Advice on offers of employment, job offer letters, and employment agreements

Once you have decided to make a job offer to an applicant, it is time to present the person with an offer of employment. Your offer should clearly outline the terms and conditions of employment.

Make the job offer

The actual offer should be made either in person or over the phone.

Review the details of the offer (for example, title, employment status, salary, start date, benefits). Keep in mind that the candidate may attempt to negotiate some aspects of the offer. As a precaution, do not turn down other good applicants until you have reached agreement, and confirmed acceptance, with your top candidate.

Follow up with a job offer letter

Once you have extended a verbal offer of employment, follow up with a written employment agreement (an offer letter). Although there may be no legal requirement in your province to put the offer in writing, it is prudent to do so. A written offer of employment ensures that all parties are clear about their responsibilities.

To ensure that the written contract is enforceable, you need to state that any verbal offer is conditional on signing a written agreement and the candidate must sign a copy of all required documentation prior to commencing work.

Based types of employment agreements

Indefinite contract

With this type of employment agreement, the relationship continues until either party chooses to end the relationship (that is, resignation by employee or termination by company)

Fixed-term contract

With this type of agreement, the employment concludes on a specific date.

Note: Both types of employment agreements should include how the employment relationship may be terminated—either by the company or by the employee. For fixed-term contracts, it is important to set out how the relationship may be terminated during the term if necessary.

Contents of employment agreement

The employment agreement should contain the following information:

• Title
• Employment status
• Compensation
• Start date
• End date (for fixed-term contracts)
• Termination clause

Other employment agreement details to consider include:

• Job responsibilities and expectations
• Reporting relationships
• Probationary period
• Work hours
• Travel requirements
• Vacation
• Group benefits
• Variable compensation (for example, bonuses, profit sharing, stock options, commission)
• Salary increase process
• Restrictive covenants—including confidentiality, intellectual property, non-disclosure, non-solicitation and non-competition (usually separate agreements). Please note that non-competition clauses may not be legal in your province, so do your due diligence.

Tips on creating the employment agreement

• Consider hiring a lawyer to review and/or craft your standard employment agreement, particularly with respect to restrictive covenants.
• Read carefully any employment agreement template you use to ensure that additions and/or amendments are not required.
• Include a clause stating that you retain the right to amend certain parts of the contract with proper notice and cause (for example, job responsibilities, reporting relationships, group benefits).
• State that your verbal offer of employment is conditional until you have completed a reference check and/or background checks. And make sure that this clause is included in the written employment agreement.

References

Butteriss, M. (1999). Help Wanted: The Complete Guide to Human Resources for Canadian Entrepreneurs. Toronto: John Wiley & Sons.