Streamline sales order approval in Employment contracts

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if it turns out that uh that all along it was you know it was a contract relationship but it actually really looked a whole lot more like an employer employee relationship the company is going to have a very difficult situation on their hands hi my name is steve parr i'm a corporate lawyer and i'm here to answer the internet's most asked questions about employment law an employment contract is an agreement between an employer and an employee and the most important terms of an employment contractor of course the wage or salary kind of bonus structure is in place the termination clause the severance clause what the work schedule is what the benefits are confidentiality provisions and then other important pieces are non-competes and non-solicit is an employment contract necessary well is feeding yourself for breakfast necessary no strictly not however it's a great idea and if you enter into a lot of employment relationships you are just stacking liability upon liability upon liability so as the as the complexity and scale of your business grows uh if your employment contracts are you know heaven forbid not in place but if they are not properly drafted then you know you're just adding layers on layers of risk to your business so no it's not a legal requirement that an employment contract be in place but you should know that in the absence of an employment contract an employment contract can be deemed to exist so if you are exchanging compensation in exchange for services you essentially have an employment relationship you might wish to believe that this is a as a contract relationship a contractual relationship where you wouldn't necessarily have the same kind of obligations to the employee but that is going to be harder to establish if you don't have documentation that supports what the actual nature of the employment contract is so is an employment contract legally binding well it depends on the nature of the the actual employment contract that we're talking about but yes in general an employment contract is going to be legally binding and is going to require the employer to uphold uh their end of the bargain and and require the employee to uphold theirs basic elements of what forms a legitimate binding contract are is that there is an exchange of value so the employer in this context you're talking about an employer paying compensation the employee providing services back to the back of the company and that there is acceptance so acceptance of the terms of that uh of that type of agreement evidence of a of a legally binding contract can can exist through can can be formed verbally so verbal contracts do exist and in fact if the substance of the of the relationship is you know money is is changing money is changing hands in exchange for services then you have a contract so when should an employment contract be issued so an employment contract should be issued before the employee begins working with the employer uh it's very important to structure the relationship right from the get-go a because you're you are going to restrict the type of legal liability that might exist uh b because it very much sets the type of tone that you are going to have with the with the employee um so very i mean this this principle holds true for just about any business relationship you want to have the terms of what the relationship are clarified documented and agreed upon before the substance of the relationship begins does contract work count as employment it depends a company uh chooses to contract with with somebody to perform a certain set of services that can count as employment it just depends on the nature of what the relationship is so if they are contracting them for on a full-time basis such that this worker uh you know worker being like the the neutral term that is neither a consult a contractor or an employee if the worker cannot work for anybody else uh you know i either the employer has monopolized his or her time or if the employer is providing that worker with tools necessary to complete the task if that employer is providing them with a space and requiring that they show up say at an office within a certain period of time you've got to be in there from nine to five monday friday that's very much uh going to look like an employer employee relationship even if there is a contractor agreement in place so just because you have a employee employment agreement or a contractor agreement that doesn't necessarily that does not determine the nature of the relationship what determines the nature of the working relationship is the substance of that relationship those are terms like exclusivity if they have an opportunity to to profit because they can you know take on more clients or they can participate in the in the uh the pro the upside that the company is going to enjoy then that's that's more likely to be a contract relationship this is a very gray area of law you know lawyers love to say gray area but this is actually one of those cases where it's actually true so it needs to be looked at it needs to be examined very carefully if you have any uncertainty at all you should absolutely consult with an employment lawyer and clarify this and then document what the what what the actual nature of the relationship is so that everybody understands what are the consequences of having a contractor be counted as an employee after the working relationship ends if upon you know a worker ends their working relationship with the employer and and they elect they notify the cra hey you i i'm going on ei um and and i just i was just laid off then and if it turns out that uh that all along it was you know it was a contract relationship but it actually really looked a whole lot more like an employer employee relationship then the uh the company is going to have a very difficult situation on their hands so because they had an obligation to permit income tax withholdings cpp ei uh all along the way throw this ribbon says generally amount to about 20 to 25 of the the gross amount that is paid to that worker so you can imagine if this person was with your company for two three years you have a massive tax bill on your hands not to mention penalties fines interests etc that are going to be allowed by the cra so that's a very difficult situation and something that you want to very scrupulously avoid so should you get professional help when drafting unemployment agreements it really depends on how important your business is to you and what your tolerance for risk is if your tolerance for risk is extremely high and you don't feel that you have a whole lot to lose then downloading something off of or some of the other services online might be might be sufficient to meet your needs but that said like it really just depends on on your willingness to get burned frankly depends on the nature of the employee but it's not necessarily a hugely prohibitive cost particularly when it's stacked up against other types of costs that a business might incur and the downside of not having it done can be substantial so um it's something that i highly recommend getting done it's something that you can you know you can build a relationship with a lawyer if you're choosing who you trust who you think knows their stuff and and has your back and and that's going to be an invaluable asset there are many many reasons to have a lawyer in your pocket to have an accountant all these types of advisors in your pocket you need to establish good relationships early on and uh and drafting employment agreements contract agreements relatively low cost way to to build that relationship and start to test the waters with uh with your chosen counsel [Music] you