Key Considerations for Employment Contracts for Charities & Non-Profit Organizations

An employer has a contractual relationship with its non-union employees, and this contract of employment can be either verbal or written, sometimes with only certain terms in writing. Charities and non-profit organizations are increasingly recognizing the benefits of having a detailed written employment agreement that clearly delineates the obligations and entitlements of both the employer and the employee, both during the course of employment and upon its termination. The purpose of this article is to explore the benefits of having written employment contracts for both non-profit employers and employees.

‍Advantages of a well-crafted employment agreement

A written employment contract provides clarity regarding the rights and obligations of both parties at the beginning of the employment relationship, making it simpler and less costly to resolve disputes in the future. In case of any disagreement, the employment contract can be consulted to determine each party's rights and responsibilities. This can help avoid costly and prolonged litigation.

Many employment-related disputes that end up in court occur when there is no written employment contract. Without a written agreement, parties may have differing recollections of the basic employment terms. Without a written contract, the credibility of oral evidence presented in court may become the basis of judgment, posing a risk for both the employer and the employee.

Creating a written employment contract may seem intimidating for small organizations, but it doesn't have to be complex or lengthy. Although executive contracts may require more detail than those for middle managers or staff employees, it is worth the effort to create a written contract for every employee, regardless of their position.

Adherence to the Employment Standards Act of 2000

When creating an employment contract, it is crucial to ensure that its provisions comply with the minimum standards outlined in the Employment Standards Act of 2000 (ESA). The ESA sets out the minimum obligations of employers in Ontario, which include minimum wage, overtime compensation, vacation benefits, statutory holidays, leaves of absence, and termination and severance requirements. These minimum obligations cannot be diminished, even through agreement, as specified by the ESA. Additionally, employment contract provisions that fail to meet the minimum statutory requirements of the ESA will not be enforced by the courts.

Termination provisions

Employers may be reluctant to enter into employment contracts out of concern that these agreements could constrain their capacity to effectively manage their workforce, including making necessary employee terminations. However, this is a misconception. Termination of employees is not precluded by written employment contracts. In cases of termination without reasonable cause, employers must provide adequate notice or pay in lieu of notice. If the contract does not specify the notice period, courts will decide what is reasonable under the circumstances. Such notice periods determined by the court are often longer than the minimum standards outlined in the ESA. As a result, the absence of a written termination clause can lead to significant liability for the employer in the event of a termination without cause. Assuming they meet the criteria stipulated by the ESA and other relevant regulations, contractual notice provisions will generally be upheld by the courts, providing a fixed termination cost and avoiding the expense and uncertainty of a wrongful dismissal lawsuit based solely on reasonable notice.

Many employers are caught off guard by the significant amount of "reasonable notice" that an employee may be entitled to receive when there is no enforceable written termination provision in the contract.
By including an enforceable termination provision in a contract, employers can establish the costs of termination and prevent the unpredictability and costliness of a wrongful dismissal lawsuit where the sole matter at hand is the reasonable notice period.

Other important provisions

Additional key terms that both the employer and employee should consider including in the contract are:

• The job position and job description;
• The compensation package, including bonuses, commissions, and how they are calculated;
• Whether the employment is for an established term or indefinite;
• Details regarding vacation time, sick leave, and if they accrue from year to year;
• Whether there will be a probationary period;
• Any possible changes to job duties or work location;
• The safeguarding of the employer's intellectual property and confidential information, in addition to any post-employment obligations such as non-competition or non-solicitation clauses.

By including a clause in the written employment contract, the employer can reference their personnel and policy manual, which covers details such as eligibility for benefit plans, the reimbursement of expenses, and the employer's e-mail and internet use policy. However, it's crucial that the clause specifically states the intention to incorporate such policies by reference. Additionally, the employer is required to provide the employee with a copy of the policies before their employment commences. If the employer fails to fulfill this requirement, a court may determine that the policies and procedures are not part of the employment contract.

‍

Conclusion
A written employment contract is essential in protecting the commitments made by both the employer and employee during the hiring process. The clarity and certainty provided by a written contract benefit both parties, making it a positive aspect of the employment relationship. It is highly recommended for organizations to implement a policy requiring written employment contracts as it provides significant benefits for both the organization and its employees.

‍