Just because a clause appears in your employment contract does not guarantee its enforceability under Canadian law. Howard Levitt, a prominent employment lawyer, emphasizes that many common provisions are often legally void.
Discretionary Bonuses
Many employees believe that a bonus labeled as "discretionary" means the employer can withhold it at will. However, this is false. Dismissed employees are entitled to all compensation they would have received during the notice period, including bonuses. If other employees receive bonuses or if there is a pattern of regular bonus payments, the employer cannot arbitrarily deny it.
Independent Contractor Misclassification
Contracts that label a worker as an independent contractor do not automatically make them one. Canadian courts apply a specific legal test to determine actual employment status. The majority of workers filing taxes as independent contractors are legally employees or dependent contractors, entitled to full employment protections.
Equity Compensation
Restricted Stock Units (RSUs), stock options, and other equity awards often have clauses stating they vanish upon termination. However, the general rule is that employees should receive what they would have earned during the notice period. If the plan lacks precise language to exclude this, employees may claim the monetary value of unvested equity.
Legal Advice is Crucial
Howard Levitt advises all workers to have their employment contracts reviewed by a lawyer before signing. Many outdated contracts contain unenforceable terms, and employees often assume they have no legal recourse. In reality, thorough legal examination frequently reveals that written terms are not binding.
