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Can an employment agreement executed after the employee starts work be enforced? The Ontario Court of Appeal says yes.

employment agreementJulia Wood received an offer for employment from Fred Deeley Imports (“Deeley”) on April 17, 2007. Wood accepted the offer during the phone call, and later received an email from Deeley which outlined the terms of her employment. The parties could not recall the date of the email, but it was received by Wood prior to commencing employment with Deeley on April 23, 2007. Then, on April 24, 2007, Wood met with the human resources representative and signed various employment documents, including an employment agreement. Eight years later, Deeley terminated Wood’s employment. Wood commenced a wrongful dismissal action, alleging (among other things) that her entire employment agreement was unenforceable because she signed it after she commenced working for Deeley.

The trial judge considered the exchange between the parties leading up to the execution of the contract, and inferred that the terms of Wood’s employment were contained in the email, which she received before she started working. Given that there had been no substantial change in the terms before Wood signed the contract, the trial judge found that the employment agreement was enforceable.

Wood appealed, arguing that in order for the employment agreement, executed the day after she started working for Deeley, to be enforceable, she needed to receive fresh consideration from Deeley.

In Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158, the Ontario Court of Appeal confirmed that a “written employment agreement is not unenforceable merely because the employee signs it after starting to work” (at para. 12). The Court found the trial judge’s inference to be reasonable, noting that Deeley did not claim she reviewed the terms of her employment for the first time on April 24, 2007, or that the contract contained any new material terms. The Court acknowledged that the contract was likely signed the day after Deeley started work as “a matter of administrative convenience.” In these circumstances, fresh consideration was not necessary.

Comment:

This decision is a welcome one for employers across Canada. It is highly advisable that employers provide employees with a copy of their employment agreement for review in advance of commencing employment. It is also highly advisable that employers have the employee execute and return the contract prior to commencing employment. If, however, the contract is executed shortly after the employee commences work and provided it is substantially the same as the version sent to the employee prior to their start date, this decision makes it clear that it will likely be enforceable. Thus, although it is not advisable to wait until after employment has commenced to have an employee sign a contract, not all is lost if such circumstances arise.

By Donovan Plomp, Partner

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Employer Advisor, McCarthy Tétrault LLP

Employment and labour lawyers at McCarthy Tétrault LLP
McCarthy Tétrault through their Employer Advisor blogs offers their perspectives on the latest legal developments applicable to the workplace. It provides their insights on legislative and regulatory developments, as well as new case law, while providing practical tips for employers and their human resources professionals when managing the workforce. McCarthy Tétrault is a Canadian law firm that delivers integrated business law, litigation services, tax law, real property law, labour and employment law nationally and globally. Several of their blog posts will be republished with permission on First Reference Talks. Read more
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