Canada: Indecent Proposal? Whether And How To Ask Existing Employees To Sign New Employment Contracts

Asking existing employees to sign new employment contracts can be a sensitive topic. Employees will undoubtedly wonder why they are being asked to do so. Many will quite rightly assume that the employer's main motive for having new contracts be signed is to protect the employer – not the employee. Some will sign without issue, while others will refuse to do so. Others may sign reluctantly, and perhaps feel some ongoing resentment towards the employer for being asked to do so. Employers should, therefore, proceed with caution when asking existing employees to sign new employment contracts.

Reasons for Having Existing Employees Sign New Employment Contracts

There are many valid and pressing situations where employers may want or need employees to sign new employment contracts. These include:

  • Where there is nothing in writing with a given employee. The employee was hired with a hand-shake. The terms of employment were agreed upon verbally. As is often the case with informal hand-shake deals, important employer provisions – such as termination obligations or restrictive covenants – were never discussed. Even if discussed and agreed upon, there is no clear written record to rely upon if the situation were to later become litigious.
  • Where the employee signed an employment contract, but either it is missing key provisions (i.e. those designed to provide protections to employers or flexibility in how employers can operate) or is poorly drafted. Poor drafting can expose the employer to unintended liabilities for a number of reasons, including the fact that anything unclear or ambiguous will generally be interpreted in favour of the party who is not the drafter of the document (i.e. the employee).
  • Where the employee signed an employment contract, but for a position no longer held by the employee. The employee was transferred or promoted within the organization – perhaps several times – since signing the initial contract. There is unfortunately no or insufficient language in the initial contract that has the effect of having provisions in that contract automatically continue to apply to future positions held by the employee.
  • Where the employee signed an employment contract, but it was signed in circumstances where the enforceability of the employer-friendly provisions may be called into question. This would include situations where: (a) an employee accepted a verbal offer of employment, and perhaps even gave notice of resignation to her former employer, before receiving the employment contract; (b) an employee was provided insufficient time to consider and consult legal counsel about the employment contract before being required to sign it back; (c) an employee was provided the employment contract to sign after already commencing employment (i.e. on or shortly after the first day of employment); (d) the employee was provided the employment contract in advance, but did not sign it back until sometime after commencing employment; and/or (e) the employee was told not to worry about the employment contract as "it's just a technicality required by our lawyers" or "we never rely upon those provisions in the contract".
  • Where the employee signed an otherwise enforceable employment contract, but certain provisions are now out-dated. It may refer to old laws no longer in place or, as often happens, it contains provisions that, while well drafted and legally enforceable at the time that the initial contract was prepared, may no longer be legally enforceable.1
  • Where the employer wishes to now make changes to terms of the employment relationship and either wants or needs to get employee agreement to make those changes. The employer doesn't want to deal with a situation down the road where the employee claims either to not have agreed to, or understood, the revised terms of employment.
  • The employer has entered into an agreement with a third party that requires updated employment contracts to be entered into by all or certain employees. For example, the employer wishes to sell its business, but the purchaser is requiring that new employment contracts be entered into by the employer and certain key employees as a condition of the closing of that transaction.

Tips When Asking Existing Employees to Sign New Employment Contracts

If asking existing employees to sign new employment contracts, consider the following:

  • Determinate a "spin" on why existing employees are being asked to sign new employment contracts. While you don't want to be untruthful, few employees may sign if you disclose all of the reasons why new employment contracts are important for the employer. Spinning it as being part of an overall review by the employer of its employment contracts in order to ensure that updated and consistent employment practices are in place for employees may be an easier sell.
  • Consider the best time to have new employment contracts be signed. For example, new employment contracts should ideally be signed every time that an employee is offered a promotion or voluntary position change within an organization. Another ripe opportunity for doing so is when the employer is already intending – unbeknownst to the workforce – to roll out some significant positive employment change for the affected employees (e.g. new improved benefit program; wage increase above historical norm; flexible working arrangements; additional paid time off work; etc.). If the employee wants the new position or to receive the benefit of the positive employment change, then the employee will need to sign the new employment contract.
  • Ensure that sufficient "consideration" is provided to the employee in exchange for signing the new employment contract,2 failing which the employer-friendly provisions in that new contract will not be binding on the employee. Consideration must be "something extra" to which the employee is not otherwise entitled. What is considered to be sufficient consideration will differ from situation to situation. It generally needs be of a reasonable value in light of what the employee is giving up by signing the new contract. For example, a $100 signing bonus would not, in my view, be sufficient consideration for having a 15-year employee sign a new contract that limits termination entitlements to the statutory minimums and contains a 12-month non-solicitation clause. In contrast, a $5,000 signing bonus or an additional 1% wage increase or 1 week of annual paid vacation may well be enough.
  • Consider what to do if the employee does not to sign the new employment contract. Are you prepared to have the employee continue without a new contract in place? If not, then when and under what terms will the employment relationship end? For example, the employee could be given written notice that the new contract must be signed by X date, failing which the employment relationship will be terminated on Y date. Refusing to sign a new contract will not be cause to terminate the employment relationship – but depending upon the amount of working notice provided and the employee's entitlements upon termination, all or a significant part of the employee's termination entitlements may be satisfied via the working notice period.
  • If not prepared to end the employment relationship if she refuses to sign the new contract, then do not tell the employee that she must sign the new contract in order to remain employed. Instead, provide the employee with the option to sign or not sign the new contract. However, make it clear to the employee that she will not receive the consideration (i.e. the "something extra") if she chooses not to sign the new contract. And, to state the obvious, if the employee doesn't sign, then don't give the consideration to her.
  • Of course, ensure that the new contract is well drafted based on the current laws, and is introduced in circumstances that will not jeopardize its enforceability down the road. Among other things, this means providing sufficient opportunity for the employee to consider the new contract and to obtain independent legal advice if so desired before signing it back. In fact, you may wish to consider paying for the employee to obtain such legal advice up to a specified amount (e.g. $500).


1 We have seen this happen over the past number of years with termination provisions in signed employment contracts. Certain termination language that courts have historically upheld as legally enforceable is no longer being enforced.

2 Courts have consistently held that continuing the existing terms of employment is not sufficient consideration for existing employees. However, an offer of new employment is considered to be sufficient consideration for new employees.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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.

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.