Tuning Up Your Offer Letter by P.A. Neena Gupta

1. Tuning Up Your Offer
Letter
By P.A. Neena Gupta

2. Employment Contracts
• Why review your agreements?
• Legislation changes
• Courts interpret provisions
• Your business changes
• Expands to new jurisdictions
• Different provinces
• Different countries
• Acquires new lines of business or product
• Your employee’s role changes (intern to Vice President)
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3. Employment Contracts
• Make sure that all relevant legal documents
(including offer) signed by employee BEFORE
commencement of employment
• Legal terms signed AFTER commencement of
employment may not be enforced by courts,
unless EMPLOYER can prove FRESH
CONSIDERATION (i.e. new benefit to employee)
• Promotion
• Bonus (not otherwise promised)
• Raise
• Training
• Signing bonus
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4. Obsolescence
• Courts will typically not enforce an agreement
where employee’s position has changed
substantially
• Position
• Title
• Compensation
• Consider language that specifically deals with
obsolescence:
• e.g. the terms and conditions of this offer letter shall continue
to govern unless specifically altered in writing and executed on
behalf of the Company, regardless of any changes to your job,
including, without limitation, job title, job responsibilities,
seniority, years of service or compensation.

5. Obsolescence
• Review contract terms at performance review
• Consider an annual confirmation that despite any
compensation, that all other terms and conditions
of the offer letter dated _________ remain in full
force and effect
• Ensure that all promotions are made subject to a
specific offer of promotion with appropriate terms
and conditions
• Consider whether additional terms necessary
when employees are promoted

6. Additional Terms Required
• Offer letters are NOT a “one size fits all”
• Software developers, technical professionals and
research scientist should be signing
• Intellectual Property Agreements
• Assignment of copyright
• Waiver of moral rights
• Assignment of intellectual property rights
• Agreement to cooperate with patent and other IP applications
• Sales people, C-level executives and key
employees should be signing
• Non-solicitation agreements prohibiting them for seeking
business from clients of Company for a reasonable period of
time post-termination

7. Non-Solicitation Agreements
• Less is more
• 95% is better than 105%
• Length of time
• What is a reasonable amount of time for Company to re-
establish relationships between its clients after employee’s
departure?
• Can company prove the reason for the need for the length of
time?
• Consider sales cycle/complexity of sales process
• Industry standard – can be as little as 3 months and as much
as 24 months

8. Non-Solicitation Agreements
• Geographical scope
• In what area will the prohibition exist?
• Just because Company has worldwide operations does not
mean worldwide prohibition will be enforceable
• Must only extend the area in which employee actually has
influence or impact

9. Non-Solicitation Agreements
• Scope of Prohibition
• Be careful what you restrict post-termination
• Should be activity that is specifically detrimental to the
Company, i.e. business that Company typically transacts with
the client
• This area of law changes rapidly and non-
solicitation agreements should be reviewed every
2 years

10. Non-Solicitation Agreements
• Notoriously difficult to enforce
• Consider tying payment of severance payments,
deferring bonus or other types of post-termination
payments to honouring non-solicitation clauses

11. Confidentiality
• Although courts recognize importance of
confidentiality, don’t always understand WHAT is
confidential in your industry
• Consider defining types of documents,
information that is confidential in YOUR industry

12. Business Changes -- Constructive Dismissal
• Contracts can be used against employer
• Job Duties
• Location of business
• Commission structure
• Include language that makes clear that
Company reserves right to make
reasonable changes, preferably on notice

13. Business Changes -- Constructive Dismissal
Job Duties – Company reserves right to
amend, delete, augment job duties,
provided such changes are commensurate
with the position of _____________ within
the industry
You shall work at the Company’s
headquarters located at 1 _____ Street,
Toronto or such other location in the
Greater Toronto Area (define what cities)
the Company may designate

14. Business Changes -- Constructive Dismissal
Commission – The Company reserves the
right to alter, amend, change or eliminate
the Commission Plan without notice.

15. Benefits
• Employee is eligible for benefits, subject to
the terms and conditions of any group
benefit plan
• Employee is NOT “entitled” to benefits
• Disclose any pre-existing condition
exclusions in offer letter or accompanying
benefits material
• Make sure HR does not over-promise
benefits

16. Geography Matters
• Be careful of where employee works
• An employee who is transferred to another
province or country needs specialized
agreements
• Ontario agreement does not work for other
provinces
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17. Geography Matters
• Quebec agreements have to be very carefully
drafted
• Different legal system
• French language requirements
• Different countries have vastly different
expectations
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18. Common Misapprehensions
• The Employment Standards Act, 2000
provides employers the right to temporarily
layoff employees without triggering
termination or severance pay obligations
• However, there is no right to layoff at
common law
• Put right of layoff in agreement
• Otherwise, layoff constitutes constructive
dismissal

19. Common Misapprehensions
• The Employment Standards Act, 2000 permits a
probationary period of 3 months
• Probationary period not implied at common law
• A short service employee is entitled to reasonable
notice or pay in lieu
• “Probationary employees” have received 4 months
to 9 months of notice upon termination, because of
recruitment or other factors
• Include explicit probationary clause in offer
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20. Termination Clauses
• Ensure clause is carefully drafted
• Cannot be less than ESA under any
circumstances
• Best to use technique such as:
The Company may terminate your employment
without just cause upon providing you notice (or
compensation in lieu) and severance, if any that is
the greater of:
(i) your minimum entitlements under the
Employment Standards Act, 2000 (“Act”), as it may
from time to time be amended; or,
(ii) xxxx (your company’s preferred formula)
Benefits shall be continued for the period of time
prescribed by the Act.

21. Boilerplate Matters
• Severability
• If any statute provides greater right or benefit,
than employee shall benefit from the statutory
rights or benefits in lieu of those provided for in
this offer
• Choice of law
• Choice of forum (location of court)
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22. Boilerplate Matters
• Parole evidence/exclusion of side agreements:
this offer supersedes all prior understandings,
agreements or representations. You agree that
there are no representations, whether in writing
or verbal, touching upon the matters relating to
this offer or your employment with the Company.
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23. Thank You
P.A. Neena Gupta
Gowling Lafleur Henderson LLP
Barristers & Solicitors
50 Queen Street North
Suite 1020
Kitchener, ON, N2H 6M2
Direct Tel: 519.575.6910
Direct Fax: 519.571.5001
Email: neena.gupta@gowlings.com
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