What Is an Employment Contract in Ontario?

An employment contract is a legal agreement between you and your employer that sets out the terms of your job. It can be written, verbal, or implied through your actions and workplace practices. Most contracts are written documents you sign when you start a new job.

The contract covers important details like your salary, job duties, benefits, vacation time, termination conditions, and any special rules like non-compete clauses. It creates legal obligations for both you and your employer.

A typical employment contract in Ontario includes:

Basic terms:

• Your job title and responsibilities
• Start date
• Salary or hourly wage
• Work location and hours
• Benefits (health insurance, dental, pension)
• Vacation and sick leave entitlements

Important clauses:

• Probationary period
• Termination notice requirements
• Severance pay limits
• Non-compete or non-solicitation restrictions
• Confidentiality agreements
• Intellectual property ownership

Legal requirements: Employment contracts must comply with Ontario’s Employment Standards Act. Any clause that provides less than ESA minimums is unenforceable, even if you sign it.

If you start working without signing a written contract, you still have an employment contract—it’s just not written down. This can actually work in your favor.

Without a signed written contract, you’re entitled to “common law” rights, which are often much more generous than what employers offer in written contracts. However, your employer might withdraw the job offer if you refuse to sign. If you’re already working and haven’t signed, don’t rush to sign now without reviewing it carefully—your current situation might be better for you legally.

If you have no written contract, you still have full employment rights under Ontario law. The Employment Standards Act protects all employees regardless of whether they signed anything.

Your rights include:

• Minimum wage
• Overtime pay after 44 hours per week
• Vacation pay and public holiday pay
• Termination notice or pay in lieu
• Protection from discrimination and harassment
• Safe working conditions

Severance rights: Without a written contract limiting your rights, you’re entitled to “reasonable notice” under common law if terminated without cause. This is usually much more than ESA minimums and depends on your age, length of service, position, and how easily you can find comparable work. Long-term employees can receive 12-26 months of pay.

Not necessarily. Many people labeled as “contractors” or “independent contractors” are actually employees under Ontario law, regardless of what their contract says.

Courts look beyond job titles and contracts to determine your true status. They examine:

• Does your employer control how, when, and where you work?
• Do you provide your own tools and equipment?
• Can you work for multiple clients?
• Do you bear financial risk?
• Can you hire others to do the work?

If your employer controls your work like an employee, you’re legally an employee—even if your contract says “contractor.” This matters because employees get ESA protections, severance rights, and vacation pay that contractors don’t receive.

Many employers misclassify workers as contractors to avoid obligations. If you think you’re misclassified, you can challenge it and claim employee rights including unpaid vacation pay, severance, and benefits.

Read it carefully: Don’t just skim it. Every clause affects your rights.

Watch for red flags:

• Termination clauses limiting severance to ESA minimums only
• Broad non-compete clauses restricting future employment
• Clauses saying you can’t claim constructive dismissal
• Indefinite probationary periods
• Clauses requiring you to repay training costs

Get legal advice: Having a lawyer review your contract before signing can save you thousands later. 

Negotiate: Job offers aren’t take-it-or-leave-it. You can negotiate salary, severance terms, vacation time, and removal of unfair clauses. Employers expect some negotiation.

Don’t sign under pressure: If an employer demands you sign immediately without time to review, that’s a warning sign.

Even if you signed a contract with unfavorable terms, it might not be enforceable. Courts regularly strike down employment contract clauses that violate the ESA or are unconscionable.

Common unenforceable clauses include:

• Termination clauses that don’t comply with ESA requirements
• Overly broad non-compete agreements
• Clauses limiting your right to sue
• Terms that were added after you started working without new consideration

If you’ve been terminated and think your contract limited your severance unfairly, consult an employment lawyer. The contract might be invalid, entitling you to much more compensation.

An employment contract defines your job terms and legal rights. You can have a written, verbal, or implied contract—all are legally binding. Without a signed written contract, you often have stronger rights under common law.

Whether you’re starting a new job, already working without a written contract, or questioning your current employment terms, understanding your rights protects you from unfair treatment and ensures you receive proper compensation.

Contact Pinto Shekib LLP at info@pintoshekib.ca or 416.901.9984 to schedule a confidential consultation about your employment contract or workplace rights.