The Growing Business Owner Who Wanted to Draft One Employment Contract

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After years of entrepreneurship and efforts, a business owner wants to reorganize the business to portray a better reputation with lenders, customers and employees, and to secure a sustainable growth.  When the business started, the owner hired employees, but they didn’t sign contracts.  Now, the business is steady and prepared to take on more long-term projects and commitments.

With two dozen employees the owner wants to set things clear and thinks that the business will benefit from signing one contract with the employees.  He asks a lawyer with experience in employment relations to draft one template he can use with all employees.

Yes, having one written contract is better than not having one.  But, notice that one contract template will not (be even close to) control the legal exposure that the relationship with employees had and have.  

First, there is no one-size-fits-all.  Having a dozen employees suggests that there are different roles, responsibilities, shifts, expectations, working culture, and an endless list of different circumstances that interact day in and day out.  Although some of these employees may be grouped by similar roles, each employment relationship is somewhat unique.  Unless, you are in an industry/sector bound by a collective agreement.  

Second, workplace related laws and their regulations limit the employer and employee’s autonomy to contract things in or out of the employment agreement and relationship.  For example, an employer and an employee may agree that if an employee is harassed at work, the employee waives his or her right to file a claim against the employer.  This clause will not be enforced by a legal decision maker (i.e. judge), and the employee will be entitled to file a claim, regardless of what he or she “agreed” to about harassment in that agreement.

This means that if you are budgeting workplace relations legal costs based on one contract, expecting that it will be enough to safely predict your bottom line, well … think again.

Assess. Plan. Implement.

Besides a written or oral agreement between an employer and its employees, laws and regulations expect that businesses keep records, and have policies, programs and systems in place to efficiently manage employees’ expectations and the work climate.  This includes, training for managers and supervisors and education for all employees about the business’ workplace legal infrastructure (‘Infrastructure’) set up by the employer.

With a complete Infrastructure’s assessment, the business will realize it strength, or lack thereof, to stand scrutiny from its own employees and boards, tribunals and courts.  This assessment will also allow business to clarify where can you go with your workforce and design steps and stages to get there.  Because, what seems to be a decision for instinct or common sense, it’s usually a more complex project that requires another level of attention.  For example, you don’t have policies in place, and you authorized your employee to take an additional vacation week when she informed you that her daughter was sick and needed care.  It seemed the right thing to do.  But, how would you account for a non-entitled additional week of vacation in your books and before your other employees?      

With a better picture of the Infrastructure, you can now put the puzzle together.  You can design a robust set of tools that would allow the business to manage its employees’ expectations efficiently.  Getting back to the example of that additional vacation week you generously granted, wasn’t it a job-protected non-paid leave? Or, wasn’t it an accommodation request?

After you (1) assess your realities and understand where you could take your workforce to, and (2) designed an Infrastructure, it’s time for (3) the implementation stage.  Up to this point, you’ve carefully built an Infrastructure that would be the envy of your business owner peers.

Now, drive it home!

You’ve achieved so much; it would be sad to finish the assessment and designing stages and waste all that work for a lack of legally sound communication with your employees and Infrastructure-based performance management at the implementation stage.

Infrastructure’s legal tools must be reviewed on a need to know and regular basis over a reasonable period of time, some of them, at least once a year.  Business leaders, such as managers and human resources professionals must be trained about the tools and the rest of the employees educated.

This would move your workforce from an intuitive environment, expose to unknown and unpredicted sources of legal liability, to a healthy and wealthy work climate with a predictable and preventive legal budget.    

You could choose to wait it out, without assessing, planning and implementing an Infrastructure, and see if you will have to use a “forced legal budget” later, which will be more expensive and time consuming.

Get to the practice of having written agreements with your employees before they start working for your business and build a workplace legal infrastructure that gets you closer to a better reputation with lenders, customers and employees. Take a look at the things you could start doing to build your Infrastructure.    

Antonio F. Urdaneta is a marathon runner, a workplace lawyer, investigator, compliance coach, and thought leader at Workplace Legal.  He uses coaching skills and tools to inform, advice and represent workplaces in digital and physical legal challenges and endeavours.  He writes his own posts.