Are Employment Contracts Signed After You’ve Started Working Enforceable?

The employment relationship is governed by legislation as well as, in most cases, an employment contract. An employment contract can determine many of an employee’s and employer’s rights and obligations in the employment relationship, with some of the most significant issues arising at the end of the employment relationship.

The enforceability of employment contracts accounts for a significant amount of employment disputes, and there can be a number of reasons as to why a particular employment contract may or may not be enforceable. One such issue that can significantly impact the enforceability of an employment contract that many employers and employees are unaware of is when an employee signs a contract of employment.

Consideration & Employment Contracts

Employment contracts can be either written or oral, with written contracts being the preferred choice for clarity and legal certainty. A written employment contract typically outlines the terms and conditions of employment, including but not limited to job responsibilities, compensation, benefits, termination clauses, and any restrictive covenants such as non-compete or non-disclosure clauses.

The general rule in most jurisdictions is that for a contract to be legally binding, there must be three things:

  • an offer;
  • acceptance of that offer; and
  • consideration.

In the context of employment contracts, consideration usually takes the form of an agreement between the employer and the employee, usually for the employee to perform work for the benefit of the employer for a certain wage/salary and benefits and for the employer to pay that wage/salary and provide those benefits in exchange for work performed.

Without a written contract of employment, a contract can be implied through oral representations or the actions of both the employer and employee. Such an implied contract would then be governed by legislation which, generally speaking, works to ensure an employee’s basic rights without limiting any entitlements an employee may be entitled to under common law and an employer’s corresponding obligations.

The question then becomes, what happens if an employee begins working for an employer, and earning her rights to a salary and benefits which the employer will pay before they sign a contract that would presumably add new terms to the employment relationship?

Timing Is Everything

The issue of enforceability of employment contracts signed after an employee starts their employment is really one of consideration.

If an employee begins working for an employer prior to signing an employment contract, then the question becomes, what new fresh consideration is the employer providing to the employee to make their acceptance of a new employment contract enforceable at law?

The employee may not be getting anything of extra value (salary or benefits) that could be considered fresh consideration, and as such any employment contract signed after an employee has already started working may be unenforceable for lack of fresh consideration.

This is not to say that all employment contracts entered into after an employee starts working will be unenforceable. The Courts have recognized that employment contracts signed during employment can be enforceable under certain conditions, for example, if the employer offers something new in the employment contract that the employee did not have before, whether it is an increased salary, a bonus, or promotion, this could be viewed by a Court as valid consideration thereby making the employment contract enforceable.

Another important factor is whether the terms of the contract are reasonable and fair. Courts in British Columbia, as in other jurisdictions, are reluctant to enforce contracts that are unconscionable or significantly disadvantageous to one party. Therefore, if an employment contract signed after the commencement of work contains terms that are overly harsh or one-sided, there is a risk that those terms may be deemed unenforceable by a court.

The issues of duress or coercion are also relevant when assessing the enforceability of employment contracts. If an employee feels pressured or compelled to sign a contract after starting work, this could raise concerns about the validity of their consent, which could render the contract unenforceable.

Practical Implications for Employers and Employees

For employers in British Columbia, it is essential to ensure that any employment contract is signed by a new employee prior to the start of their employment and that any post-employment contracts offered to employees are fair, reasonable, and based on fresh consideration. Employers should also provide employees with sufficient time to review and seek legal advice on the terms of the contract before signing to limit the risk of future issues/disputes.

For employees, it is important to carefully review any employment contracts proposed by an employer and seek clarification on any terms that are unclear or concerning, as well as ensure you are getting consideration for any changes to the existing employment relationship. If an employee feels pressured or unfairly treated in the process of signing a contract, they should consider seeking legal advice to understand their rights and options.

Experienced Employment Lawyers

Evaluating the enforceability of an employment contract requires careful consideration by a lawyer with expertise in employment law and contract matters. If you have a claim regarding the enforceability of an employment contract contact our experienced employment lawyers today for a consultation.