Contract enforceability: Signing the employment contract prior to the start date

Contract enforceability: Signing the employment contract prior to the start date

employment contractWhen an employee is terminated without cause and offered a package that is very modest, but otherwise compliant with the employment contract, a common first step for his or her lawyer will be to see if the contract can be set aside. If the contract can be declared void, the employee can try to pursue the typically much greater common law damages.

There are several grounds upon which courts have set aside either the full contract or at the least, the termination provision, including:

  • the termination provision provides less than the minimum required in the Employment Standards Act (ESA), including if there is no reference to continuation of benefits at least through the ESA notice period.
  • the contract references at–will language and/or is governed by a US jurisdiction and disentitles the employee to minimum standards.
  • the contract was entered into after the first day of employment.

The Ontario Court of Appeal released Wood v Fred Deeley Imports Ltd. (2017 ONCA 158), a decision that addresses a few of these enforceability issues. This blog post will focus on the issue of signing the contract prior to the start date.

Pre-Wood

Prior to this case, it was commonly held that an employer must have the employee sign the employment contract prior to the first day of employment. This is based on the contracts principle that consideration (a benefit) must flow between the parties in order to enter into a legally binding contract: the employee provides services and the employer pays for them. The terms of those services and compensation must be set out prior to the commencement of the contract.  

If a contract was introduced after the start date, the employer was required to provide fresh consideration, such as a signing bonus. Mere continued employment is not sufficient consideration in Canada.

Contracts were set aside if the employer had the employee sign a contract after their start date, and the contract included an adverse term such as a termination provision that limited the employee’s default common law entitlements. This was deemed to be changing the deal after the fact.

Post-Wood

Wood v Deeley case rejected this argument based on the following facts:

  • Prior to the employee’s start date, the parties exchanged phone calls and emails that negotiated the terms of employment and that landed on a written agreement of terms via that email exchange;
  • The employee did not claim that she was seeing her contract for the first time on her start date, but rather, that it was not signed until after the start date; and
  • The contract did not contain any additional material terms she hadn’t already agreed on through email or on a telephone call a week prior to her start date.

The court concluded:

[13]… The signing the day after she started working was no doubt a matter of administrative convenience. Deeley did not unilaterally impose a new term of her employment. Fresh consideration was therefore not required.

This conclusion is a big deal. The Ontario Court of Appeal has declared that there will be no more setting aside of a contract on the technical detail of signing after the start date if the facts don’t otherwise support the need for fresh consideration.

Take away for employers

This is good news to employers who often have logistical headaches getting the formal employment contract signed prior to the start date. For example, an employee may not have a scanner or the means to conveniently return the signed employment contract prior to the start date.

Most employees have email, and a very deliberate and careful exchange of email setting out the contract, preferable attaching a copy of the final version of the contract, and then getting email confirmation will likely suffice, pending the employee signing off when they arrive on the first day.

The lawyer in me would still feel better about getting signatures and final deals done well before the start date for mid– and senior– level employees where the termination exposure is much greater for the employer, but this does provide some welcomed flexibility for onboarding processes for front line employees.

common law damages
dismissal without cause
employment contract
employment law
employment standards act
signing employment contract
Wood v Fred Deeley Imports Ltd.
Share

Related Posts

Imagen 1

Addressing domestic violence in the workplace – some insights

The Ontario Occupational Health and Safety Act violence and harassment prevention provisions (Bill 168) require an employer to take all reasonable precautions in the circumstances for the protection of all employees if a domestic violence situation is likely to expose a worker to physical injury in the workplace and the employer becomes aware or ought reasonably to be aware of the situation.

But what does that imply? The law states the requirement but provides little guidance on what employers need to do to prevent domestic violence from spilling into the workplace. In addition, many employers are not comfortable addressing a situation of such a personal nature. It is not an easy task to complete and might never be.

Marie-Yosie Saint-Cyr, LL.B. Managing Editor

Read more
Imagen 1

Sleeping on the Job? What do you have to do to get fired in Canada, anyway?

Employees can be dismissed for cause, and therefore without notice or severance, when their misconduct or performance is so egregious that the employment relationship has been irreparably harmed. In assessing this issue, employers must adopt a contextual approach, which considers not only the misconduct in question, but the entirety of the employment relationship.

Rudner Law, Employment / HR Law & Mediation

Read more
Imagen 1

Employees with disabilities – accommodation strategies (Part I)

Accommodating employees with disabilities to the point of undue hardship under human rights legislation can be a complicated task. It’s important to make sure the accommodation process goes smoothly and the employee can focus on working as efficiently as possible, but employers may not be sure about what kinds of questions to ask disabled employees in order to meet their needs.

Christina Catenacci, BA, LLB, LLM, PhD

Read more