Avoiding Verbal Employment Agreements

Many companies utilize an incorrect procedure of hiring employees. An employment contract comes into existence at the point when the candidate is offered and accepts a job (with the consideration being the promise of pay). Therefore, if a company meets with a candidate and offers a job on a handshake and requests that the candidate “fill out the paperwork”, an “invisible contract” or “verbal contract” may exist prior to the execution of the written employment agreement. Therefore, the terms on the written employment agreement may become unenforceable.

To avoid this situation, companies should ensure that they follow the correct hiring procedure:

  1. Interviews – The company should conduct all necessary interviews with the candidate.
  2. Written offer – The company should present the candidate with a written employment agreement and a cover letter outlining that a conditional offer of employment is being made.
  3. Reasonable signing deadline – The company should afford the candidate a reasonable period of time to review the written employment agreement and obtain legal advice.
  4. Return signed offer – The candidate should return an executed copy of the written employment agreement.
  5. Satisfaction of all pre-conditions – The company should sign the written employment agreement once it is satisfied that all pre-conditions (including background checks) have been met and the results are satisfactory.
  6. Start date – The company should provide a start date only once the above is completed.

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