Includes a FREE Lawyer-Vetted Employment Contract Template for Canadian Employers*

Hiring employees is one of the biggest investments a restaurant makes. Yet many restaurant owners spend more time choosing a POS system than reviewing the employment contracts they ask new hires to sign.

Imagine this: a restaurant owner downloads a free employment contract template from the internet, updates the company name, and uses it for every employee. Years later, a staff member is terminated. The owner assumes the contract limits their legal obligations – until a court finds one of the clauses is unenforceable. Suddenly, what seemed like a simple, money-saving decision results in a much larger termination payout than expected.

While every situation is different, Canadian courts have repeatedly shown that poorly drafted or outdated employment contracts can expose employers to significant financial risk.

Whether you operate a neighbourhood café, a quick-service franchise, or a fine dining establishment, a well-drafted employment contract is one of the best ways to protect your business, establish clear expectations, and reduce legal risk.

Before your next hire, make sure you’re not making one of these seven common mistakes.

Disclaimer: This template is provided for general information only and should not be relied upon as legal advice. Employment laws vary across Canada. Always consult an HR or employment law professional before implementing or modifying employment agreements.

Mistake #1: Waiting Until the Employee Starts Work

One of the most common – and costly – mistakes employers make is asking employees to sign an employment contract after they’ve already started working or after they’ve completed training and onboarding shifts.

Once an employee has begun employment, simply asking them to sign a contract may not be enough to make important clauses enforceable unless new consideration (such as a lump sum, raise, bonus, or promotion) is provided along with the employment contract.

This is because the new employment contract could limit what they would receive at common law and so they need to receive something in exchange for losing out on a greater potential payout. That means that provisions you intended to rely on, particularly termination clauses, could be challenged if the employment relationship ends and there was no consideration provided.

Best practice: Have every employee review and sign their employment agreement before their first shift (including training and onboarding shifts).

Mistake #2: Using an Outdated Contract Template

Employment law evolves constantly. Court decisions reshape how employment agreements are interpreted, and contracts that were enforceable several years ago may no longer provide the protection employers expect.

Unfortunately, many restaurants continue using templates that haven’t been reviewed in years.

Case in Point

In Dufault v. Township of Ignace (2024), the Ontario Court of Appeal found that the employer’s termination provisions were unenforceable because of wording that did not comply with the Employment Standards Act (ESA). The employer was obligated to provide common law notice instead of the contractual termination clause limiting termination notice to ESA minimums.

The lesson? Employment contracts aren’t “set it and forget it” documents. They must be updated when court decisions affect their wording.

Best Practice: Treat employment contracts as living documents, not one-time use paperwork.

Mistake #3: Using the Same Contract for Every Employee

Restaurants employ a diverse workforce.

• Servers.
• Bartenders.
• Hosts.
• Line cooks.
• Sous chefs.
• Managers.
• Seasonal staff.
• Part-time employees.

Using one generic contract for every position often leaves important issues unaddressed.

For example:

• Managers may require stronger confidentiality obligations.
• Seasonal employees often require different contract language than permanent staff.
• Senior employees may need additional provisions relating to bonuses or post-employment obligations.

A good employment contract reflects the responsibilities of the role, not simply the employee’s name.

Best Practice: Consider the type of employment before choosing the employment contract that best suits the position.

Mistake #4: Leaving Out Important Clauses

A strong employment contract is about much more than wages and start dates.

Every agreement should clearly address topics such as:

• Position (fixed term or permanent)
• Hours of work and scheduling expectations
• Compensation and benefits
• Working from home/remote work conditions
• Vacation entitlement
• Probationary period
• Overtime eligibility
• Workplace policies
• Confidentiality
• Termination provisions
• Governing law

Restaurants often operate evenings, weekends, holidays, and fluctuating schedules.

Best Practice: Clearly documenting expectations in an employment contract helps to reduce future misunderstandings while creating consistency across your workforce.

Mistake #5: Assuming Every Employee Is Automatically on Probation

Many restaurant employers believe every new hire automatically has a probationary period.

That’s not necessarily the case.

If you intend to have a probationary period with specific employment terms, your employment agreement should clearly address it.

Without appropriate language, employers may have fewer options than expected if a new employee isn’t the right fit.

Best Practice: Ensure that your employment contract and your HR policies reference a probationary period.

Mistake #6: Using Unenforceable Termination Clauses

Termination provisions continue to receive significant scrutiny from Canadian courts.

Even small drafting mistakes can have substantial financial consequences.

Landmark Decision

One of the most significant employment law decisions in recent years was Waksdale v. Swegon North America Inc. (2020).

In the case, the Ontario Court of Appeal ruled that because one of the “for cause” termination provisions violated minimum employment standards, the employer could not rely on the entire termination section, even though the employee had been terminated without cause.

In other words, one problematic clause affected the entire termination framework in the contract and rendered the clauses limiting termination monies to ESA minimums unenforceable.

For employers, this case serves as an important reminder that employment contracts are interpreted as a whole. A single clause that doesn’t comply with employment standards legislation can significantly increase termination costs.

Best Practice: Ensure that your termination clauses are up-to-date with the latest court guidance by having them reviewed by legal counsel and HR professionals.

Mistake #7: Forgetting to Review Contracts Regularly

Employment contracts shouldn’t sit in a filing cabinet for years.

As your restaurant grows, introduces new workplace policies, changes compensation structures, or adapts to legislative updates, your contracts should evolve as well.

Many employers review their employment agreements annually or after major legislative or court decisions to ensure they continue supporting the business while remaining legally compliant.

Best Practice: If your contract hasn’t changed in years, it may not be protecting your business today. Schedule a contract review at the end of every fiscal year to make sure the contract is keeping pace with your business.

Why Do Written Employment Contracts Matter?

They create clarity.

Employees understand their role, compensation, reporting relationships, scheduling expectations, and workplace policies from day one.

They reduce legal risk.

Clearly defining rights, responsibilities, and termination provisions can help minimize disputes.

They support compliance.

Employment agreements help demonstrate compliance with provincial or federal employment standards while promoting consistent HR practices.

They protect confidential information.

Restaurants often possess valuable confidential company information, including customer data, supplier relationships, recipes, pricing strategies, operating procedures, and financial information.

Appropriate confidentiality provisions help protect these business assets.

They strengthen recruitment.

Professional employment agreements demonstrate that your business takes HR seriously and help to establish trust with new employees.

What Every Restaurant Employment Contract Should Include

As mentioned above, although every workplace is different, most employment agreements should include:

• Position, including fixed term or permanent
• Start date
• Hours of work
• Compensation
• Vacation entitlement
• Sick time entitlement
• Benefits (if applicable)
• Probationary period
• Overtime eligibility
• Confidentiality provisions
• Compliance with workplace policies
• Termination provisions
• Resignation requirements
• Intellectual property (where appropriate)
• Governing law

Your contract should also reference your policy manual which includes important workplace policies such as harassment prevention, workplace violence, attendance, health and safety, food safety, alcohol service (where applicable), uniforms, and social media.

The Cost of Not Having an Enforceable Contract

Many employers view employment contracts as burdensome administrative paperwork.

In reality, they’re one of the most valuable risk-management tools a restaurant can have.

Without properly drafted agreements, employers may face:

• Wrongful dismissal claims
• Higher termination costs
• Inconsistent employment practices
• Uncertainty around employee obligations
• Costly legal disputes
• Operational disruptions

Having clear expectations upfront will cost far less than court disputes down the road.

👉 Download your FREE Employment Contract Template today and build stronger employment agreements with confidence.

Disclaimer: This employment contract template is provided for general information and educational purposes only. It is not intended to replace legal advice. Employment legislation varies by province and individual circumstances. Always consult an HR or employment law professional before implementing or modifying employment agreements.