Whether you’re starting a new job or renegotiating your terms of employment, understanding your employment contract is critical. In British Columbia, employment relationships are governed by a combination of statutory law, common law, and contractual terms. Too often, employees sign contracts without fully understanding their implications—sometimes waiving important rights or agreeing to restrictive conditions that could limit their future employment prospects. This blog explores why understanding your employment contract matters, and how it interacts with B.C. law and jurisprudence.

1. What Is an Employment Contract?

An employment contract is a legally binding agreement between an employer and an employee that outlines the terms and conditions of employment. In B.C., these agreements may be written, verbal, or implied based on the conduct of the parties. However, written contracts are the most enforceable and commonly used in professional settings.

Common elements of an employment contract include:

• Job title and duties
• Salary and benefits
• Hours of work
• Probation period
• Termination provisions
• Non-compete or non-solicitation clauses
• Confidentiality obligations

2. Employment Standards Act – The Legal Minimum

The Employment Standards Act (ESA) of B.C. sets out the minimum employment standards that all contracts must meet. An employment contract cannot provide less than what the ESA guarantees—for example, in areas such as minimum wage, overtime pay, statutory holidays, and termination notice or pay in lieu.

Section 4 of the ESA states that any agreement to waive or reduce an employee’s statutory rights is void. This means if your contract says you’re entitled to less than the minimum under the ESA, that portion of the contract is unenforceable.

3. Termination Clauses – Why They Matter

One of the most litigated aspects of employment contracts in British Columbia is the termination clause. A valid and enforceable termination clause can limit an employee’s entitlement to reasonable notice under common law. However, if the clause is poorly drafted, vague, or in breach of the ESA, courts may strike it down.

In Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986, the Supreme Court of Canada held that if a termination clause does not comply with the applicable employment standards legislation, it will be void, and the employee will be entitled to reasonable notice under common law determined by the Bardal factors (age, length of service, character of employment, and availability of similar employment), which can be significantly more generous.

More recently, B.C. courts have adopted this principle, scrutinizing termination clauses closely. In Verigen v. Ensemble Travel Ltd., 2021 BCSC 1934, the B.C. Supreme Court found the termination clause to be unenforceable because it was introduced after the employee had already started working, and the employer provided no new consideration.

Key takeaway: Always review termination clauses carefully. Seek legal advice if you are unsure what they mean or how they interact with your statutory rights.

4. Probationary Periods – Not Automatic

Many employees assume that there is a “standard” 3-month probation period. However, under B.C. law, probation must be explicitly stated in the contract. Otherwise, the employer cannot rely on the ESA’s exemption from notice or pay in lieu for employees dismissed during their first three months.

In Ly v. British Columbia (Interior Health Authority), 2017 BCSC 42, the Court held that probation is not implied and that the employer must act in good faith, even during probation.

5. Restrictive Covenants – Know What You’re Agreeing To

Many employment contracts include non-compete or non-solicitation clauses that limit your ability to work for a competitor or contact former clients after leaving a job. In B.C., courts interpret these clauses narrowly, especially non-compete clauses, which are often found to be unenforceable unless they are reasonable in duration, geographic scope, and the nature of the restriction.

Based on caselaw, non-compete clauses are only enforceable where the employer can show they are necessary to protect a legitimate business interest and are not broader than required.

6. Changes to the Contract – Must Be Agreed Upon

An employer cannot unilaterally change the terms of your employment (e.g., hours, salary, responsibilities) without your consent. Doing so may constitute constructive dismissal, entitling you to damages.

In Keenan v. Canac Kitchens Ltd., 2016 ONCA 79, the Court emphasized that a significant change in job terms without consent can lead to a finding of constructive dismissal. Although this is an Ontario case, the principles have been cited with approval in B.C. decisions.

7. Independent Contractor vs. Employee – Labels Are Not Determinative

Many contracts label a worker as an “independent contractor,” but that label does not determine legal status. If the working relationship resembles that of an employee (e.g., control over duties, provision of tools, integration into business), courts may find that the individual is actually an employee, with full entitlements under the ESA and common law.

The courts have emphasized the importance of substance over form in assessing employment relationships.

Conclusion

Employment contracts shape the foundation of your relationship with your employer. In British Columbia, understanding your rights and obligations under your employment agreement is essential for protecting yourself from unfair treatment and navigating job transitions confidently.

Whether you’re starting a job, renegotiating terms, or facing termination, consider consulting an employment lawyer to review your contract. A small investment in legal advice today can save you from costly disputes tomorrow.

Need help reviewing your employment contract?

At Pax Law Corporation, we offer personalized legal advice on employment agreements, wrongful dismissal, and constructive dismissal. Contact us at +1-604-767-9529 or visit www.paxlaw.ca to book a consultation with our employment lawyer.