Rolling out a new employment agreement to existing Canadian employees? Read this first.
After months of review and revisions, your Canadian company finally has a shiny new employment agreement with stronger termination language and better protection clauses for the business.
Great.
Now comes the part where many employers accidentally undermine the entire exercise.
If you’re asking existing employees to sign an employment agreement, whether it’s their first agreement or a replacement for an old one, you need to understand a concept called consideration.
Existing employees are different
When a new hire signs an employment agreement before starting work, the exchange is simple.
You offer employment. They accept.
That’s the consideration.
Existing employees are different. They’re already employed, already working, and already receiving a paycheque.
If you’re asking them to sign a new agreement that introduces new obligations or replaces an existing one, you need to provide something new in return. And a promise of continued employment doesn’t cut it because contractually, they’re already entitled to that.
The consideration problem
Consideration is something of value exchanged between the parties. It’s a fundamental requirement of contract law.
Many employers assume continued employment is enough. It isn’t.
If the agreement is challenged later, one of the first questions an employee’s lawyer will ask is whether valid consideration was provided when the agreement was signed.
If not, key provisions will likely be unenforceable in a Canadian court.
Examples of consideration can include:
- A salary increase.
- A bonus.
- Additional vacation.
- A promotion.
- New benefits.
- A one-time signing payment.
The value doesn’t have to be significant, but it should be real.
Why employers should care
The provisions employers care about most are often the ones most vulnerable to challenge.
That includes:
- Termination clauses.
- Non-solicitation clauses.
- Confidentiality provisions.
- Other business protection terms.
If a court finds the agreement isn’t enforceable, the employer may lose the protections it thought it had.
Before you roll it out
The implementation matters just as much as the wording.
A strong employment agreement is only half the job.
For termination clauses, that can mean a return to Canadian common law notice obligations that are substantially more expensive than expected.
Before rolling out a new agreement to existing employees, make sure you have a plan for consideration, communication, and sign-off.
Otherwise, the document may provide far less protection than you think.
We can help
Rolling out employment agreements across an existing workforce can quickly become a project that consumes far more time than expected.
We’ve completed dozens of these projects for Canadian employers and can help at any stage of the process.
Employment Agreement Design
We’ll work with you to understand your business, workforce, industry, and risk profile. Through a structured due diligence process, we’ll identify what needs to be protected and create employment agreement templates that reflect your specific roles, responsibilities, and business requirements.
Employment Agreement Preparation
Once the templates are complete, we can collect employee information and prepare individual employment agreements for every employee. This helps reduce administrative effort, improve consistency, and minimize costly errors.
Employee Sign-Off Management
We can manage the entire rollout process, including communication, distributing agreements, tracking signatures, following up with employees, and maintaining signed records. The result is a more efficient implementation process and a complete audit trail.
For many employers, outsourcing the project is faster, more accurate, and more cost-effective than trying to manage it internally.
We help reduce the load.
Practical. Cost-effective. 100% Canadian.
Since 2006, more than 10,000 Canadian employers have trusted ConnectsUs HR for HR tools, resources, and support. HR services are now delivered through Sienna HR.
Same team. Same service. Same standards.
Every HR service engagement includes a complimentary 1-year HR Toolkit subscription (a $700 value).
