Ramifications to having an employee begin without an employement agreement

Not every employee has a written employment contract as proof of their employment. In fact, the opposite is more commonplace than most people would guess. Many employees are hired verbally, without any physical documentation outlining the terms of their employment. This is fine if everything runs smoothly in the workplace. But if it doesn’t, it may leave the employee feeling vulnerable. Without an official employment contract, does an employee have any rights?

Absolutely. Whether you sign on the dotted line or not, the fact that you show up for work every day, perform your assigned tasks and receive a pay check invariably leaves a trail of evidence indicating an agreement between you and your employer.

It’s this evidence that comprises a verbal employment contract, and these verbal agreements are legally enforceable. In fact, they’re so common; the courts have a system for determining an employee’s rights from verbal, written and conduct-based elements.

The Three Main Elements of an Employment Contract

1) Verbal Elements: Involve the exchange and terms of employment between the two parties. The employee agrees to perform the tasks and duties of the position offered by the employer; and the employer agrees to compensate with a rate of pay and benefits in exchange for the performed duties. This agreement usually happens at or around the time of hire and is the foundation of the employment contract.

2) Written Elements: These can include various administrative documents associated with the workplace, such as:

• pay statements
• benefit programs
• any signed paperwork associated with taxes
• stock options and / or grants
• promotion letters

One thing to note is that these elements aren’t restricted to paper documents only. Other media such as texts, emails or any memoranda that indicate changes to function and alterations in pay are potentially enforceable. Even without any of the above, the Employment Standards Act defines the most basic employment contracts and sets out the minimum requirements for employees. So, even if you think you don’t have an employment contract, in the eyes of the law, you do.

3) Conduct-Based Elements: Changes can occur at any time during employment and may affect the relationship or conduct between employer and employee. These changes in conduct may amend or alter the terms of the original employment contract. What most people don’t realize is that the common law allows for these amendments in the midst of employment…provided that there is enough evidence to prove the changes in conduct occurred.

If you’re a long-term employee, you may have already experienced several changes in conduct; some of which may work in your favor and others not. The smallest differences can legally alter an employment contract and have a significant impact on your life.

Here are two simple examples of employees exercising their rights:

• Originally hired to work on Mondays, Tuesdays and Wednesdays, a sales employee discovered that her commission-based salary would increase significantly if she worked on Thursdays, Fridays and Saturdays. Over time, she managed to change her schedule and worked Thursday through Saturday for a number of years. This marked, long-term change in conduct altered the original employment contract. When the employer tried to change the days she worked, the courts stated the employer couldn’t change those terms without her agreement or without reasonable notice.
• For years, an employer paid his employee by cheque. Suddenly, he began electronically depositing the money into the employee’s account instead. For whatever reason, the employee didn’t like this change and took action. He argued that the employer didn’t have the right to do this and the court agreed. The employer’s conduct for a number of years had established payment by cheque as a term of the employment contract.

As you can see, the courts recognize the dynamic nature of written and verbal employment contracts. These agreements provide rights and protection for every employee, so whatever your situation is, you are not without power. If you’ve been experiencing unfavourable changes in the workplace and would like to take action, please contact Employment Contract Lawyer, Bob Yeager.