Once your business has interviewed and selected a suitable candidate, the next steps are offer and acceptance of a job offer for that candidate. For the purposes of this article, I will call this step “onboarding”.
However, please note, this article will only discuss the technical, legal aspects of onboarding an employee (i.e., offer and acceptance). This article will not discuss an employee’s orientation or training following the technical, legal “onboarding” steps (i.e., offer and acceptance).
Legal Steps to Hire an Employee
All employment relationships are contractual in nature. Thus, the law of contracts applies to all employment relationships.
As per the law of contracts, to form a valid contract, and therefore a valid employment relationship, you need three ingredients: (1) consideration, (2) offer and (3) acceptance.
“Consideration” means something for something. Quid Pro Quo. In terms of employment relationships, consideration always means money in exchange for labour. In this regard, an employer has to offer money in exchange for the employee’s labour to form an employment relationship.
Anecdotally, unpaid internships are void because there is no “consideration”. Where there is no consideration, there is no “contract”. If an unscrupulous employer gives an unpaid intern a contract to sign, it isn’t worth the paper it’s written on.
Next, the meaning of “offer” and “acceptance” is self-explanatory in the employment context. An “offer” is a job offer, and “acceptance” is when the employee does something to accept the job offer.
The balance of this article will discuss best practices for “offer” and “acceptance”.
Offer
An offer can be as simple as an oral offer on the phone or as detailed as emailing the candidate a letter offering the job with an attached multipage employment contract detailing employment terms and conditions.
An employer can communicate a job offer in person, by phone, by mail, courier, fax, or email. All that matters is that the candidate actually receives the offer.
It is my advice, but not a requirement that the best way to offer a job is to write an email containing (1) an offer letter and (2) a contract for the employee to sign for the offer to be accepted. The (1) offer letter should be the body of the email and the (2) contract should be a PDF attachment.
USE CONTRACTS!
My recommendation for sending the candidate a contract, not just an offer letter, cannot be overstressed. There are many benefits of written contracts for employers:
- defining the job description and duties expected of the employee;
- ensuring that the employee confirms that he or she possesses the skills to perform such duties;
- providing for a probationary period for new employees;
- specifying termination entitlements;
- setting out and/or referencing internal policies regarding expenses, benefit plans and other perquisites affiliated with the employment relationship;
- confirming, where appropriate, obligations of non-disclosure, non-solicitation and other restrictive covenants;
- clarifying all aspects of the employee’s compensation, including base pay, bonuses, commissions and the like.[1]
Where there is no written contract, an unwritten, implied contract is formed when an offer is made. Some of the terms and conditions of employment, such as employee-friendly termination rights, will be implied by common law terms and conditions. The statutory minimum entitlements will govern other terms and conditions such as minimum wage, vacation entitlements and statutory holidays. However, many employer-friendly standard employment terms and conditions like probationary periods and non-competes, for example, will not be implied into an unwritten employment contract.
In light of the fact implied employment contracts (i.e., unwritten contracts) are more generally favourable to employees, employers should use written contracts to oust the implied common law terms and conditions present in implied contracts and add additional terms and conditions like probationary periods and non-competes, for example.
Employers can use goHeather to create an employment contract easily.
In the offer letter, employers should ask that the employee sign the (hopefully) attached contract to accept the job offer to perfect the deal.
It is also my advice, but not a requirement, that the offer email should be in standard professional letter format and that the contract should appear on company letterhead.
In summary, an offer can be complex or straightforward. However, most employers are smart enough to offer their candidates a more complex offer consisting of both an offer letter and a detailed contract. This way, there are no surprises for either party, there is a clear “meeting of the minds” and the employer can better protect itself.
Acceptance
To complete the onboarding steps of hiring an employee, the last requirement is “acceptance”.
All that is required for acceptance is clear communication of that acceptance by the candidate.
A candidate can accept a contract in all the same ways an employer can make an offer (i.e., in person, on the phone or over email).
In most cases, the employer requires the candidate to sign an attached contract to indicate acceptance of the job offer. Thus, if the candidate returns the contract signed, he or she has accepted the offer.
Other points to know about acceptances:
- Acceptance can be made at any time until the offer is terminated or if there is a deadline and it passes.
- If the candidate makes a counteroffer, the employer can terminate its offer.
Once the employee communicates acceptance of the offer, and there are no outdistancing conditions (like background checks, etc.), an employment contract is formed instantly. The employee and the employer are now subject to a contract of employment, completing the onboarding process.
[1] Canadian Forms and Precedents, Lexis Nexis, Jeff Dutton (Editor), Chapter 2.
Jeff is a lawyer in Toronto who works for a technology startup. Jeff is a frequent lecturer on employment law and is the author of an employment law textbook and various trade journal articles. Jeff is interested in Canadian business, technology and law, and this blog is his platform to share his views and tips in those areas.