Understanding Employment Contracts in Alberta

Employment contracts form the foundation of an employee-employer relationship whereby it sets out contractual rights, obligations, and expectations for both parties. Employment contracts, for provincially regulated employees, are governed by the Employment Standards Code, the Alberta Human Rights Act, Occupational Health and Safety legislation, and common law principles. As an employee, it is crucial to understand the legal implications of an employment contract or, if you are an employer, the risks of not having a properly drafted employment contract.

What Makes an Employment Contract Binding in Alberta?

In order for a contract to be legally enforceable it must meet certain requirements which include:

Clear Offer and Acceptance,
Consideration (something of value is exchanged),
Mutual Intent (both parties intend to create a binding agreement), and
Capacity (can legally enter into a contract).

Generally, the above requirements are satisfied when an adult employee becomes employed by a new employer. However, satisfying the “consideration” requirement can become problematic if an employee is already employed when asked to sign an employment contract.

For example, an employee is hired with no employment contract in place. The employer, after the employee already became employed, presents the employee with an employment contract with no change to the employee’s position and/or pay.

The risk to the employer in the above example is that there is no consideration and thus the employment contract is not binding. In other words, the employee did not receive something of value in exchange for executing the employment contract as they were already employed and there was no increase to their title and/or pay. In this scenario, the employer may be relying on an unenforceable employment contract.

Nevertheless, if you are already employed and your employer presents you with an employment contract, you want to be sure you fully understand each provision within the employment contract as said provisions may impact for instance your severance, ability to work for a competitor, and/or ownership of intellectual property.

Essential Terms in an Alberta Employment Contract

Employment contracts in Alberta typically include:

1. Job Description

Position title
Job duties and responsibilities
Full-time, part-time, or casual status

2. Compensation & Benefits

Salary or hourly wage
Overtime pay (if applicable)
Bonus structures, commissions, or profit-sharing
Health benefits, pension plans, and other perks

3. Hours of Work & Schedule

Standard work hours
Shift expectations (if applicable)
Remote work or hybrid arrangements

4. Probationary Period

An employment contract may define a “probationary period”
Alberta’s Employment Standards Code does not define a probationary period. However, a probationary period is implied as Employment Standards Code does not require an employer to provide an employee notice of termination (or pay in lieu of notice) if they have been employed for 90 days or less.

5. Termination Clauses

Notice Periods – Alberta’s Employment Standards Code sets minimum notice requirements for a termination without cause. The employer must either pay “termination pay” or provide “termination notice” if they terminate an employee without cause.
Termination for Cause – the contract may stipulate grounds for an employer can terminate for just cause. It is important to note, absent such a contractual provision, a termination for just cause must meet a high threshold whereby only the most serious misconduct warrants such a response by an employer.
Termination Without Cause – a provision which sets out notice or pay in lieu of notice in the event of termination without cause. Generally, a termination clause is included in an employment contract to limit or remove any further entitlement for “severance” beyond what is prescribed by the Alberta Employment Standards Code. For instance, an employee of 20 years may be entitled to a significant common law notice period. However, if there is an enforceable termination clause that removes common law entitlement entirely, that same employee would only receive 8 weeks of notice or pay in lieu (or a combination thereof).
Enforceability– For a termination clause to be enforceable, it must be clear and unambiguous in removing common law entitlement. If the language used in the termination clause is unclear or ambiguous, the court is likely to interpret the clause in favor of the employee.

6. Restrictive Covenants (Non-Compete & Non-Solicit Clauses)

Non-compete clauses – restrict employees from working with competitors after leaving
Non-solicitation clauses – prevent poaching clients and/or employees.
In Alberta, the court, when considering the enforceability of these types of clauses, weighs the interests of both the employee, who is seeking new employment in their area of expertise, and the employer, who is protecting the interests of their business. The court assesses whether the clause is reasonable, and thus enforceable, based on its scope, duration (the timeframe the clause is to apply), and geography (over what physical area does the clause apply). Generally, overly broad restrictive covenant provisions are unenforceable

7. Confidentiality & Intellectual Property

Protects trade secrets and proprietary information.
Clarifies who owns work-related inventions or creations.

Common Pitfalls in Employment Contracts

1. Vague or Unenforceable Termination Clauses

If a termination clause fails to provide the minimum notice period required by the Employment Standards Code or is unclear/ambiguous, the termination clause may be unenforceable.

2. Unreasonable Non-Compete Restrictions

Overly broad restrictions may be struck down by courts.

3. Failing to Update Contracts

Laws change so contracts should be reviewed periodically.

4. Misclassifying Employees vs. Independent Contractors

Incorrect classification can lead to legal disputes over benefits, taxes, and termination rights.

Best Practices for Employers & Employees

For Employers:

Have contracts drafted or reviewed by an employment lawyer.
Ensure compliance with Alberta’s Employment Standards Code.
Be transparent about key terms (e.g., termination, bonuses).

For Employees:

Read the contract carefully before signing.
Negotiate terms if necessary (e.g., severance, remote work flexibility).
Seek legal advice if you have questions, or if clauses seem unfair and/or unclear.

What Happens If There’s a Dispute?

Employees can file a complaint with Alberta Employment Standards if minimum legal entitlements are violated.
Employees can file a complaint with the Alberta Human Rights Commission if they have been subjected to discrimination by their employer.
For wrongful dismissal claims, employees may sue for reasonable notice pay under common law.
Employees and employers can contact an employment lawyer who can act on your behalf in navigating any legal disputes you may encounter.

Getting Help with a Labour & Employment Law Lawyer

The Edmonton and Calgary labour & employment lawyers at Kahane Law Office help both employers and employees. Never in the same matter though! Issues related to the workplace often have significant impacts on both the employer and the employee. We always recommend knowing your rights before signing any documentation or dealing with employee issues. Lastly, learn more about our employment law team here. Kahane Law Office features offices in Calgary and surrounding areas. For help in the Calgary area please call: (403) 225-8810. If you prefer, feel free to email today to contact us.

Please note, the information provided herein is directed toward non-lawyers for purposes of providing general information and should not be relied upon nor considered legal advice. It is recommended that you always consult with legal counsel prior to entering into, or drafting, an employment contract.