Should You Sign that Employment Contract?

Dec 14, 2015

Should You Sign that Contract?

You have been working for many years for your employer.  You are then asked to sign a new contract.  Should you sign it? And, if you do, is it valid?

What is Consideration?

For a contract to be enforceable in Canada, it must have ‘consideration.’ Essentially, this requires that both parties give something to make the contract binding.

In the case of a job offer and a new employment contract, the employer is giving the job and the employee is giving away her rights in signing the contract (to learn more about these rights see here). With an employee who is already working for an employer, the employer must give something extra for a new contract to be binding.  For example, this could be increased pay or vacation, or improved health benefits.

Consideration in Practice

A recent case, Riskie v. Sony of Canada Ltd., 2015 ONSC 5859, demonstrates the importance of consideration in contracts.

Mr. Riskie was a long-service manager at Sony working in Toronto.  In 2014, he wanted to move to Ottawa and continue to work for Sony remotely.  Sony was not in favour of employees working from home.  However, the President and CEO agreed to allow Mr. Riskie to work from Ottawa if he signed a new fixed-term contract.  Mr. Riskie agreed and signed the contract. The fixed-term contract was not renewed as part of Sony’s restructuring.  Mr. Riskie was paid his entitlements under the Employment Standards Act and nothing further. He sued for wrongful dismissal.

The court found that Mr. Riskie’s new contract was legally enforceable and he was not entitled to further damages.  Although he did not receive increased pay for signing the contract, he received the benefit of being able to work from Ottawa as he desired.  The court also found that Mr. Riskie had the option not to sign the new contract and to continue working from Toronto. He was not entitled to any further pay from Sony.

Take Away

If Mr. Riskie’s contract was not enforceable, he may had received as much as 18 months’ more pay from Sony when he was terminated. This case demonstrates how important it is to seek legal advice when signing any contract, whether for a new position or a new contract with your current employer.

If you have questions about an employment contract or have been terminated, please contact us at [email protected] or 647-204-8107.

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