At Wise Law, our Toronto employment contract lawyers provide strategic guidance on the drafting, review, and enforcement of Ontario employment agreements. These legally binding documents shape many of the most critical aspects of the employment relationship and are becoming increasingly common in Ontario workplaces. Today, most employers require signed employment contracts before a new hire’s first day.
Because these agreements define the rights and responsibilities of both parties, even a seemingly minor clause can have serious consequences. Whether you’re an employee reviewing a job offer or an employer drafting a new policy, it’s essential to understand how Ontario law applies to employment agreements.
What Is Included in an Ontario Employment Agreement?
Employment contracts in Ontario typically cover:
- Job duties, title, and work location (including hybrid or remote work policies)
- Start date, working hours, and conditions of employment
- Salary, benefits, bonuses, and incentive programs (e.g., profit sharing or stock options)
- Vacation entitlements and scheduling
- Confidentiality obligations
- Ownership of work product, materials, and intellectual property
- Workplace policies, rules, and applicable employee handbooks
- Whether temporary layoffs may occur
- Termination for cause and willful misconduct
- Termination clause for dismissal without cause, including notice and severance terms
- Restrictive covenants, such as non-solicitation and non-competition clauses
- Governing law — typically Ontario
Legally, these contracts should be signed before employment begins. If an agreement is presented after employment has started, it may not be enforceable unless the employee is offered additional compensation or benefit in exchange, such as a bonus, raise, or promotion. This is known as “fresh consideration.”
Additionally, contracts may become outdated if an employee is promoted, transferred, or materially changes roles. In those cases, an employer may ask that a new employment agreement be prepared and signed. Legal advice should be obtained before signing any new agreement after employment has commenced.
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Why Termination Clauses Matter in Ontario Employment Contracts
A termination clause is one of the most critical parts of any employment agreement. It attempts to override the common law right to reasonable notice of termination by specifying a fixed amount of notice or compensation.
Below are two typical examples:
Example 1:
“The Company may terminate your employment without cause by providing 2 weeks’ notice or pay in lieu for each year worked. These payments are inclusive of all statutory entitlements under the Employment Standards Act, 2000.”
Example 2:
“The Employer may terminate the Employee without cause by providing the minimum notice required by the applicable employment standards legislation.”
These clauses are often successfully contested. They may be unenforceable if they are unclear, overly broad, or fail to meet minimum standards under the Ontario Employment Standards Act. Numerous Ontario Courts have ruled that employers must clearly and unambiguously express their intent to limit common law notice rights in any employment contract. Even a single ambiguous word, or critical, omitted provision, such as a failure to provide for benefit continuation after termination, can void an entire termination clause.
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Are Restrictive Covenants in Employment Agreements Enforceable?
Many employment agreements in Ontario include non-solicitation and non-competition clauses designed to prevent former employees from poaching clients or competing after their employment ends. These clauses are legally known as restrictive covenants and are frequently litigated in Ontario courts.
Generally:
- Non-competition clauses are rarely upheld unless tied to a business sale or high-level fiduciary role. Ontario’s Bill 27, also known as the Working for Workers Act, 2021, now prohibits employers in most other circumstances from entering into non-compete agreements with employees, retroactive to October 25, 2021.
- Non-solicitation clauses are more likely to be enforced if they are specific, reasonable in duration (e.g., 6–12 months), and geographically limited.
- Courts assess the context, including the employee’s role, seniority, and whether they had access to sensitive client data.
The Supreme Court of Canada has established a legal test to assess whether such clauses are valid. The Court asks whether the employer has a legitimate business interest (e.g., trade secrets or customer relationships), and whether the restriction is overly broad in time or geography.
If you’re being asked to sign a non-solicitation or non-compete clause — or seeking to enforce one — it’s important to speak with an experienced employment contract lawyer in Toronto.
Explore related services:
- Toronto Workplace Discrimination Lawyers
- Employment Termination Lawyers in Toronto
Why Legal Advice Is Critical
Employment agreements are highly technical legal documents. The enforceability of a clause can turn on a single word or phrase. Whether you’re an employer or an employee, reviewing a contract without legal guidance can lead to unintended consequences — particularly when it comes to termination pay, post-employment restrictions, or rights under the Employment Standards Act.
At Wise Law, we help Toronto employees and employers understand their obligations, avoid disputes, and protect their rights. We also represent clients in disputes involving wrongful dismissal, termination clauses, and the enforceability of employment agreements.
Contact a Toronto Employment Contract Lawyer
If you’re reviewing an employment agreement or facing a workplace dispute, contact Wise Law Office for clear legal advice. Our employment contract lawyers serve clients across the Greater Toronto Area and throughout Ontario.
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This page is for informational purposes only and does not constitute legal advice. For assistance with your specific employment matter, consult directly with a Toronto employment lawyer.
© Garry J. Wise and Wise Law Office, Toronto, Ontario, Canada. This content may not be reproduced without written consent.
