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When should a new hire sign their employment contract?

This is a question that comes up all the time, and to answer it it may be best to give a short explanation of what we call ‘consideration’ in law.

Consideration is what one party receives in exchange for giving something up. In a new job for example, an employee is receiving the opportunity of that new job, and in exchange they are likely signing away rights in that employment contract (usually with a termination clause). The new job is ONLY valid as consideration, though, if the employee signs the offer prior to being hired. That is because being hired is the quid pro quo for their acceptance of the contract. If they have already been hired, it’s too late.

Cases have shown repeatedly that if an employee signs a contract any time after they begin working (or when they show up for their first day), then that job is no longer valid as consideration. In that case, just as if a new contract is being offered to an existing employee, there needs to be some sort of fresh consideration. There is no legal minimum for what consideration must be (ancient law said that a peppercorn would suffice) but it needs to be something of value in exchange for what they may be giving up. This usually means a signing bonus, but can take other unique forms of compensation as well, such as a promotion, increase in pay or new benefit. Your lawyer will work with you to find the appropriate consideration for your workplace. 

Employment Lawyers - Rudner Law
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Rudner Law
15 Allstate Parkway
Suite 600
Markham, ON
L3R 5B4

Phone: 416-864-8500
Text: 416-864-8500


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