Changing an Employment Contract in Ontario

The world of work is dynamic. Businesses evolve, and sometimes, an employee’s role needs to adapt as well. This can necessitate an employer to think about changing an employment contract. At other times, business businesses feel the need to ask employee’s to sign a new employment contract in order to adapt to new economic conditions or changes in business operations.

But how do you, as an employer in Ontario, go about modifying an employee’s contract legally and fairly?

This Ontario employment lawyer blog post explores the key requirements for successfully changing an employment contract.

Understanding the Basic Elements of Contract Law – Changing an Employment Contract

In Ontario, employment contracts generally follow a principle of contract law in general. This means that both the employer and the employee must agree to any changes made to the contract. Simply put, an employer cannot force an employee to accept new terms, and there must be the essential elements that constitute a legally binding contract:

offer
acceptance
consideration

Offering “Fresh” Consideration: The Mutuality of Benefit

If an employer wants an employee to sign a new employment contract where an employee had previously signed an employment contract (or otherwise never signed an employment contract at all), the key element is providing “fresh” consideration to the employee for signing (or modifying) their employment contract.

In simple terms, consideration refers a something of value offered in exchange for entering into a legal contract. In the context of modifying an employment contract, this means the employer must provide the employee with something of value in exchange for their agreement to the new terms. Here are some examples of consideration an employer might offer:

increased salary or wages
enhanced benefits benefits plans
stock options or other forms of long-term incentives
additional vacation time

Importantly, the courts have repeatedly held that an employer offering continued employment does not constitute sufficient consideration for asking an employee to sign a new employment contract or modify an existing employment contract.

Practical Considerations When Asking Employees to Sign a New Employment Contract

Amending an employment contract is not a sudden switch. The employer has a responsibility to provide the employee with reasonable notice of the proposed changes. This gives the employee time to carefully consider the implications and,if necessary, seek legal advice.

What constitutes “reasonable notice” can vary depending on the circumstances, but typically include:

The nature and significance of the proposed changes
The employee’s length of service
The employee’s position and seniority

What if the Employee Declines Signing a New Employment Contract: Potential for Constructive Dismissal Claim

If the employee is not happy with the proposed modifications or new employment contract, they have the legal right to refuse. However, the employer can then choose to terminate the employment relationship, as long as they comply with their obligations in the existing employment contract, which can limit a severance package to the statutory minimum amount of termination pay and severance pay, or as high as an employee’s common law right to reasonable notice of termination (or pay in lieu of notice).

It is important to note that if an employer forcefully implements significant changes to an employee’s job terms that were included in an employment contract rejected by the employee, the employee may have a constructive dismissal claim allowing the employee to end their employment and obtain a severance package.

Seeking Legal Guidance from an Ontario Employment Lawyer: A Sound Investment

Ontario employment law can be complex, and navigating the process of modifying contracts can be tricky. To ensure you remain on solid legal footing, consulting with an employment lawyer is advisable. Through a legal consultation, an experienced employment lawyer in Toronto can help you with:

drafting a clear and concise amendment to the employment contract (or including provisions in an existing employment contract permitting reasonable modifications to the employee’s terms and conditions of employment)
determining the appropriate form of consideration to offer the employee
ensuring you are providing reasonable notice of the changes
mitigation the risk of a constructive dismissal claim

Book a Consultation with an Employment Lawyer in Toronto

At Bune Law, we understand and are familiar the complexities of workplace law and are committed to helping both employers and employees navigate these challenges. Whether you are an employer or employee dealing with employment contracts, workplace disputes like a wrongful dismissal or constructive dismissal, or simply need guidance on your rights and obligations for a severance package review and negotiation, our experienced employment lawyer is here to assist you.

Book a confidential consultation with our Toronto employment law firm to protect your legal rights to understand your options and protect your rights. Why Choose Bune Law When You Need an Ontario Employment Lawyer?

Experience in all areas of workplace law, including wrongful dismissal claims, constructive dismissal claims, severance package reviews, severance package negotiations, discrimination and human rights disputes, and employment contract reviews.
Proven track record of successfully resolving workplace disputes through negotiation, mediation, and employment litigation.
Compassionate and personalized approach to each case, ensuring tailored solutions that meet your specific needs.

If you need a Toronto employment lawyer who is committed to delivering strong results and proactive solutions, please contact Bune Law online or by phone today at 647-822-5492.