Canada: Fresh Consideration Needed: Court Of Appeal Confirms Employment Agreement Unenforceable And Offer Letter Governs Employment

Last Updated: January 20 2016
Article by Stefanie Di Francesco and George Waggott

Many employers provide job candidates with an offer letter which includes only cursory details about the position and often does not include a termination clause. In many cases, these candidates are asked to sign the offer letter, with the understanding that they will be provided with a more detailed employment agreement later on—perhaps during orientation.

Employers who engage in this practice often take for granted that the offer letter constitutes a binding agreement. In Holland v, the Ontario Court of Appeal reaffirmed that when an employee signs an offer letter and then subsequently signs an employment agreement with new terms, the employment agreement is unenforceable if the employee does not receive fresh consideration such as a cash payment money or another tangible benefit in exchange for agreeing to the new terms.

The Facts

In Holland v, Sean Holland was hired by pursuant to an offer letter, which did not contain a termination clause. The offer letter also expressly stated that Holland's employment was conditional upon him subsequently signing an employment agreement. Holland proceeded to sign the offer letter as presented, and commenced his employment.

Later, Holland was provided with a six-page employment agreement, which contained a termination clause that limited his termination entitlements to the statutory minimums set out in Ontario's employment standards legislation. When Holland then signed the employment agreement, he was not provided with any additional compensation or benefit in exchange for signing the agreement.

When subsequently terminated Holland's employment, the company relied upon the terms of the employment agreement, and provided him with the statutory minimum pay in lieu of notice. Holland then filed a claim against When subsequently terminated Holland's employment, the company relied upon the terms of the employment agreement, and provided him with the statutory minimum pay in lieu of notice. Holland then filed a claim against for common law reasonable notice, arguing that the employment agreement was unenforceable due to a lack of fresh consideration.

The Law: Reasonable Notice by Default

It is a general principle in Canadian employment law that an employee who is dismissed without cause is entitled to common law reasonable notice. The reasonable notice period is determined on a case-specific basis, by reference to the character of employment, length of service, age, experience, and qualifications of each employee. Suffice it to say, common law reasonable notice periods are considerably longer than the minimum notice periods set out in employment standards legislation.

In order to displace the general principle of common law reasonable, an employment agreement must contain carefully drafted language that expressly limits an employee's termination entitlements to the statutory minimums. If an offer letter is silent as to an employee's termination entitlements, the general principle applies. Thus, offer letters without termination clauses are deemed to include an implied term that entitles the employee to common law reasonable notice upon the termination of the employment relationship.

The Trial Decision

The trial judge rejected Holland's arguments about contractual consideration and sided with the company. In accepting the employer's position, the trial decision held the offer letter and the employment agreement were interrelated documents, in respect of which consideration had been given when Holland accepted the offer letter. In arriving at this conclusion, the trial judge found that the offer letter and the employment agreement did not contain inconsistent terms. Holland proceeded to appeal.

The Ontario Court of Appeal's Decision

The Ontario Court of Appeal overturned the decision of the lower court on the enforceability of the employment agreement, finding that: (1) the offer letter and the employment agreement contained inconsistent terms; and (2) Holland did not receive fresh consideration when he signed the employment agreement.

The Court of Appeal confirmed that since the offer letter was silent as to Holland's termination entitlements, the offer letter contained the implied term of common law reasonable notice. Further, since the employment agreement purported to limit Holland's termination entitlements to the statutory minimums, the employment agreement introduced a new "very material" term, which was inconsistent with at least one implied term in the offer letter. Since Holland was not provided with any consideration for relinquishing his common law rights, the Court of Appeal found that employment agreement was unenforceable and Holland's employment with was governed by the terms of the offer letter.

Instead of limiting him to the statutory minimum seven weeks of pay and benefit continuation in Ontario's Employment Standards Act, the Court of Appeal found that Holland was entitled to reasonable notice of eight months' salary and benefit continuation.

Lessons for Employers

Employers who engage in the practice of providing job candidates with cursory offers letters followed by detailed employment agreements may wish to reevaluate their current practices and documentation. To ensure that the employment relationship is governed by the terms of the employment agreement, Holland v directs that employers must provide the employee with fresh consideration. Better yet, such employers should consider dispensing with the bifurcated documentation altogether. Instead, employers should consider having all job candidates sign a single document that contains all the terms of their employment which, if accepted, will apply from the outset of the employment relationship. Sometimes, less paper and fewer steps saves both time and money.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2016

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Stefanie Di Francesco
George Waggott
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.