Employment contract

An employment contract is the agreement between you and an employee on pay, duties and terms. It exists even if unwritten and can't go below the law.

Also called: contract of employment, employment agreement, written employment contract

What employment contract means

An employment contract is the agreement between an employer and an employee about the work: what the person will do, what you will pay, the hours, and the other terms of the job. It can be written, spoken, or partly both. As soon as someone works for you for pay as an employee, there is a contract, even if nothing was signed.

A written contract matters because it records what you both agreed. Without one, the terms come from what was said, what you have done in practice, and the law. In particular, courts can award common-law notice when they decide a without-cause termination, and for a longer-service employee that can be more than the minimum in employment standards law.

No contract can give an employee less than the employment standards in your province or territory. These are minimums. A term that falls below them is not enforceable to that extent, and the employee still gets the minimum.

How it works

A basic written contract covers: the parties, job title and duties, start date, whether the job is ongoing, fixed term or seasonal, work location, hours, pay and pay frequency, vacation, benefits, probation, how either side can end the employment, and any confidentiality or non-solicitation terms. For a small business, a clear offer letter that the employee signs can do this job.

Have the person sign before they start, so the terms are agreed before the work begins. Terms added after someone has started, especially terms that limit the employee's rights, can be harder to rely on, so get advice if you need to do that.

Termination terms need care. Statutory notice minimums depend on length of service and province: for example, in Nova Scotia an employee with 2 to under 5 years of service is owed 2 weeks' notice, and in Ontario 1 more week is added for each year of service after 3 years, up to 8 weeks. A clause that limits notice to these minimums must be worded so it never gives less. Get advice before relying on one.

Restrictive terms also need care. Ontario's employment standards law bans most non-compete agreements made on or after 25 October 2021. Non-solicitation and confidentiality clauses are not banned there, but courts look closely at how broad they are.

When you want to change a key term, such as pay, hours or duties, get the employee's agreement in writing. A one-sided change to a key term can lead to a constructive dismissal claim.

Is it the same in every province?

Employment contracts are governed by common law in every province except Quebec, where the Civil Code of Québec applies; in all provinces, contracts must meet the local employment standards. Federally regulated employers follow the Canada Labour Code minimums instead.

Example: Putting a verbal deal in writing

Kim has run a 5-person landscaping business in Kentville, Nova Scotia, for years with handshake deals. Her crew lead has worked for her for 4 years and she wants to make his role and pay clear.

With his agreement, she writes a short contract setting out his duties, $24.00 an hour, 40 hours a week year-round, and vacation pay. She does not try to reduce his notice entitlement without advice, because he already has 4 years of service and is owed at least 2 weeks' notice under the Labour Standards Code. They both sign, and she keeps a copy in his file.

Hollis drafts the letter

Hollis, part of the Staffkin HR Suite, drafts province-specific letters, including offers, for your approval. It never sends a letter on its own.

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Questions about employment contract

Is a verbal employment contract valid in Canada?

Yes. A contract exists once someone works for you as an employee, written or not. A written contract simply makes the terms clear.

Can an employment contract give less than employment standards?

No. Employment standards are minimums. A term that gives less is not enforceable to that extent, and the employee still gets the minimum.

Do I need a lawyer to write an employment contract?

Not for the basics, which a clear offer letter can cover. Get advice for termination clauses, non-competes and other restrictive terms, because these are where contracts most often fail.

Can I change an employee's contract?

Only with their agreement. Changing key terms like pay or hours on your own can be treated as a constructive dismissal.

Official sources

General information for Canadian employers, not legal advice. Rules differ by province and territory and change over time, so check with your provincial employment standards office (or the federal Labour Program if you are federally regulated) before you rely on it. See employment standards by province.

Checked against official sources on 4 November 2026.