Employment Contract Options in Canada

Types, seniority, noncompetes, and more.

Updated on November 15th, 2022

Can we add company-specific information to the employment contract? Will Velocity Global review these updates?  

Yes. We recommend that you include your business name and a business overview in the employment contract. Our local internal counsel will review these changes and any other new information to ensure the employment contract remains compliant.

What are the types of employment contracts we can offer? (e.g., fixed-term, indefinite, project-based)

Velocity Global can offer indefinite-term, fixed-term, part-time, and hourly employment contracts in Canada. An employment contract is assumed to be indefinite if no term is specified. 

While fixed-term employment contracts make it easier for you to terminate a supported employee at the end of the term, we do not recommend offering these employment contracts as a means to avoid compliance obligations (e.g., notice of termination or pay in lieu). Fixed-term employment contracts can only be used in circumstances like the completion of a specific project, parental leave, sporadic work demands, or trial periods. 

If you must offer fixed-term employment contracts, we recommend you do not extend or renew them past one year. Should you require the employee for a longer period, we recommend an indefinite employment contract.

Can we recognize seniority in Canada?

Yes. It is best practice and often required to recognize seniority due to the continuity of employment legislation in many Canadian provinces. Please note that Velocity Global may need to collect an extra deposit from your company based on our Seniority Recognition Policy.

Can we include benefits in the employment contract?

Yes, we can include benefits in the employment contracts in Canada. Please note that you are fully responsible for paying for these benefits. Cost sharing is not possible.

Can we add variable compensation to the employment contract? 

Yes, our employment contracts briefly mention variable compensation. We will outline more details of your company’s variable compensation policy in our separate Variable Compensation Agreement. Your Client Account Manager or Velocity Global representative will provide you with this separate Variable Compensation Agreement. 

Can employment contracts include noncompete agreements beyond 12 months?

No, we do not approve noncompete agreements beyond 12 months. In fact, we typically recommend clients do not include noncompete agreements beyond six months. Noncompetition clauses are difficult to enforce in Canada (even unenforceable or prohibited in some provinces) as the courts are generally hesitant to restrict an individual's ability to seek employment and earn wages. In summary, these non-compete agreements must be reasonable and not overly restrictive when considering the totality of the circumstances. 

Can a noncompete agreement cover an entire country or region?

We suggest that the geographic scope of the noncompete agreement be as narrow as possible. Rather than widening the geographic scope, we recommend adding specific competitors to the noncompete agreement.

When considering a reasonable geographic scope of restriction, we consider the following:

  • Your supported employee's position
  • Your supported employee’s access to confidential or sensitive information
  • Where your supported employee performs their duties of employment
  • Where your company may do business