Should I Sign This Employment Contract?

The Termination Clause Is the Most Important Term

Most employees focus on salary and title, but the clause that quietly controls the most money is the termination clause. In Canada, unless a valid termination clause says otherwise, a dismissed employee is entitled to common-law reasonable notice — often several months to two years of full pay. A well-drafted termination clause can lawfully reduce that to bare statutory minimums, a difference frequently worth tens of thousands of dollars. That is why this single clause deserves more scrutiny than any other before you sign.

The saving grace for employees is that Canadian courts hold termination clauses to an exacting standard. Since Waksdale v. Swegon (2020 ONCA), if any part of the termination language — including the 'for cause' provision — could violate employment-standards minimums in any scenario, the entire termination scheme is struck down and full common-law notice is restored. Many clauses fail this test. In the US, at-will employment means severance is usually contractual, so a termination or severance clause defines whatever protection you get; without one, at-will employees typically receive no severance at all.

Restrictive Covenants: Non-Compete, Non-Solicit, and IP

Restrictive covenants limit what you can do after you leave, and their enforceability varies dramatically by jurisdiction. Non-competes are the most disfavored: Ontario banned most employee non-competes in 2021, California, North Dakota, Oklahoma, and Minnesota void them for employees, and the US FTC has moved to restrict them nationally. Even where permitted, courts enforce only reasonable, narrowly tailored restrictions protecting a legitimate business interest — an overbroad non-compete is often unenforceable in full.

Non-solicitation clauses (barring you from soliciting clients or coworkers) are more likely to be upheld because they are less restrictive, but they still must be reasonable in scope, geography, and duration. Intellectual-property assignment clauses can claim ownership of what you create during employment — and sometimes overreach into work made on your own time and equipment, which several US states expressly limit. Understanding exactly what these clauses claim, before signing, prevents unpleasant surprises when you move on.

Signing Pressure, Mid-Employment Contracts, and Arbitration

You are entitled to review and negotiate an employment contract, and a same-day ultimatum is not a legal reason to sign one blindly. Timing also affects enforceability. In Canada, an employer cannot impose materially worse terms on an existing employee without fresh 'consideration' — something of real value beyond merely keeping your job. A new restrictive contract presented after you have already started, with nothing new offered in return, may be unenforceable, and forcing a significant change in terms can even amount to constructive dismissal.

Watch for arbitration and class-action-waiver clauses too. In the US these are frequently enforced and can push disputes into private arbitration while stripping the right to join a collective action. Canadian courts have been more willing to strike arbitration clauses that block access to statutory employment-standards remedies. Because these clauses shape not just your obligations but how any future dispute is resolved, a short legal review before signing is one of the highest-value steps you can take in your career.

Related: Employment Law Wizards · Non-Compete Agreement Review · Was I Wrongfully Dismissed? · Is My Severance Package Fair? · Employment Law Wizards · All Legal Wizards