Year-End Review: Improving Enforceability of Employment Agreements

13 Dec Year-End Review: Improving Enforceability of Employment Agreements

At R&D LLP, we understand the importance of having enforceable employment agreements in place as they serve as a cornerstone in protecting your company’s interests and defining the parameters of your relationship with employees.

Updating Employment Agreements Before Year-End

As a result of recent decisions by the Ontario courts, many (if not most) employment agreements that have not been reviewed by counsel in the last 1-2 years are likely at risk of being found unenforceable in the event of facing a wrongful dismissal/severance claim by a former employee.

The above is significant, as in the event that your business should have to terminate an employee, the difference between having an enforceable employment agreement versus one that is not could cost more than 10-fold the amount of severance/notice pay in some instances.

Protect Your Company’s Interests as the Year Comes to a Close

Reviewing, revising, and updating your existing employment agreements to take account of recent court rulings could therefore have a very substantial impact upon your business’ financial performance and risk management.

An employment agreement cannot simply be updated to take into account the new changes without complying with the rules pertaining to “fresh consideration”.  This concept requires an employer to provide something of new or fresh value (e.g., additional day(s) off, pay increase, a bonus, etc.) to the employee at the same time the employee moves from their existing employment agreement onto a new form of employment agreement. 
 

A Strategic Opportunity Unveiled 

Year-end bonuses, raises, or promotions, which an employer may already be planning on providing, present an employer with an opportune time to revisit and update their employment agreements with their existing workforce, so as to get the employees onto new/updated employment agreements that are more likely to be enforceable and guard against some of the main risks that businesses face from having to part ways with an employee.  It is for this reason we recommend that our corporate clients who have employees speak with us about having their employment agreements updated prior to year-end or at least before they may wish to otherwise offer a pay increase to an employee for the next year.  

By taking proactive steps now, a company may not only promote compliance with employment law requirements but can also mitigate potential risks that could arise from outdated or insufficient agreements which may mean the difference between several weeks to a great many months of additional notice pay to an employee for which it would be liable in the event of termination. Our legal team is here to provide guidance and review your existing employment agreements to promote their alignment with the latest common law decisions for the purpose of limiting notice requirements.

Schedule a Consultation Today

Seizing this moment as the calendar year ends provides an excellent and somewhat time-limited window during which to protect your company’s interests before any issues arise. We welcome you to reach out to schedule a consultation.

Excellence. Sophistication. Value.

At R&D LLP, we specialize in working with founders, entrepreneurs, and emerging companies. Our team of experienced lawyers understands the unique legal challenges that growing businesses face, and we balance our advice with an appreciation of the realities of running a business.

Our lawyers are skilled in providing strategic and actionable advice to help our clients navigate the complex legal landscape. We are dedicated to providing exceptional client service and achieving the best possible outcome for our clients.

Call us at 416-966-0304 or contact us online to schedule a confidential consultation today.