Employment contract — Ontario Employment Law
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About Employment contract
In Ontario, every employment relationship is governed by a contract, whether you signed a detailed document or simply agreed to the job's terms verbally. An employment contract is the foundational legal agreement that outlines the rights and obligations of both the employee and the employer. It can be a formal written document, a verbal agreement, or a combination of written terms and implied understandings based on industry practice and the conduct of the parties.
There are three main types of employment contracts. A written contract is the most common for many professional roles and explicitly details terms like salary, duties, vacation, and termination provisions. An oral contract, formed through conversation, is equally binding but can be difficult to prove in a dispute. Finally, an implied contract includes terms that are not explicitly stated but are understood to be part of the agreement, such as the duty of good faith or the employer's obligation to provide a safe workplace under the Occupational Health and Safety Act (OHSA).
Crucially, no employment contract in Ontario can provide less than the minimum standards set out in the Employment Standards Act, 2000 (ESA). For example, a clause that provides for less vacation time or termination pay than the ESA requires will be void. Where a contract is silent on a key issue like termination, or if its termination clause is unenforceable, the common law will imply a term requiring the employer to provide 'reasonable notice' of dismissal, which is often significantly more than the ESA minimums. Understanding the interplay between your specific contract, the ESA, and common law principles is essential. Because these documents define the entire employment relationship, having a contract reviewed by a legal professional before signing or when a dispute arises can prevent significant future problems.
Frequently Asked Questions
Do I have an employment contract if I never signed anything?
Yes. In Ontario, an employment contract is formed the moment you accept a job offer in exchange for payment, even if nothing is in writing. This creates a binding oral and implied contract, and its terms will be governed by your verbal agreements, company policies, and the minimums set by the Employment Standards Act, 2000 and the common law.
Can my employer change my employment contract after I've started working?
Your employer cannot unilaterally make a significant negative change to your contract without providing you with something new in return (known as 'fresh consideration'), such as a raise or promotion. If they do, it may constitute a constructive dismissal. Minor administrative changes are generally permissible.
What happens if a clause in my contract is illegal or unenforceable?
If a specific clause in your contract violates the Employment Standards Act, 2000 or is otherwise found unenforceable by a court (like a poorly drafted termination clause), that specific clause will be struck from the contract. The rest of the contract usually remains valid, and the voided term may be replaced by more generous common law principles.
How long do I have to sue for a breach of my employment contract in Ontario?
In most cases, you have two years from the date the breach occurred (or when you reasonably discovered it) to start a lawsuit for breach of contract, as per Ontario's Limitations Act. This is a strict deadline, so it's crucial to act promptly.
My employer gave me a new contract to sign years into my job. Do I have to sign it?
You are not obligated to sign a new contract mid-employment. If the new contract introduces less favourable terms and your employer provides no new benefit for signing, it may not be enforceable. Refusing to sign could carry risks, so it's a situation where seeking legal advice is highly recommended.
When is it most important to have a lawyer review an employment contract?
It is wisest to have a lawyer review a contract before you sign it, especially for senior or complex roles. A review is also critical if you are asked to sign a new contract mid-employment or if you have been terminated and need to understand how your contract affects your severance entitlements.
Common Scenarios
- A marketing coordinator is hired based on a verbal agreement for salary and vacation, but a year later, a dispute arises over an expected annual bonus that was never put in writing.
- A senior manager is presented with a 20-page employment contract and is told they must sign it within 24 hours to secure the job offer.
- An employee who has worked for a company for five years is asked to sign a new employment agreement with a more restrictive termination clause, but is not offered a raise or any other new benefit.
- Upon termination, a project manager is told their severance is limited to two weeks' pay, as stated in their original offer letter from ten years ago.
- A new hire signs a contract containing a non-competition clause, not realizing it could prevent them from working in their industry within a 50km radius for two years after leaving the company.
What You Should Know
- Always get it in writing. While verbal agreements are binding, a written contract provides clarity and is much easier to enforce. Request a formal written offer for any job.
- Read the entire contract before signing, paying special attention to clauses about termination, bonuses, confidentiality, and any restrictions on future employment (restrictive covenants).
- If your employer attempts to change your contract, document the proposed change and your response in writing. Be aware that continuing to work without objection may be seen as acceptance of the new terms.
- Keep a copy of your signed employment contract and any subsequent amendments in a safe, personal file outside of the workplace.
- Given that an employment contract can significantly limit rights you would otherwise have under common law, investing in a legal review before you sign can be one of the most important steps you take in your career.
Featured Cases
C. v. W.
2026 ONCA 634 (CanLII) · 2026-09-10C. v. W.: Fiduciary Duties and Joint Ventures
This was an appeal to the Court of Appeal from a trial judge's decision dismissing the plaintiffs' claims and allowing the defendants' counterclaim for breach of contract. The employee and his company claimed breach of confidence, breach of fiduciary duty, and breach of a joint venture agreement regarding a research and development project, while the employer counterclaimed for negligent misrepresentation and breach of contract. The trial judge dismissed the plaintiffs' claims and awarded $1 to the employer on the counterclaim because the employee took work product when he resigned. The Court of Appeal upheld the dismissal of the plaintiffs' claims because they were employees and commercial parties with no joint venture or fiduciary relationship, but allowed the appeal on the counterclaim, dismissing it because the breach was not pleaded and there was no evidence of what was taken. The costs appeal was dismissed.
Ballance It Inc. v. L.
2026 ONSC 5148 (CanLII) · 2026-09-10Employment Contract: Interlocutory Injunction Refused
This interlocutory proceeding addressed whether the employer established a strong prima facie case to restrain a former employee from breaching non-solicitation and confidentiality obligations under their employment agreement. The court assessed the reasonableness of restrictive covenants and the handling of confidential information on personal devices, ultimately refusing the injunction as the prima facie case was not met.
2250898 Ontario Inc. v. P.
2026 ONSC 4676 (CanLII) · 2026-08-13Employment Contract: Repayment of Commission Draws
This is an appeal to the Divisional Court from a trial decision regarding a dispute over repayment of commission draws under an employment contract. The court allowed the appeal, finding that the contract wording did not establish a repayment obligation and that the trial judge failed to adequately address the Employment Standards Act defence. The employee's claim for repayment was dismissed.
Bellwether Investment Management Inc. v. Harbourfront Wealth Management Inc.
2026 ONSC 3622 (CanLII) · 2026-05-19Enforceability of Non-Compete & Non-Solicit Clauses
This interlocutory proceeding addresses the enforceability of non-solicitation and non-competition clauses in an employment agreement. The court found a strong prima facie case that the defendant breached these restrictive covenants by soliciting clients and employees, leading to the issuance of an injunction. Additionally, a show cause hearing was ordered regarding alleged contempt of court for violating the interim injunction.
F. v. HUB International Limited
2026 ONCA 313 (CanLII) · 2026-05-04Employment Contract: Option Dispute & Forum Selection
The Court of Appeal for Ontario dismissed an appeal concerning the interpretation of an employment agreement and option documents. The court determined that the Alternative Dispute Resolution (ADR) clause in the employment agreement did not govern the dispute over equity options, and enforced a Delaware forum selection clause despite allegations of unconscionability.
Riva Plumbing Limited v. F.
2026 ONCA 297 (CanLII) · 2026-04-24Riva Plumbing Limited v. F. - Unpaid Bonus, Non-Compete
This is an appeal to the Court of Appeal from a trial judge's decision dismissing the appellants' claims and allowing a counterclaim. The employer sued former employees for economic torts, breach of fiduciary duties, and breach of a settlement agreement containing non-competition clauses. One former employee counterclaimed for an unpaid bonus. The trial judge dismissed the employer's claims due to lack of evidence and allowed the counterclaim, finding the bonus was non-discretionary and did not require ongoing employment. The Court of Appeal dismissed the appeal, finding no errors in the trial judge's factual and credibility findings.
S. v. Strada XR Limited et al
2026 ONSC 2837 (CanLII) · 2026-04-23Employment Arbitration Stay: ESA Compliance
This is a procedural ruling on a motion to stay court proceedings in favor of arbitration under the Arbitration Act, 1991. The court addressed whether the arbitration clause in the employment contract was valid and enforceable, particularly regarding its compliance with the Employment Standards Act, 2000. The court granted the stay, finding the dispute fell within the arbitration agreement and that the clause did not contract out of ESA minimum requirements.
Canada Suites Ltd. v. L.
2026 ONSC 1591 (CanLII) · 2026-03-20Dependent Contractor Status Appeal Dismissed
This is an appeal to the Divisional Court from a Small Claims Court decision regarding the employment status of the worker. The court upheld the finding that the worker was a dependent contractor rather than an independent contractor, applying the McKee and Keenan test for exclusivity and deference to factual findings. The appeal was dismissed, and new issues regarding the pandemic were not entertained.
Nexus Solutions Inc. v. K.
2026 ONCA 199 (CanLII) · 2026-03-19Copyright Ownership: In the Course of Employment
This is an appeal to the Court of Appeal for Ontario dismissing the employer's appeal regarding copyright ownership of software developed by an employee. The court applied the Penhallurick factors to determine whether the work was created 'in the course of employment', concluding that the employee's side venture was outside the employer's control and mandate, and that resource expenditure was not a prerequisite for vesting copyright in the employer.
Cowan Insurance Group Ltd, v. B.
2026 ONSC 1413 (CanLII) · 2026-03-09Non-Compete Injunction Dismissed: ESA s. 67.2 Analysis
This interlocutory motion sought an injunction to prohibit a former employee from soliciting the plaintiff's clients, alleging breaches of restrictive covenants. The court dismissed the motion, finding that existing contractual and court-ordered restrictions were sufficient to protect confidential information, that the balance of convenience favored the defendant, and that the requested restraint was inconsistent with the prohibition on non-compete agreements under the Employment Standards Act, 2000.
Green Life Inc. et al. v. 24K Maple Supply Inc. et al.
2025 ONSC 7356 (CanLII) · 2025-12-05Injunction Refused: Expired Non-Compete & Confidentiality
This interlocutory motion concerned an application for an injunction to enforce confidentiality obligations and restrict competition, where the underlying non-competition clauses had expired. The court applied the RJR-MacDonald test, finding no serious question to be tried regarding the confidentiality of pricing and stock information which was largely public, and determined that damages were an adequate remedy. The motion was dismissed as the balance of convenience favoured the respondents and the relief sought would effectively shut down the competing business.
M. v. Enthusiast Gaming Inc.
2025 ONCA 783 (CanLII) · 2025-11-18M. v. Enthusiast Gaming: Share Vesting Appeal
This is an appeal to the Court of Appeal from a motion judge's summary judgment decision about a financial consultant's entitlement to unvested stock options. The plaintiffs, a consultant and his corporation, were retained by the defendant gaming company for financial services, but the relationship was terminated after five months. The motion judge decided that the consultant was not entitled to shares and options scheduled to vest at 12 and 24 months because the agreement was not a fixed-term contract and required his continued active service. The Court of Appeal agreed, finding that a vesting schedule does not automatically create a fixed-term contract. The appeal was dismissed, meaning the consultant's claim remains dismissed.
B. v. Canadian Nuclear Laboratories Ltd.
2025 ONSC 6400 (CanLII) · 2025-11-17Employment Contract: Forum Selection Clause Validity
This case addresses whether a forum selection clause in the plaintiff's employment agreement remained valid and enforceable after the plaintiff transitioned from AECL to Canadian Nuclear Laboratories. The court found that the defendant failed to demonstrate strong cause to disregard the clause and determined that the Ontario Superior Court of Justice had jurisdiction based on a real and substantial connection.
Titus Steel Company Limited v. H.
2025 ONCA 693 (CanLII) · 2025-10-09Former Employee Fiduciary Duties Appeal
This is an appeal from a trial decision concerning a former employee who established a competing business after resigning. The Court of Appeal reviewed whether the respondent owed fiduciary duties, whether those duties were breached, and whether the trial judge's reasons were sufficient for appellate review. The appeal was dismissed as there was no reversible error in the trial judge's findings.
J. v. Loblaw
2025 ONSC 4755 (CanLII) · 2025-08-18J. v. Loblaw: Employment Settlement Validity
This is a summary judgment motion concerning the enforceability of a settlement agreement reached upon the plaintiff's employment termination. The court examined whether the parties formed a binding agreement regarding severance terms and whether a release clause barred claims unrelated to the employment, such as those arising from a failed house purchase.
YG Limited Partnership and YSL Residences Inc. (Re)
2025 ONCA 591 (CanLII) · 2025-08-14Employee Profit-Share is Contract Damages, Not Equity Claim
An appeal to the Court of Appeal from an order of the Superior Court of Justice concerning an employee's profit-sharing claim in a bankruptcy proposal. Maria Athanasoulis claimed $18 million for breach of a profit-sharing agreement. The Trustee disallowed the claim as an equity claim and too contingent. The appeal judge reversed this, finding it was an unliquidated claim for damages for breach of an employment contract. The Court of Appeal upheld the appeal judge's decision, dismissing the appeals of the Trustee and limited partners.
F. v. P.
2025 ONSC 4509 (CanLII) · 2025-08-06Employee Fraud: Punitive Damages & Summary Judgment
This is a summary judgment motion involving an employee accused of misappropriating over $1 million from the employer's accounts. The court addressed whether the defendant's evidence was spurious and whether summary judgment was appropriate under the Hryniak v. Mauldin framework. The court found the employee in breach of fiduciary duty and entitled the employer to punitive damages for the fundamental breach of the employment relationship.
W. v. Canada (Attorney General)
2025 ONSC 4089 (CanLII) · 2025-07-10Federal Employee Jurisdiction: GPRA Section 236
This is an interlocutory or jurisdictional motion concerning whether the Ontario Superior Court of Justice has jurisdiction over workplace accommodation claims by federal public service employees. The court analyzed section 236 of the Federal Public Sector Labour Relations Act, determining that the exclusive grievance process ousts court jurisdiction for disputes related to terms and conditions of employment. The court also addressed constitutional challenges regarding division of powers and Charter equality rights, finding that employment status is not an enumerated or analogous ground under section 15(1) of the Charter.
One World Logistics Group Corp. v. S.
2025 ONSC 3518 (CanLII) · 2025-06-11Interim Relief: Non-Compete vs Confidentiality in Employment
This is an interlocutory proceeding concerning interim injunctive relief to enforce restrictive covenants in an employment agreement. The court declined to grant interim relief for the non-competition clause due to its broad scope and questionable enforceability, but granted interim orders enforcing confidentiality obligations and requiring the provision of login codes.
P. v. ITCAD Tech Inc.
2025 ONSC 1697 (CanLII) · 2025-06-02Independent Contractor Non-Compete & Punitive Damages
This case addresses whether the plaintiff was an employee or independent contractor and the enforceability of a non-competition clause in their agreement. The court upheld the independent contractor relationship and found the 12-month non-compete restriction reasonable. Damages for breach of the non-compete were awarded, along with punitive damages for the withholding of funds.