Many employment relationships in British Columbia begin informally. A job offer may be made over the phone or confirmed by email, and work starts quickly—sometimes before any written agreement is signed. While that may be convenient, relying on a verbal agreement often increases risk for both employers and employees, particularly when expectations change or the relationship ends.
Verbal employment agreements can be enforceable, but the terms are often unclear
In British Columbia, an employment contract does not need to be in writing to exist. A binding agreement may be formed where the parties have agreed on essential terms such as the job, compensation, and start date.
The problem is usually not whether a contract exists, but what the contract actually says. Without a written agreement, parties may recall key discussions differently, and informal communications may not capture important details. Disputes commonly arise about job duties, hours of work, overtime expectations, bonuses or commissions, benefit entitlements, and what was promised about job security or advancement.
Termination is where undocumented arrangements most often create significant exposure
Termination is frequently the point at which verbal agreements cause the most serious problems. In British Columbia, the Employment Standards Act (the “ESA”) sets minimum termination notice or pay in lieu of notice. Those minimum standards cannot be contracted out of.
However, if there is no enforceable written contract limiting termination entitlements, an employee may be entitled to common law “reasonable notice,” which can exceed ESA minimums. Depending on the employee’s circumstances—such as position, length of service, age, and the availability of comparable employment—reasonable notice can amount to several months of compensation. This can come as a surprise where the parties assumed the ESA minimums would apply.
Key terms are often missing when nothing is documented
Verbal arrangements frequently leave important issues unresolved. Bonus and commission entitlements are a common flashpoint, including whether an incentive is discretionary or earned, how it is calculated, and whether it remains payable when employment ends. Benefit coverage can also create disputes, particularly around whether and how benefits continue during notice periods, including the statutory notice period under the ESA.
Other common gaps include whether employment is fixed-term or indefinite, the scope of confidentiality obligations, whether non-solicitation terms apply, and ownership of intellectual property or work product created during employment. When these issues are not addressed early and clearly, disputes often arise later—sometimes long after the working relationship seemed settled.
Changes over time can make the original “deal” hard to prove
Even where the relationship starts smoothly, employment usually evolves. Promotions, raises, restructuring, and role changes often occur without any written amendment. Over time, that can create uncertainty about what terms govern the relationship and what promises were made, particularly if the parties disagree later about compensation, duties, or termination entitlements.
Why written employment contracts reduce disputes
A well-drafted written employment contract helps both parties understand their rights and obligations from the start. For employers, it can clarify workplace expectations, protect confidential information, and set out termination terms intended to comply with the ESA while managing common law risk. For employees, it provides clarity about compensation, benefits, incentive plans, and the core expectations of the role. In most cases, written terms reduce the likelihood that misunderstandings become litigation.
Timing matters: introducing a contract after work has started
One recurring issue in British Columbia is presenting a written contract only after employment has already begun. Under common law principles, new or more restrictive terms introduced mid-employment may be unenforceable unless implemented properly, often requiring fresh consideration (or, in some circumstances, clear advance notice before the change takes effect). This can be particularly important for termination clauses—if a termination provision is not enforceable, the employer may remain exposed to common law reasonable notice despite having a signed document.
Final thoughts
Verbal employment agreements can be legally binding in British Columbia, but they often leave both employers and employees exposed to unnecessary risk. Clear written contracts—introduced at the appropriate time and drafted to comply with the Employment Standards Act—remain one of the most effective ways to prevent disputes and create predictability throughout the employment relationship.
Employment relationships and workplace needs vary widely, and contractual terms should reflect the specific circumstances of both employers and employees. For advice on employment contracts or workplace arrangements, please contact Northam Law Corporation at 604-630-2350 or melissa@northam-law.com.
** The information in this article is for general informational purposes only and does not constitute legal advice. Laws can and do change over time and every legal situation is unique. You should consult with a qualified legal professional, such as the team at Northam Law, to obtain advice tailored to your specific circumstances before making any decisions.
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