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
Cross v. Cooling Tower Maintenance Inc.
2025 ONSC 7203 (CanLII) · 2025-12-23Employment Contract Dispute: Summary Judgment and Lump Sum Payment
A case involving the interpretation and enforcement of a settlement agreement in an employment context. The court granted summary judgment, finding that the failure to disclose re-employment did not constitute repudiation, and ordered the payment of a lump sum. The court also dismissed a counterclaim for punitive damages.
Barnett v. Canadian Nuclear Laboratories Ltd.
2025 ONSC 6400 (CanLII) · 2025-11-17Employment Contract: Forum Selection Clause Validity and Enforceability
A civil procedure case examining the enforceability of a forum selection clause in an employment contract. The court found the clause valid and enforceable, despite the plaintiff's transition to a new employer and the defendant's arguments for a more appropriate forum in Manitoba.
Liggett v. Veeva Software Systems, Inc. and Veeva Systems Inc.
2025 ONSC 7010 (CanLII) · 2025-10-07Employment Contract Dispute: Termination Clause and Reasonable Notice
A case involving the enforceability of a termination clause under the Employment Standards Act, 2000, and the determination of reasonable notice for a senior product manager. The court also addressed the award of benefits and incentive compensation during the notice period.
McCoubrey v. Salesfloor Inc.
2025 ONSC 3739 (CanLII) · 2025-06-24Employment Contract Case: Commission Policies and Entitlements
A case involving the interpretation of employment agreements and commission policies. The court determined that the 2020 Commission Policy governed the plaintiff's entitlements and that the plaintiff was entitled to $61,228.28 USD in commissions for deals she was the effective cause of before her resignation.
Riva Plumbing Limited v. Ferrari
2025 ONSC 3219 (CanLII) · 2025-05-29Employment Contract Dispute: Pro-Rated Bonuses Awarded
A case involving former employees of a plumbing business who were accused of breaching fiduciary duties and non-competition clauses. The court ruled that there was no breach of duties as the employees did not compete during their employment or misuse confidential information. Additionally, the court determined that the employees were entitled to pro-rated bonuses under oral agreements despite resigning before the fiscal year-end.
Colby v. Township of Ignace
2025 ONSC 2506 (CanLII) · 2025-04-24Employment Contract Dispute: Termination Provision Enforceability and Trial Proceeding
A civil procedure case concerning the enforceability of a termination provision in an employment contract under the Employment Standards Act, 2000. The defendant sought an adjournment of the trial pending a related appeal, but the court denied the adjournment to avoid delays and set a precedent for judicial efficiency.
Baker v. Van Dolder’s Home Team Inc.
2025 ONSC 952 (CanLII) · 2025-02-11Employment Contract Termination Provisions: ESA Compliance and Enforceability
A summary judgment motion was dismissed in a wrongful dismissal case due to unenforceable termination provisions in the employment contract. The court applied Waksdale v. Swegon North America, 2020 ONCA 391, and Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029, to determine that termination clauses misstating ESA rights are unenforceable.
Dufault v. The Corporation of the Township of Ignace
2024 ONSC 1029 (CanLII) · 2024-02-16Wrongful Dismissal: Fixed-Term Contract and ESA Compliance
A wrongful dismissal case involving a fixed-term employment contract where the termination clause was found unenforceable due to non-compliance with the Employment Standards Act (ESA) at the time of contract formation. The court ruled that the termination clause was unenforceable, and the employee was entitled to wages and benefits for the unexpired term of the contract.
Rae v. Ecolab Co.
2023 ONSC 5995 (CanLII) · 2023-10-23Wrongful Dismissal: Breach of Employment Contract and Confidentiality
A wrongful dismissal case involving a former employee who took confidential documents from the employer without authorization. The court ruled that the employee breached the employment agreement by failing to return company property and granted an injunction to protect confidential business information.
Giacomodonato v PearTree Securities Inc.
2023 ONSC 3197 (CanLII) · 2023-05-29Employment Contract Dispute: Enforceability, Wrongful Dismissal, and Punitive Damages
A case involving the enforceability and breach of employment contracts, wrongful dismissal, and punitive damages for abusive conduct. The court found the second employment contract enforceable, awarded salary continuance and variable compensation, and ruled non-competition clauses unenforceable. The employer was also found to have breached the contract and was ordered to pay punitive damages.
Salina Chagpar Professional Corporation v Jin
2023 ONSC 3153 (CanLII) · 2023-05-26Employment Contract: Injunction Granted for Non-Solicitation and Confidentiality
A court granted injunctive relief to prevent a former employee from soliciting clients and disclosing confidential information, upholding non-solicitation and confidentiality clauses in the employment contract. The court also awarded partial indemnity costs to the plaintiff.
Baker v. Fusion Nutrition Inc.
2022 ONSC 5814 (CanLII) · 2022-10-26Employee Misclassification and Wrongful Termination: Damages Awarded
A court case involving the misclassification of an employee as an independent contractor and the enforceability of a termination clause in a fixed-term contract. The court applied the Sagaz test and found the plaintiff to be an employee, invalidated the termination clause for non-compliance with the Employment Standards Act, and awarded damages for unpaid wages, vacation pay, and holiday pay. The court also dismissed claims for punitive and aggravated damages due to a lack of evidence of malicious or outrageous conduct.
Aware Ads Inc. v. Walker
2022 ONSC 5543 (CanLII) · 2022-09-29Employment Case: Denial of Injunction for Expired Non-Competition Clauses
An interlocutory injunction case where an employer sought to prevent a former employee from working for a competitor. The court ruled that expired non-competition clauses and insufficient evidence of breach of fiduciary duty and misuse of confidential information led to the denial of the injunction.
Wellsky Corporation et al. v. Miller
2022 ONSC 4124 (CanLII) · 2022-07-13Employment Case: Interlocutory Injunction and Costs Award
A motion for interlocutory injunction was dismissed due to a lack of evidence of harm or wrongdoing by a former employee. The court also awarded costs to the defendant, considering the plaintiffs' resources and the burden on the defendant.
Goberdhan v. Knights of Columbus
2022 ONSC 3788 (CanLII) · 2022-06-27Employee vs Independent Contractor: Arbitration Agreement Validity
A court case determining whether a field agent working for the Knights of Columbus was an employee or an independent contractor. The court applied the Sagaz test and found the plaintiff to be an employee. The case also addressed the validity of arbitration agreements in employment contracts, finding them invalid due to lack of consideration.
PureFacts Financial Solutions Inc.et al. v. Cheung et al.
2022 ONSC 961 (CanLII) · 2022-02-10Employment Contract Dispute: Non-Solicitation Clauses and Enforceability
A case involving restrictive covenants in employment contracts, specifically non-solicitation clauses. The court reviewed the enforceability of these clauses, the use of proprietary information, and the inference of intent to underbid. The arbitrator's application of legal principles was challenged, but the court found no significant errors.
Krecisz v. Cascades Recovery Plus
2021 ONSC 3225 (CanLII) · 2021-05-10Employment Contract Dispute: Misclassification and Wrongful Dismissal
A motion to dismiss was denied in a case where the plaintiff alleged misclassification as an independent contractor and sought wrongful dismissal damages. The court ruled that the terms of the alleged pre-employment agreement had not been determined, and the plaintiff was awarded costs of $13,045.
Anderson v. Total Instant Lawns Ltd.
2021 ONSC 2933 (CanLII) · 2021-04-20Wrongful Dismissal: Employment Contract Repudiation and Workstoppage
A wrongful dismissal case involving a dispute over payroll discrepancies and workplace conditions. The court examined whether the plaintiff's actions, including refusing to perform duties and participating in a work stoppage, constituted repudiation of her employment contract. The court found insufficient evidence linking the plaintiff's departure to the defendant's losses, dismissing the claim for wrongful resignation.
Todd v. Deloitte LLP
2021 ONSC 2260 (CanLII) · 2021-03-24Employment Contract Dispute: Discovery and Bonus Entitlement
A civil procedure case concerning the scope of discovery and production of documents related to employment agreements, bonus entitlement, and termination. The court ordered limited expansion of discovery and production to balance relevance and proportionality.
Skof v. Bordeleau
2019 ONSC 7418 (CanLII) · 2019-12-20Employment Status and Discipline: Secondment of Police Officer
A case regarding the employment status of a police officer seconded as President of the Ottawa Police Association, including the interpretation of collective agreements, disciplinary measures, and the application of the Police Services Act and the Canadian Charter of Rights and Freedoms.