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Offer of employment

Once you have decided to hire an applicant, it is time to present the person with an offer of employment. The offer should clearly outline the terms and conditions of employment.

Making the offer

The actual offer should be made either in person or over the phone. Review the details of the offer (e.g., title, employment status, salary, start date, benefits). Keep in mind that the candidate may attempt to negotiate some aspects of the offer. As a precaution, do not turn down other good applicants until you have reached agreement, and confirmed acceptance, with your top candidate.

Once you have extended a verbal offer of employment, follow up with a written employment agreement (an offer letter). Although there is currently no legal requirement in Ontario to put the offer in writing, it is prudent to do so. A written offer of employment ensures that all parties are clear about their responsibilities. To ensure that the written contract is enforceable, it is imperative to state that any verbal offer is conditional on signing a written agreement and the candidate must sign a copy of all required documentation prior to commencing work.

Types of employment agreements

Two basic types of employment agreements exist:

  • indefinite contract: the employment relationship continues until either party chooses to end the relationship (i.e., resignation by employee or termination by company)
  • fixed-term contract: the employment concludes on a specific date

Note: Both types of employment agreements should include how the employment relationship may be terminated—either by the company or by the employee. For fixed-term contracts, it is important to set out how the relationship may be terminated during the term if necessary.

Contents of employment agreement

The employment agreement should contain the following information:

  • title
  • employment status
  • compensation
  • start date
  • end date (for fixed-term contracts)
  • termination clause

You should also seriously consider including some or all of the following details in the employment agreement:

  • job responsibilities and expectations
  • reporting relationships
  • probationary period
  • work hours
  • travel requirements
  • vacation
  • group benefits
  • variable compensation (e.g., bonuses, profit sharing, stock options, commission)
  • salary increases
  • restrictive covenants—including confidentiality, intellectual property, non-disclosure, non-solicitation and non-competition (usually separate agreements)

Tips on creating the employment agreement

  • Consider hiring a lawyer to review and/or craft your standard employment agreement, particularly with respect to restrictive covenants.
  • If you use a template to create the employment agreement, read it through carefully to ensure that additions and/or amendments are not required.
  • Include a clause stating that you retain the right to amend certain parts of the contract with proper notice and cause (e.g., job responsibilities, reporting relationships, group benefits).
  • If you perform a reference check after extending an offer of employment, make sure that any verbal offer is stated to be conditional upon satisfactory references, and that this clause is included in the written employment agreement.

Useful Templates

References

Butteriss, M. (1999).Help Wanted: The Complete Guide to Human Resources for Canadian Entrepreneurs. Toronto: John Wiley& Sons.

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