by Whether you’re hiring someone new or an employee considering a new job offer, there are a few key clauses of the employment agreement that need careful thought and consideration. Obviously, the rate of pay will be very important but there’s more to it than that. We recommend you pay particular attention to the following key provisions: Hours of Work, Restraint of Trade and Trial periods.
Hours of Work
With the new employment standards legislation, employers can no longer require an employee to be available to work additional hours unless there is a genuine business reason to do so, reasonable compensation is provided, and an appropriately drafted clause is included in the employment agreement.
This means it is no longer lawful to have a standard clause in the employment agreement that requires an employee to work “all or any hours necessary to suit the demands of the business and the position”. If the employment agreement contains such a clause, the provision it is likely to be unlawful and unenforceable. As such, the employee can refuse to work additional hours without repercussion, or if there were repercussions (disciplinary action or otherwise) they could challenge these by way of a personal grievance.
Salaried employees can be compensated for their availability to work additional hours within the salary (although this should be specified in the employment agreement), but waged employees must receive compensation in addition to their hourly rate.
A simple way to comply with this legislation (if it suits the demands of the business) is to not require an employee to work additional hours, but allow extra hours to be available at times, by mutual agreement. If that doesn’t suit the demands of the business, then a carefully thought out hours of work clause needs to be developed in order to require employees to work additional hours and comply with current employment legislation. We can help with this so feel free to get in touch!
Restraint of Trade
Often employment agreement templates contain a generic restraint of trade provision. If this is the case, it is highly likely that this sort of clause will be unlawful and unenforceable. In order to be upheld, careful drafting is required. The restraint of trade clause will need to ensure the restrictions placed on the employee are necessary and reasonable, and do not unfairly limit the employee’s future ability to earn a living.
Aspects to consider will include what proprietary interests need to be protected, for how long the restrictions would be necessary, within what geographical area should the restrictions apply, and how much compensation is going to be offered in exchange for the employee’s agreement to the restrictions imposed. The general rule is the more narrow the restrictions placed on the employee, the more likely the restrictions are to be found as lawful and reasonable.
For new employees, or employees’ accepting a promotion or new position, compensation for the restraint can be included within the salary offered. To add a restraint of trade to a current employee’s terms and conditions of employment, specific and identifiable compensation would be required in order for the restraint to be enforceable. They would also need to agree to it in writing!
A good alternative to a restraint of trade clause can often be a non solicitation clause, which can be drafted to prevent the employee from soliciting clients, customers, employees, contractors, suppliers etc following the termination of their employment. If you need help with creating or understanding a restraint of trade or non solicitation clause then let us know.
90 Day Trial Period
From 6 May 2019, only businesses with less than 20 employees will be able to use the 90 day trial period.
Otherwise, an employer can employ a new employee on a trial period for up to 90 days as long as this is agreed in the written employment agreement before the employee starts work. There are a lot of technicalities to getting a trial period right so it’s important that employers understand the provision and have an appropriately drafted clause in the employment agreement.
It’s important for employees to know that they do not have to agree to a trial period!
While many people think going under a trial period is just a standard part of getting a new job. However, this is not actually the case, especially for more senior positions. Every term of the employment agreement should, in good faith, be negotiable. The trial period is no different.
We urge employees to understand all the provisions contained in their employment agreement but this one really is key. Agreeing to a trial period takes away an employee’s rights, and as such this shouldn’t be agreed to without careful thought and consideration, especially if resigning from a permanent position to take up a new offer.
Need help creating or understanding an employment agreement?
Please do not substitute this article for professional advice.