Includes a FREE, Lawyer-Vetted Employment Contract Template and other valuable resources!

Nonprofits like you are driven by passion and making a real difference in the world. But let’s be honest, with everything going on, it’s easy to overlook some important stuff. One crucial document that most nonprofits tend to neglect is an enforceable employment contract. Now, whether you’re a small nonprofit with just a single employee or a larger organization, having an employment contract goes a long way. By clearly outlining expectations, compensation, and termination procedures, an employment contract can help you avoid potential legal disputes down the road, saving you valuable time, resources, and unnecessary stress. In this blog post, we will delve into the significance of enforceable employment contracts for nonprofits, provide valuable tips and clauses to include. 

We always include valuable resources in our articles, but this time we’ve gone above and beyond by including a FREE Employment Contract Template exclusively made for Ontario nonprofits. This exceptional template has been meticulously crafted by top-notch legal professionals at HRC Law professional corporation.

DISCLAIMER: This employment contract template is provided for general information and reference purposes only. It is not intended to be used as a standalone legal document. We strongly advise seeking expert legal advice before utilizing this template. We take no responsibility for any damages that may occur from using this contract without consulting a lawyer or HR professional for proper legal guidance.

Here’s a list of all the free resources you’ll find in this article.

  • Employment Contract Template
  • Employment Agreement Checklist 
  • Video Recording of our Webinar “Why employment contracts are essential to your business” that features Anatoly Dvorkin, CEO and employment lawyer at HRC Law Professional Corporation, and Ljubica Durlovska, employment lawyer at HRC Law Professional Corporation.
  • Webinar Presentation with Valuable Insights and Case Studies
  • Termination Letter Without Cause

Save your time, and get them all in a single click!

10 reasons why nonprofits should have an employment contract

Having an employment contract is beneficial for nonprofits for several reasons. Here are the top ten:

1. Termination Procedures: Terminations can be a source of anxiety for nonprofit organizations, especially when a key employee such as the Executive Director is involved. To ensure continuity of operations, nonprofit boards can find reassurance by including provisions in the employment contract that require advance notice of resignation. This helps to mitigate potential disruptions and uncertainties. 

When drafting an employment contract for a nonprofit organization, it is crucial to include proper termination clauses that address various scenarios involving termination with or without cause. These clauses should consider legal requirements and best practices to protect both the nonprofit and the employee.

Contracts can outline termination procedures, including notice periods, severance arrangements, and any other relevant provisions in case of employment termination.

2. Clarity and Consistency: An employment contract establishes clear expectations and terms of employment for both the nonprofit organization and the employee, ensuring consistency and avoiding misunderstandings.

3. Legal Protection: Contracts can help protect both the nonprofit and the employee by outlining the rights, obligations, and responsibilities of each party. They can help prevent potential legal disputes and provide a clear framework for resolving conflicts.

4. Compliance with Employment Laws: Employment contracts can ensure compliance with federal, provincial, and territorial employment laws in Canada. They can help establish minimum employment standards, such as minimum wage, overtime, vacation entitlement, and other statutory requirements.

5. Non-disclosure and Confidentiality: Contracts can include provisions regarding confidentiality and non-disclosure, protecting the nonprofit’s sensitive information, trade secrets, donor lists, or any proprietary data.

6. Protection of Intellectual Property: If employees create intellectual property in the course of their work, employment contracts can clarify ownership rights and ensure that the nonprofit retains appropriate control over such intellectual property.

7. Compensation and Benefits: Contracts outline details regarding compensation, benefits, and any other perks offered by the nonprofit, ensuring fairness and preventing disputes in relation to remuneration.

8. Accountability and Professionalism: Having employment contracts in place demonstrates a commitment to professionalism, accountability, and ethical employment practices, enhancing the nonprofit’s reputation among stakeholders.

9. Job Security: Contracts can provide a sense of job security to employees by defining the terms and conditions of employment, including the duration of the contract and provisions related to termination.

10. Recruitment and Retention: A well-drafted employment contract can help attract, lock-in and retain qualified and committed employees, as it demonstrates a professional and transparent approach to employment.

Disclaimer: It’s important to remember that employment laws can vary among provinces and territories in Canada. It’s advisable for nonprofits to consult with experts who specialize in nonprofit HR and employment law to ensure compliance with relevant legislation and best practices specific to their jurisdiction.

Clauses to consider in your contract

A comprehensive employment contract for nonprofits should include the following key clauses:

  1. General Clauses: This section covers the offer of employment, background checks, and any conditions precedent to employment.
  2. Employment Details: It includes important information such as the employment start date, probationary period (if applicable), place of work, reporting structure, work schedule, and adherence to employer policies.
  3. Compensation: This section outlines the employee’s remuneration, including the amount, form of payment, deductions, bonuses, commissions, vacation pay, and benefits.
  4. Termination/Resignation: It specifies the grounds and procedures for termination or resignation, notice periods, severance provisions, and any post-employment obligations.
  5. Employee Expectations: This clause outlines the employee’s duties, responsibilities, and any specific expectations related to their role within the nonprofit organization.
  6. Confidentiality and Non-Disclosure: This specifies the employee’s obligation to maintain the confidentiality of proprietary information and trade secrets.
  7. Non-Competition and Non-Solicitation (if applicable): Include provisions that restrict the employee’s ability to compete with the employer or solicit clients or employees after the termination of employment.
  8. Intellectual Property Rights: Address ownership and usage rights related to any intellectual property created by the employee during the course of employment.
  9. Governing Law and Jurisdiction: Specify the applicable laws and jurisdiction governing the employment contract.

Disclaimer: It’s important to remember that employment laws can vary among provinces and territories in Canada. It’s advisable for nonprofits to consult with experts who specialize in nonprofit HR and employment law to ensure compliance with relevant legislation and best practices specific to their jurisdiction.

How to review current contracts or draft one from scratch? – Our Solution

Now that you understand the importance of having employment contracts and the mandatory clauses to include, it’s crucial to review your existing employment contracts or draft new ones. Operating without contracts, relying on outdated agreements, or having contracts without proper consideration can expose employers to unnecessary liability. Solid contracts serve as a protective shield, whereas the absence or poor drafting of contracts can lead to disputes and lawsuits. Many of you may have turned to internet templates for convenience and cost-effectiveness when drafting contracts. However, it’s important to note that these templates often overlook essential clauses and may lack enforceability.

To assist you in this process, we’ve prepared an employment agreement checklist that will guide you in reviewing your current employment contracts or creating new ones from scratch.

Ontario nonprofits, we’ve done the hard work for you!

Download our free, lawyer-made employment contract designed specifically for Ontario organizations. With this resource in hand, you can ensure your contracts are comprehensive, legally sound, and tailored to meet the unique requirements of your nonprofit.

DISCLAIMER: This employment contract template is provided for general information and reference purposes only. It is not intended to be used as a standalone legal document. We strongly advise seeking expert legal advice before utilizing this template. We take no responsibility for any damages that may occur from using this contract without consulting a lawyer or HR professional for proper legal guidance.

The Importance of Enforceability

One of the key aspects of a valid employment contract is its enforceability. To ensure the validity and enforceability of an employment contract, certain key elements must be present:

  1. Offer and acceptance: The contract should reflect a mutual agreement between the employer and the employee.
  2. Consideration: There must be an exchange of value between the parties, such as compensation for work performed.
  3. Certainty of terms: The language used in the contract should be clear, understandable, and detailed enough to avoid ambiguity. Ambiguous terms are often interpreted in favour of the employee.
  4. Compliance with minimum standards legislation: The contract should align with the applicable labour laws and minimum employment standards set by the governing authorities.

We have covered all of the above topics in detail in our webinar “Why employment contracts are essential to your business.” Watch the Video Recording of the webinar that features Anatoly Dvorkin, CEO and employment lawyer at HRC Law Professional Corporation, and Ljubica Durlovska, employment lawyer at HRC Law Professional Corporation. The recording covers:

  • Nuts and bolts provisions of a good employment contract
  • Avoiding generic, vague language and costly errors
  • Most common employment contract disputes
  • Question & Answer session

The cost of drafting a contract vs the cost of not having one

Employment contracts play a crucial role in the nonprofit sector as they establish clear expectations and protect the rights of both employers and employees. While some organizations may perceive drafting employment contracts as an unnecessary expense, the cost of not having one can far outweighs the initial investment. Without a well-defined contract, nonprofits expose themselves to potential legal disputes, wrongful dismissal claims, and ambiguities that can strain the employer-employee relationship.

Termination Comparison

When it comes to termination analysis, the presence of a contract determines whether common law or specific contract provisions apply. In Ontario, when an employee is terminated without cause and there’s no employment contract in place or their employment contract lacks an enforceable termination clause, they are entitled to common law notice. Common law notice is a default entitlement for all non-unionized employees in Ontario (and Canada) and is implied as a term in every employment contract. The only way an employer can waive an employee’s right to notice is by including a valid and enforceable “termination clause” in the original employment contract. This clause can specify an alternative amount or condition instead of common law notice. 

If there is no contract in place, common law governs the employment relationship. However, if a contract exists, its validity and the inclusion of a valid termination clause become crucial factors in determining the rights and obligations of both parties. 

The province of Quebec differs in this respect as it has no system of common law. Instead, it is governed by the Civil Code of Québec. 

Notice Pay Comparison

When comparing notice pay with or without an employment contract, the benefits of having a written agreement become evident. A well-drafted contract not only provides clarity regarding the notice period but also ensures that both parties understand their obligations. Without a valid contract, the absence of clear terms can lead to disputes and potential legal consequences for the organization.

When considering the cost of drafting an employment contract, it is essential to weigh it against the potential expenses that may arise from not having one. Nonprofits that operate without employment contracts often find themselves entangled in costly legal battles if disagreements or terminations occur. By investing in a comprehensive employment contract, organizations can mitigate the risks associated with employment disputes and minimize their financial burden in the long run.

Fixed-Term Contract vs. Indefinite Term Contract

When drafting an employment contract, nonprofits have the option to choose between a fixed-term or an indefinite term contract. A fixed-term contract specifies a predetermined end date, while an indefinite term contract does not have a specific termination date. Nonprofits should carefully consider their organizational needs and the nature of the position when determining which type of contract best suits their requirements.

Enforceable employment contracts are vital for nonprofits to establish a mutually beneficial relationship with their employees while safeguarding their organization’s interests. Investing in a comprehensive employment contract not only ensures clarity and enforceability but also reduces the risk of costly legal disputes and wrongful dismissal claims. 

By utilizing our free Employment Contract Template, developed in collaboration with HRC Law professional corporation, nonprofits can enhance their employment practices and create a stronger foundation for success in the nonprofit sector.

DISCLAIMER: This employment contract template is provided for general information and reference purposes only. It is not intended to be used as a standalone legal document. We strongly advise seeking expert legal advice before utilizing this template. We take no responsibility for any damages that may occur from using this contract without consulting a lawyer or HR professional for proper legal guidance.

Get your questions answered by an HR expert

We understand that navigating the complexities of employment contracts can still raise questions and uncertainties. That’s why we’re here to offer further assistance. We invite you to book a free appointment with one of our HR experts, who will gladly address any doubts or inquiries you may have. Our goal is to ensure that your nonprofit organization operates with confidence, armed with the knowledge and tools necessary to maintain a fair and harmonious work environment. Don’t hesitate to reach out and take advantage of this opportunity to receive personalized guidance and have your specific questions answered. Together, we can strengthen your nonprofit and empower it to achieve even greater impact.

About HR Covered: At HR Covered, we have a deep understanding of the critical organisational needs and processes specific to Canadian nonprofits. We ‘get’ your culture, your goals, and what drives you, too. Our unparalleled responsiveness and impeccable service have helped more than 200 nonprofits in Canada to focus on their core activities. We provide a plethora of services including HR Compliance, Legislative Training, HR Documentation, Health & Safety Compliance, HR Legal, HR Consulting and Outsourcing. For more info visit our website: www.hrcovered.com or call us at +1 866-606-0149.