DEMYSTIFYING YOUR RIGHTS
An Employment Law Primer
with Andrea Sanche
A recent Randstad US survey confirmed that women who are dissatisfied with their salaries are less likely to ask for a raise than to make a lateral move. Click Here to View Salary and Compensation Statistics on the Impact of COVID-19
Rather than broach a potentially difficult conversation with their employers about terms that would make them happier, women simply find new jobs. There are many reasons women make these decisions, many of which come down to systemic inequality rather than personal failing or qualities inherent to being women. The impact of these lateral moves, however, is that women’s career advancement can be delayed. Further, it sets a tone and precedent in the workplace, obvious to all employees: great women move out rather than up. My goal is to change this trajectory!
Achieving this normative shift depends on structural changes in business, government, and society that address systemic inequality, which is certainly a larger project. There are tools that women can employ, however, to make real changes in their daily lives, within this existing framework. Establishing a mutually beneficial employment relationship helps women employees to feel secure in their position, to manage their exit from a role, and to help other women in their workplace by setting reasonable precedents. If you have been promoted or have started a new job and are given an employment contract to sign, many terms and benefits are negotiable, with the backstop being that the applicable statute in your province (or under federal law) will provide you with minimum rights that are protected.
I know this is easier said than done. You may feel vulnerable – that you do not have sufficient bargaining power – or you may worry that you will jeopardize your potential job or promotion. First, don’t forget: your employer wants you! They have offered you the job or promoted you. Second, although it can be intimidating, the negotiating process is not inherently adversarial. If you take a practical approach to your employment contract and treat it as you would any other business negotiation, it sets a tone for your relationship with your employer that will be apply for later, potentially difficult conversations.
What if I am fired? No one wants to think about it, especially at the outset, but managing your exit from a position will ensure that you avoid possible pain and aggravation in the future. If your employer terminates your employment “without cause”, you are entitled to working notice or payment (either over time or in a lump sum) instead of that working notice. As a simple example, if you are entitled to two weeks’ notice that your employment is terminated, your employer can either
(1) advise you that your employment will end in two weeks and you must work to that end date, or
(2) advise you that your employment is terminated immediately and pay you two weeks’ wages.
This begs the question: how much notice should I get? The specific answer to this question varies from province to province and depending on the terms of your employment contract. The latter likely includes terms promising you one of the following on termination:
(1) the minimum required by the employment legislation applicable to you;
(2) the statutory minimum plus another amount in exchange for your agreeing to certain terms;
(3) or another amount entirely. Your contract may also be silent. If your contract is silent or if you do not have an employment contract, you are likely entitled to what is called “common law notice”, which is the current precedent set by a court for someone in your position. Determining your specific entitlement is complicated, and usually necessitates legal advice.
When negotiating your contract, however, turn your mind to what you would like to receive on exit. The statutory minimums are usually considerably less than common law notice, so your goal should be first and foremost to ensure you are not limited to statutory notice. Further, you may be employed for twenty years; what would be suitable if your employment is terminated after two years may not be satisfactory after twenty.
Do not be afraid to ask for revised terms that ensure that you and your employer will not be stuck in protracted litigation after your employment is terminated. Positioning the conversation in this way – since no one can predict the future and future legal requirements – will likely gain traction with your employer. The way you structure your termination clause is not restricted, provided it gives you at least the statutory minimum. You can be creative, you can think about tax consequences, and you can consult a lawyer and financial advisors if you want to understand how various structures might work. Thinking about an exit is not pessimistic, but a way to manage expectations, both yours and your employer’s.
Salary AND Benefits. The general rule is that you are entitled to salary and benefits over the course of the notice period. In the example above, this would be two weeks of salary and benefits. If you are on an extended health and dental plan, you are entitled to coverage for those two weeks. If you are paid in a lump sum, some benefits might continue while some might be paid to you at that time. The notion of “benefits” can be quite broad; for some employees, depending on the wording of their contract, this can include car allowance, RSP matching, pension contributions and more. It is crucial that you establish in your employment contract your expectations as to what is explicitly defined as “benefits”.
Bonus Entitlement. It is also helpful if you address your entitlements to a bonus in your employment contract, particularly if it constitutes a large part of your remuneration. First, look at the relevant terms in your contract: do they explicitly exclude entitlement to bonus if you are not “actively working” for the company? This is an attempt by the company to limit you to only receiving a bonus if you have not been notified that your employment is terminated. Consider also whether this means you receive a bonus if you are on leave – sabbatical, parental leave, or otherwise. Second, if your provision is silent, can you revise it to indicate that you are explicitly entitled to the bonus during the notice period? Note that it is likely non-negotiable (and reasonable) that your contract states that you are not entitled to a bonus if you are terminated “with cause”.
Share Options. You may have a separate agreement relating to share options. Read it closely to see how you are affected when your employment is terminated. Some agreements provide different outcomes if you are fired, if you quit, of if you are fired with cause. It is often the case that these agreements are not negotiable; they usually apply equally to all employees. Some differ if you are an executive or if you are in certain areas of the business. It is important to take note and often wise to read these documents with reference to the terms of your employment agreement.
Restrictive Covenants. Employment contracts often include terms that require that after you leave the company, you will not compete with it or solicit its employees or clients. Provisions that restrict competition are usually not enforceable unless they are very narrowly drafted. Provisions that restrict solicitation are usually enforceable, but they must also be properly drafted. Clarifying issues like their duration, geographical area, and definitions of terms like “competing business” are all important. These terms and their definitions are usually best discussed with a lawyer. Consider this as a general takeaway, however: if your employer wants you to sign a non-compete for a certain amount of time, potentially requiring you to sit out the job market, your termination clause should ideally provide you with at least that amount of compensation.
These are all provisions that you can think about and discuss with your employer when you are presented with an employment contract. Raising these issues with your employer can be nerve-wracking. I always suggest that you position your comments as constructive ideas to ensure the employment relationship is transparent and mutually rewarding. The idea is that you want to work with your employer for a long time, and you want to make sure you and the company are set up for success. If you face resistance, you may need to narrow your focus or consider if this workplace has the right culture for you. Always keep in mind, meeting with a lawyer at the outset to review your contract may be invaluable as it may help you to avoid or limit issues in your employment relationship.
Andrea Sanche is a commercial litigator and partner at Ricketts Harris LLP. She can be reached at asanche@rickettsharris.com.
PLEASE NOTE THAT THIS ARTICLE DOES NOT CONSTITUTE LEGAL ADVICE