Negotiating Employment Contracts in Canada – 5 Things You Must Know [video]

Share this:

Full-time employment with one company for your entire life is no longer a reality. Most Canadians will go through at least 7 to 9 jobs in their lifetime. Therefore, understanding what goes in your employment contract is essential. This lecture explains in easy terms five basic things you must know about negotiating an employment contract.

This lecture is taught by Amer Mushtaq, LL.B., M. Engineering , B.Sc. (Hons.), who is the Principal and Founder of Formative LLP.   Through his YouTube channel, YouCounsel, Amer shares practical advice from his years of legal experience to help anyone access justice and achieve their goals.  Subscribe today to learn more.

Show Notes:


Lecture Slides:

Have a question about this video?

The team at Formative LLP has created a free discussion forum where anyone can post a legal question and get feedback from the wider audience of self represented litigants.  Join the discussion today!

Machine Transcription:

Welcome everyone, this is Amer Mushtaq from You Counsel. Today, we’ll talk about negotiating employment contracts. Back in our parents’ time, you may recall that you would get hired with one company, and you will work for that company for the rest of your life, and you will retire from there. Those days have long gone, there was a study that I came across a few years ago, that suggested that an average Canadian will go through about 7 to 9 different jobs in their life time, and that was a few years ago, and that has changed significantly even in the last, you know, few years. Because of the advancement in technology, and the concept of full time employment for the entire life is no longer valid. So, therefore this topic is crucial, it’s fundamental for many, many employees to understand how to negotiate that employment contract.

Before we begin, the usual disclaimer, that this course is not legal advice so, if you have any specific questions, you must contact a lawyer or paralegal.

So we’ll start with point number 1, should you negotiate employment contracts or not? And I’ve given you one reason at the outset that you will be going through several employments in your lifetime, so obviously there is a reason that you should negotiate. But there is another basic fact that you must understand, and that’s the basic purpose of an employment contract. The basic purpose of employment contract is to protect employer’s interest. That is the core reason why an employer gives thousands of dollars to a lawyer to have that contract drafted. The employee’s interest that a lot laid out in an employment contract are really subsidiary to that, but the fundamental reason why an employment contract is drafted and is put in writing, and it has so many clauses in it is really to protect employers business and employers own interest. So, this is the most important reason why you should worry about what goes in that employment contract.

Now the second question arises, can you negotiate an employment contract? Can you? When you are at the receiving end, you are just a small employee, you are being hired by a multinational company, a large bank, and oftentimes, when they provide you with a job offer, and if you ask any questions or raise any concerns the answer will be, this is our standard employment offer and take it or leave it kind-of-impression that you get. But you can absolutely negotiate employment contracts, and this is something that we’re going to talk about today.

There is a smart way to do that, there is a smart way to negotiate employment contracts, and so in our future lectures we will talk about how do you negotiate. Negotiation is a skill, it is an art of its own and so there’s a smart way to do it or you can be very direct about it and tell the employer that these terms are not agreeable to you and you want different terms. But I’ll give you without getting into detail, give you 2 scenarios in which you can negotiate and what are the ways to do that.

So number 1 is when you have no employment contract. So, you’re unemployed this is the first job you’re getting and you’re excited about it and this is your first contract, he even in those cases you are able to go back to the employer and ask for certain changes in the employment contract terms whether it’s salary, whether it’s bonus, whether it’s sign up bonus, whether it’s more vacation, anything that you may want to negotiate, generally you’re able to negotiate that. But, if it’s your first contract, and you’re sheepish about going back to the employer and asking for something else, then by all means accept the employment contract, sign on the dotted line and then that puts you in a situation where you now have an employment, you are employed. So, now you are in a position literally for the second contract to negotiate the terms that you want because you already have employment, you’re working for a company, you’re getting paid, so there’s no sort of fire that is causing you to sort of run out and look for a job. You actually go for a job that is appropriate for you, that you believe provides the benefits and remuneration that you deserve. And It’s a second contract that makes employers negotiate even in the first contract. Because employers understand that if they do not enter into a reasonable equitable relationship with that employee the employee will leave, and so therefore for both of these reasons, I believe that you absolutely can negotiate employment contracts, and you must.

And I’ll give you an example from my own practice, I mean in the last 10 years or so, I have advised many, many clients on negotiating their contracts, most of them have been able to get something added to their contract because of the negotiation, and sometimes they couldn’t and they accepted whatever the offer was made to them and moved on and looked for another job that will provide something better. And in 10 years, there was only 1 case where this was my long standing employee, and her and I had negotiated several contracts, and she got a job offer from a multinational company making inroads in Canada, for a very senior sales position. And I suggested that there should be certain changes and she, very, very politely, put out an email saying that she reviewed the employment contract with a lawyer, and there are a few things that she wanted to discuss, and the employer simply withdrew the offer which was quite shocking to us. I’ve never experienced that she had never experience in our lifetime. But that was the only example where the employer simply withdrew the offer and we don’t know why, it could have been because she wanted to discuss, or could be for some other reason. But 2 years down the line, she called me and she said she was so happy that she had not accepted that offer because that employer was now unwinding all of its operations in Canada and every single employee across Canada was losing his or her job.

So going back to yes, you can negotiate, and you must negotiate, and you should not really worry about the consequences, because if your employer really wants you for that position, then they will come to terms which are just and fair for you in that employment relationship, but you’ll have to ask for it.

Now, what’s the single most important thing that you want to negotiate? And so there’s one thing that you must negotiate in an employment contract, what is it? Is it your salary? And the common answer will be yes, I want to make sure that I get properly paid and my salary is what markets suggest or what I salary is what I am hoping for. My answer is no, the single most important thing you want to negotiate in your employment contract, is your termination clause. Yes, what happens to you when you lose that job, when you are terminated, that’s the single most important thing you want to negotiate?

So, what is the best termination clause? I’ll briefly talk about it, we will have a separate lecture on termination clauses. But what I can tell you from the outset in this lecture, is that the best termination clause is no terminations clause whatsoever. So, if you have an employment contract that does not talk about termination whatsoever, awesome, that’s amazing. You don’t want to go back and say hey there’s no termination clause, I want you to put one! No, no, no! If you’re an employee and there’s no terminations clause in the job offer, that’s amazing, why? Because you get Common Law Rights on terminations, you get Reasonable Notice of Termination, and what is that? We have a lecture on that, and kindly of check it out, and it will explain to you what Common Law Reasonable Notice is. But in essence, what it means is your termination rights are highest when you have no terminations clause in the majority of cases.

What is the second important thing or point number 4? Is now should you know negotiate salary? Because that would sound right, because you’ve got a termination clause locked in and now you want to worry about your salary and my answer is, no. The second most important thing, is the Post Termination Clause. What is a Post Termination Clause? Post Termination Clause is a clause obviously of what happens to you after you’re terminated. So, this clause indicates things that you cannot do, even after your employment has ended. So, that’s important. So, in employment contracts, some of the examples are Non-Competition Clause, Non Solicitation Clause, and all of these are called restrictive covenants, and there could be a variety of those clauses. So, the lesson you want to keep, is that in an employment contract, there are things that you can and cannot do during the length of your employment, but you can have an employment contract that has clauses about things that you cannot do even after your employment has ended. So, you’re not getting paid, you’re not getting salary from that employer any more, yet you are not allowed to do certain things. So, very, very important for you to understand that, and we’ll have separate lectures on all of these clauses.

Now come to Remuneration, and their idea of things that you want to make sure you negotiate. Obviously salary, bonus structure, commissions – if you’re entitled to it – benefits and all of that.

So in summary, the lesson that you want to keep that it is essential, is that you want to negotiate your employment contract. Why? Because we said that you may end up having 7 or more jobs in your lifetime, and you want to make sure that what you understand and negotiate what happens during those employments, and what you are allowed or not allowed to do after those employments.

But another thing that you want to understand, is what’s happening in this day and age, is full time employment is really going out of the door and what’s happening is, employers are hiring employees for individual tasks. So, employment is getting out of the door, tasks are coming in, which is the concept of having independent contractors. So, if you are going to be hired by an employer to do certain tasks, and you may end up having to work for multiple employers at the same time, you absolutely want to make sure that you understand what is the employment contract or the independent contractor agreement that you’re signing with that employer, and you want to make sure that you negotiate those items in your benefit. So, hopefully this was helpful, this is a very, very broad topic, very detailed, very complex topic. We’ll have many more lectures on this, but hopefully this gives you a basic sense of why you should negotiate employment contracts and what are some of the basic terms.

Ask us questions, contact us by e-mail, by comments on the YouTube channel, and we’ll be happy to add more information in the future lectures. Thanks for watching.

Share this:

Comments are closed.