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Haste Makes Waste: The Danger in Allowing an Employee to Commence Employment Before Properly Implementing a Dental Employment Contract
By Paul Martin
After reading part 1 and part 2 of our last posts, you are familiar with why dental employment contracts are vital, and you will also know that the easiest way to implement a contract is to have the employee sign it before they start. Based on this, what could possibly be wrong with uttering the words at the top of this post?
We consistently run into employers who have taken the time to prepare a new written employment agreement and have a new employee sign it, before the start of their first shift. Unfortunately, it is quite often the case that these employment agreements were actually signed after the employee truly commenced employment. The employer, after taking the time to get the contract in place before the employee starts their shift, could still run the risk of having the dental employment contract deemed unenforceable. This is a most unfortunate occurrence, but sadder still, one that is commonplace.
Once an employer communicates to an employee that they “have the job”, then, quite simply, they are hired, and they already have the job. This means that their employment contract has commenced, albeit one on verbal terms. This creates an issue, as once you have an agreement with your new employee, verbal or written, you cannot unilaterally impose a new agreement on them, even if that imposition occurs only hours after you communicate that the employee has been hired. Unfortunately, Courts do not distinguish between employees who have been employed for 3 hours, 3 weeks, or 3 years. Once an employee commences employment, the employer cannot unilaterally enforce a new agreement on the employee, unless the employer provides something of value (consideration, in legal jargon) in exchange for signing the new agreement. As mentioned in Posts 1 and 2, the essential elements of any contract are (1) Offer; (2) acceptance; and (3) consideration.
Another common (but dangerous!) practice is to present a new employee with a contract the morning of their first shift. The employee holds onto the agreement, starts working, and returns it signed at lunch. Surely a court will not penalize an employer simply because the agreement was signed a few hours after they started, right? Courts have indeed held that agreements signed hours after an employee commences employment are void, as again, once the employee starts, there exists a verbal contract governed by a common law bundle of rights. Any new written employment agreement imposed on the employee will be void, unless the employee receives consideration in return for signing the “new” agreement.
Alternatively, as also outlined in the previous post, you could also provide the employee with reasonable notice that their employment on their current terms is at an end, and that at the end of the notice period, they will be provided with a new agreement. If you have an employee who has only been working for a few days, the reasonable notice period would be quite short. Nevertheless, this is a complication, and one that can be easily avoided if employers take proper steps to implement the new contract, before the employee commences employment.
Best practice when contemplating hiring a new employee is to advise the prospective candidate as follows: “I would like to make you an offer of employment, which will be put to you in writing. You must accept in writing by signing the offer letter”. Then, you should provide the employee with a proper written dental employment contract, and advise them that this contract is the offer. So long as the employee signs, and communicates their acceptance, prior to commencing their first shift, then all necessary elements of a binding contract will be established, as the employee is receiving consideration in the form of a new job, and the employer is receiving consideration in the form of a new employee hired on the terms the employer desires. Make sure you receive back the signed, dated contract before the employee’s first day of employment.
The implications of these nuanced laws have particular interest in the dental employment world. A common, but improper, practice in dental offices is to hire an employee, and place them on a three-month probationary period. Once the employee passes the three-month probationary period, the employer then offers them a new contract to sign. Employers often mistakenly believe that passing the probationary period will serve to act as the “fresh” consideration to sign the new agreement. These employers are wrong. The law is unforgiving of employers who attempt to use the passing of a trial period as a chance to implement a new agreement. The rationale is, that in essence, the employee is not getting anything they already didn’t have once they pass the probationary period. The job is the same for all intents and purpose, save for the fact the employee cannot now be terminated without notice. However, this is a protection they are entitled to under the ESA anyways, and not a new benefit that will serve as consideration to sign the agreement.
If the agreement is not implemented properly, prior to the employee commencing employment, then it is likely that the agreement is void, and the relationship will revert to being governed by the common law. The risk being that if the employee stays on for a longer period of time, such as 5 years, all while the employer is mistakenly under the impression that they are protected by a contract limiting notice entitlements to the ESA, the employer could be in for a rude awakening in the event of termination.
It is always best to contact a lawyer, prior to offering employment to a new employee, to ensure that you are following the proper procedure. The drafting of new dental employment contracts should not be a costly process, and the employer is left with the peace of mind that they have the protection of a proper agreement.
If you would like to discuss the benefits of dental employment contracts for your business, please contact Matthew Wilton at mwilton@wmlitigation.com, or Paul Martin at pmartin@wmlitigation.com, or by phone at 416.860.9889.
*The foregoing is not intended to be legal advice and is provided for educational purposes only. You should retain a lawyer to seek advice prior to taking any legal steps.