my employer to sign the agreement, I knew I needed professional help. That’s when I found Lecker and Associates. Their guidance, expertise, and support made all the difference. The results far exceeded my expectations, and I was extremely grateful for the way they handled my case. Fifteen years later, I turned to Lecker and Associates once again and received the same high standard of service and dedication. Once again, the results far exceeded my expectations. Lecker and Associates have earned my utmost respect and comes with my highest recommendation. I would not hesitate to recommend them to anyone who needs knowledgeable, professional, and compassionate legal representation.
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I highly recommend Ian Hurley, Nathan Whittingham and the team at Lecker & Associates. After having a terrible experience with my previous counsel from another law firm, I approached Ian with recommendation from a friend. Ian and his team graciously agreed to take over my case. Ian demonstrated that he truly understood and cared about my situation and provided clear and reasonable advice. He and his team handled everything with patience, efficiency, and professionalism. They set realistic expectations and delivered. Within less than 3 months, Ian was able to reach an acceptable settlement when it took my previous lawyer over a year to get nowhere. I'm truly grateful to Ian, Nathan and his team for helping me move forward and finally put a difficult chapter behind me. I would recommend Lecker & Associates to anyone who's in need for a professional, knowledgeable, and dedicated legal team.
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