The best practice is to always lay out the terms of your agreement in writing. This is true for employment contracts as well. Generally, this will allow the employer and the employee to have a clear understanding of their rights and obligations under the employment relationship. However, many businesses and individuals operate on a more casual basis which means that oftentimes, the parties will simply have a verbal agreement. Nevertheless, this does not necessarily mean that you have no legal recourse to enforce your rights under the verbal employment agreement.
Where there is no written employment contract, or the contract is silent with regards to a matter in dispute, the Court has the authority to make inferences regarding the applicable terms for the employment agreement. For example, where an employee, whose contract outlines terms such as salary, benefits, vacation, and other entitlements, makes a verbal agreement with the employer to receive a commission, the Court may determine by implication that receiving a commission is a term of the employment contract. In such a case, a Court would examine the conduct of the parties, such as whether commissions have been paid, the amount or percentage of the commissions, and any representations made by the parties, in order to determine what the agreement is.
Conflict as to verbal agreements most often arises in the context of wrongful dismissal claims, or where the employer and employee disagree as to the terms of the compensation package. In such cases, the Court will often favour the interpretation advanced by the employee. This is partially due to the power imbalance between employer and employee. Because of this power imbalance, the Court will generally regard the employer as the “author” of the contract, whether verbal or written, and as a general principle of law, any ambiguity in an agreement is interpreted against the party that “authored” the agreement.
As lawyers with expertise in contract and employment law, we often advise our clients with regards to the enforceability of verbal agreements. The contextual analysis necessary to answer this question can be difficult, you may contact us at any time if you require assistance.
