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Chapter4

Module 3 focuses on employment contracts, covering both express and implied contracts, their legal requirements, and potential issues related to breaches and changes. Key objectives include understanding contract features, creating action plans for breaches, and recognizing problems that may render contracts unenforceable. The module also emphasizes the importance of clear policy manuals and the legal implications of misrepresentation during hiring.

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4 views4 pages

Chapter4

Module 3 focuses on employment contracts, covering both express and implied contracts, their legal requirements, and potential issues related to breaches and changes. Key objectives include understanding contract features, creating action plans for breaches, and recognizing problems that may render contracts unenforceable. The module also emphasizes the importance of clear policy manuals and the legal implications of misrepresentation during hiring.

Uploaded by

jennifer.mcconachie
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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HRM3103: Module 3 Notes

Module 3: Employment Contracts


In this module, we will examine both express/explicit and implied/implicit employment contracts,
sometimes referred to as explicit versus implicit contracts.

MODULE 3 OBJECTIVES
Upon completion of this module, you will be able to:
1. Describe the features, purposes, and uses of implicit and explicit contracts.
2. Create plans of action for dealing with breach of contract.
3. Explain potential issues that could arise when making a change to an employment
contract.

To do in Module 3
1. Read the Module 3 notes (below).
2. Read the textbook, Chapter 4.
3. Complete Unit 2: Employer-Employee Relationships in the workbook.
4. Participate in the Graded Discussion (5%).

What is an employment contract?


An employment contract is an enforceable agreement which sets out the key terms and
conditions of employment. It can be verbal (implicit), written (explicit), or a combination of the
two. Its purpose is to reduce the risk of misunderstanding between the parties, address any
contentious issues early in the employment relationship, and reduce uncertainty. The
employment contract can confirm Common Law or legislated rights and obligations, provide
additional rights or obligations above those legislated, and/or provide for a variation from the
protection rights or rules provided by Common Law.

LEGAL ELEMENTS REQUIRED FOR AN EMPLOYMENT


CONTRACT
Common Law dictates that there are three requirements necessary to create a binding contract:

1. an offer
2. acceptance of an offer
3. consideration (something given or promised in exchange)

Express/implied terms in an employment


contract
Employment contracts can contain express terms, implied terms, or both. Express terms are
those that both parties have agreed upon either verbally or in writing. Implied terms are those
that are deemed part of the contract or relationship even though the parties did not actually
discuss them or refer to them. The terms are implied based on Common Law or legislation.

COMMON LAW MISREPRESENTATION BY JOB


CANDIDATES AND WRONGFUL HIRE
While there is no specific legislation covering misrepresentation by job candidates during the
hiring process, courts have deemed misrepresentation to be grounds for dismissal by the
employer. Of significant importance as well, courts have also deemed negligent
misrepresentation by the employer for statements made during the hiring process as grounds
for wrongful hiring, making employers legally liable for damages. It is extremely important that
your hiring policies and procedures include no misleading or deceptive information.

EMPLOYER LIABILITY FOR INDUCING BREACH OF


CONTRACT
If a contract of employment exists between an employer and employee and a third party
persuades either the employer or employee to breach the agreement, the third party is liable for
inducing a breach of contract. This normally occurs at the hiring stage: if Employer A knows that
the employee is currently obligated to Employer B under an employment contract but proceeds
to persuade the employee to leave their Employer B in breach of contract, then Employer A could
be sued by Employer B.

POLICY MANUALS AND EMPLOYMENT CONTRACTS


In order to maximize the benefits of the company policy manual, you should

1. refer to the manual in the employment contract


2. provide employees with a copy of the manual before they start work
3. ensure the manual is clearly drafted
4. apply the policies consistently among employees
5. ensure employees always have an up-to-date copy of the manual
6. give significant notice to employees of changes to the manual
7. have employees indicate in writing that they have received, reviewed and understood the
manual
8. include a statement indicating that the organization has the sole discretion to make
changes to the manual
9. update the manual periodically to ensure compliance with current legislation

PROBLEMS WHICH COULD MAKE AN EMPLOYMENT


CONTRACT UNENFORCEABLE
1. lack of consideration
2. inequality of bargaining power
3. obsolescence
4. failure to meet minimum statutory standards
5. use of ambiguous language (the contra proferentem rule)

COMMON TERMS IN AN EMPLOYMENT CONTRACT


Employment contracts often contain some or all of the following common terms:

Job description; Remuneration; Term; Termination; Probationary Period; Relocation; Benefits;


Restrictive Covenants; Ownership of Intellectual Property; Choice of Law; Corporate Policies;
Entire Agreement Clause; Inducement; Independent Legal Advice; Severability Clause; Golden
Parachute.

Changing an employment contract


An employer who decides to unilaterally change an employee’s employment contact faces two
potential issues:

o Changes could amount to a constructive dismissal.


o If there is no consideration provided by the employer, then the revised terms imposed are
not binding on the employee.

PRACTICE

PRACTICE QUIZ FOR MODULE 3

After you have completed the assigned readings answer questions in Practice Quiz 3.
DISCUSSION FOR MODULE 3

The discussion for Module 3 is a graded discussion (5%). Read the instructions for the graded
discussion, review your notes and readings, and post your contribution to the discussion board.

REVIEW
This ten-minute video is a point-form presentation by a law corporation explaining how to set up
an employment contract.

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