A good employment contract protects your business before a dispute arises. A bad one — or none at all — can cost far more than you expect. Here's what BC employment contracts must cover and where employers go wrong.
Employment contracts are the foundation of the employer-employee relationship in British Columbia. A well-drafted contract sets clear expectations, limits the business's liability on termination, and protects confidential information and client relationships. A poorly drafted one — or the absence of one — can expose a BC employer to significant legal risk.
BC Employment Law Framework
In BC, employment is governed by:
- The *Employment Standards Act* (ESA) — sets minimum standards for wages, hours, overtime, termination notice, and leave entitlements. Contracts cannot contract out of these minimums.
- Common law — fills gaps in the employment contract and determines what reasonable notice means on termination where the contract doesn't specify.
- The *Human Rights Code* — prohibits discrimination in employment on protected grounds.
- The *Workers Compensation Act* — workplace injury and compensation obligations.
What a BC Employment Contract Should Cover
1. Job title, duties, and reporting structure
Clear description of the role, who the employee reports to, and the general scope of responsibilities. Flexibility language ("and other duties as assigned") is useful but should not be so broad it creates uncertainty.
2. Compensation and benefits
Base salary or hourly rate, bonus structure (if any), benefits, vacation entitlement (at minimum the ESA standard, but many employers offer more), and RRSP matching or other perks. Bonus language requires particular care — a bonus described as "discretionary" can still become legally enforceable if it has been consistently paid.
3. Hours of work
Whether the employee is full-time, part-time, or hourly. Overtime rules under the ESA are specific — professional advice is important for salaried employees whose hours may vary.
4. Termination clause — the most important section
The termination clause limits the notice or pay in lieu the employee is entitled to on dismissal without cause. Without a valid termination clause, BC employees are entitled to common law reasonable notice — which can be one month per year of service or more, far exceeding the ESA minimums. A well-drafted termination clause that is clearly communicated at hiring can significantly limit this exposure.
Critically: a termination clause must be drafted carefully to comply with BC law. Courts have struck down termination clauses that purport to limit notice to ESA minimums if the clause fails to comply with every aspect of the ESA, including benefits during the notice period and the treatment of bonuses. Get legal advice on your termination clause before using it.
5. Confidentiality
Employees who have access to confidential business information — client lists, pricing, processes, trade secrets — should be bound by a confidentiality obligation that survives termination.
6. Intellectual property
Work created by an employee in the course of their employment generally belongs to the employer under BC law, but this is cleaner when explicitly stated in the contract — particularly for creative, technical, or inventive roles.
7. Non-solicitation
After termination, can the employee contact your clients or recruit your employees? A non-solicitation clause — reasonable in scope and duration — is generally enforceable in BC. Non-compete clauses (which go further, restricting all competition) are much harder to enforce and are generally only valid for senior employees with access to genuinely protectable business interests.
Common Mistakes BC Employers Make
- Using a template from another province (Ontario employment law is significantly different from BC)
- Not having employees sign the contract before their start date — an unsigned contract, or one signed after starting, may not be enforceable
- Updating the contract mid-employment without fresh consideration (a new benefit or raise)
- Relying on a termination clause that has never been reviewed against current BC case law
- Not updating contracts when employees are promoted to significantly different roles
Not legally required, but strongly advisable. Without a written employment contract, the employment relationship is governed by the Employment Standards Act and common law — which means termination notice is determined by a court using the 'reasonable notice' standard, potentially running to many months of pay. A valid termination clause in a written contract can significantly limit this exposure.
Not unilaterally — changing a material term of an employment contract (compensation, hours, duties) without the employee's consent and without providing fresh consideration (something of value) is constructive dismissal under BC law. If you need to change terms, the proper approach is to negotiate a new agreement, provide reasonable notice of the change, and offer something in return. Get legal advice before making unilateral changes.
The Employment Standards Act sets minimum notice periods — ranging from one week (after three months of service) to eight weeks (after eight or more years of service). However, without a valid termination clause limiting notice to ESA minimums, common law reasonable notice applies — typically one month per year of service, sometimes more for senior or long-tenured employees. A valid termination clause is essential to manage this risk.
Non-compete clauses — which prohibit an employee from working for a competitor after leaving — are rarely enforced in BC courts. They are treated as a restraint of trade and must be reasonable in geographic scope, duration, and the interest being protected. Courts are much more likely to enforce a non-solicitation clause (prohibiting contact with specific clients or colleagues) than a blanket non-compete. Get legal advice before relying on a non-compete clause.