Small Business Essentials: An employment lawyer's perspective.

AuthorSkeith, Andrew

Three essentials all small business owners should have in place are employment agreements, policies, and termination letters and releases.

One of the most common mistakes small business owners make is assuming a small number of employees means proper employment documents are less important. On the contrary, the best time to speak to an employment lawyer and get help with the necessary contracts and policies is when your business is first thinking of hiring an employee.

While employment lawyers can help small business owners in a variety of ways, below are three essentials that all small business owners should have in place.

Employment Agreements

Having properly written employment agreements signed by your employees when they are first hired can help your business reduce risk, liability, and legal costs down the road. While an employment agreement can have several important provisions, one of the most important to include is a termination clause.

The Employment Standards Code is legislation that governs minimum standards applicable to workplaces in Alberta. Among other things, the Code sets out minimum amounts of termination pay an employer must pay an employee if they let them go without cause.

Employers cannot contract out of these amounts, but they can agree to pay employees more severance.

If an employee does not have a termination clause in their employment agreement, they will also have a right to "common law" reasonable notice if they are terminated without cause. How much common law reasonable notice an employee is entitled to receive depends on several factors such as length of service, age, and position. But in most cases, an employee will be entitled to much more common law reasonable notice than they would be if they only received their employment standards minimums. For example, a 60-year-old shop manager with 25 years of service with an employer could be entitled to anywhere from 16 to 24 months of compensation at common law. Under the Employment Standards Code, that employee is only entitled to 8 weeks of wages. As you can see, that is a tremendous difference.

Employers may, for entry level positions, want to limit that employee's entitlements on termination to the Employment Standards Code. For more senior or managerial roles, an employer may want to reward those employees by agreeing on a set formula for termination, such as two weeks of wages for each year of service. The important point is that, without a written...

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