Starting a New Job in Ontario? Read Your Employment Contract Before You Sign It

Most people, when they accept a new job, don't spend much time on the employment contract. They've already decided to take the position. The salary has been discussed. The start date is set. The contract feels like paperwork: something to sign and return so they can move on to the exciting part.

This is understandable, but it's a mistake, and sometimes a very expensive one.

An employment contract is not just a formality confirming what you've already agreed to. It is a legal document that governs the entire employment relationship, including what happens when it ends. Many of the most consequential provisions in an employment contract have nothing to do with your salary or your job title. They deal with things you probably aren't thinking about on your first day, but that will matter enormously if you're ever terminated, if you want to leave for a competitor, or if you create something valuable during your employment.

I review employment contracts regularly as part of my practice, and I also draft them for employers. That combination means I know what these clauses are designed to do, what's standard, what's aggressive, and what's likely unenforceable. In this article, I'll walk through the key provisions you should understand before you sign.

The Termination Clause: The Single Most Important Part of Your Contract

I've written in detail about how termination entitlements work in Ontario, but here's the short version as it relates to your employment contract: without a valid termination clause, you are entitled to what's called common-law reasonable notice if your employer lets you go. This is typically in the range of one month of your full compensation (salary, benefits, bonus, everything) for every year you've worked there, up to a rough ceiling of about 24 months.

A termination clause attempts to limit that entitlement, usually to the minimums required by the Employment Standards Act: roughly one week per year of service, capped at eight weeks.

The difference can be staggering. Consider an employee earning $90,000 a year who has been with their employer for six years. Without a termination clause (or with an invalid one), they'd be looking at roughly six months of their full compensation upon termination: around $45,000. With a valid termination clause limiting them to the ESA minimums, the employer would owe them six weeks of pay, or roughly $10,400.

That's a $35,000 difference, determined entirely by a few sentences in a contract most people sign without a second thought.

Here's the thing: as I discuss in my article on why employers need proper employment contracts, the majority of termination clauses I review are not valid. Since the Ontario Court of Appeal's 2020 decision in Waksdale v. Swegon, the courts have taken an extremely strict approach: even a minor drafting error in a termination clause can render the entire clause void, meaning the employee gets the full common-law entitlement regardless of what the contract says.

So from an employee's perspective, the termination clause is worth paying attention to for two reasons. First, you should understand what it's attempting to do: limit what you'd receive if you're let go. Second, you should know that there's a reasonable chance it may not even be enforceable, which could work significantly in your favour down the road.

Probationary Periods: Not as Simple as They Sound

Many employment contracts include a probationary period, typically three months or sometimes longer, during which the employer can terminate your employment with minimal notice or pay. The idea is that both sides are trying things out, and if it isn't working, the employer can end things without the full termination obligations that would otherwise apply.

There are a few things worth knowing about probationary clauses.

First, a probationary period doesn't automatically exist just because your employer says it does. For a probationary period to have legal effect in Ontario, it generally needs to be set out in a written contract that you signed before you started working. A verbal mention during your interview, or a policy in an employee handbook you received on your first day, may not be sufficient.

Second, the Employment Standards Act still applies during probation. If you've been employed for at least three months, your employer must give you at least one week of notice or pay in lieu, even during a probationary period. A probationary clause that purports to allow termination with no notice and no pay whatsoever after the three month mark may be void for violating the ESA, and under Waksdale, that could potentially invalidate the entire termination clause along with it.

Third, some probationary clauses are poorly drafted in ways that actually give the employee more protection than the employer intended. This is another area where the specific language matters a great deal.

Non-Competition and Non-Solicitation Clauses

These are two different things, and they are often confused.

A non-competition clause (sometimes called a "non-compete") attempts to prevent you from working for a competitor, or starting a competing business, for a certain period after you leave your job. In Ontario, since the Working for Workers Act, 2021, non-competition clauses are outright banned for most employees.

However, non-competes still appear in Ontario employment contracts with surprising frequency, often because the employer is using an outdated template, or a template drafted for another jurisdiction. The clause itself may not be enforceable, but its presence in your contract can still create confusion and anxiety if you later want to leave for a competitor. It can also signal that the employer hasn't had their contracts reviewed recently, which may tell you something about how carefully they approach legal compliance generally.

A non-solicitation clause is different. Non-solicitation clauses typically prevent you from contacting your former employer's clients or recruiting their employees for a period after you leave. Unlike non-competes, non-solicitation clauses can be enforceable in Ontario, but only if they are carefully drafted: reasonable in duration, clear in scope, and no broader than necessary to protect the employer's legitimate business interests.

A non-solicitation clause that says "you cannot contact any client of the company for two years" is likely too broad. A clause that says "you cannot solicit clients you personally worked with during the last 12 months of your employment, for a period of 12 months after your departure" is more likely to hold up. The difference matters, because if you later leave and your former employer tries to enforce a non-solicitation clause against you, the scope and reasonableness of that clause will be central to whether it works.

Intellectual Property and Ownership Clauses

If you work in a role where you create things (software, designs, written content, inventions, processes), pay close attention to any intellectual property (IP) clause in your contract. These clauses typically state that anything you create during the course of your employment belongs to the employer.

That is generally reasonable and expected. The more concerning versions are clauses that attempt to claim ownership over things you create outside of work, on your own time, using your own resources, and unrelated to your employer's business. Some contracts include very broad IP assignment language that, read literally, would mean your employer owns the side project you've been working on at your kitchen table on weekends, even if it has nothing to do with your job.

Whether such broad clauses are actually enforceable is debatable, but you'd rather not have to debate it. If the IP clause in your contract is overly broad and you do creative or technical work outside of your employment, it's worth flagging before you sign.

Confidentiality Provisions

Nearly every employment contract will include a confidentiality clause, and this is generally unobjectionable. Your employer has a legitimate interest in ensuring you don't share proprietary information, client lists, pricing strategies, or trade secrets with competitors or the public.

What's worth checking is the scope of the confidentiality obligation and how long it lasts. A confidentiality clause that applies to genuinely proprietary information and continues indefinitely is standard and reasonable. A clause that defines "confidential information" so broadly that it includes essentially anything you learn during your employment, and that purports to restrict what you can do with general skills and knowledge you developed on the job, may be overreaching.

The practical concern here is that an overly broad confidentiality clause, combined with a non-solicitation clause, could make it very difficult for you to work in your field after leaving. Even if the clauses might not survive a legal challenge, that's cold comfort if your new employer gets a threatening letter from your old one.

"Entire Agreement" Clauses and What They Override

Most employment contracts contain what's called an entire agreement clause. This is a standard provision that says the contract represents the complete agreement between you and the employer, and that anything discussed or promised outside the contract doesn't count.

This matters because of what employers often say during the hiring process that doesn't make it into the contract. If you were told in an interview that "we never fire anyone without cause," or "bonuses are guaranteed," or "you can work from home three days a week," but none of that appears in the written contract, the entire agreement clause means those verbal promises are likely unenforceable.

If something was important enough to influence your decision to accept the job, it should be in the contract. If it isn't, you should ask for it to be included before you sign.

Things That Should Give You Pause

Not every questionable clause is a dealbreaker, and having concerns about a contract doesn't necessarily mean you shouldn't take the job. But there are some things I see in employment contracts that are worth paying attention to:

A termination clause that attempts to limit your entitlements to less than the ESA minimums. This is surprisingly common, and it's void on its face, but it tells you something about how the contract was drafted.

A contract that includes a non-competition clause for a non-executive role. As noted above, this is banned in Ontario for most employees, and its presence often indicates the employer is using an outdated or improperly drafted contract.

Very broad, loosely defined restrictive covenants (non-solicitation, confidentiality, IP) that could limit your career mobility after you leave.

A requirement to repay training costs, signing bonuses, or relocation expenses if you leave within a certain period. These aren't necessarily unreasonable, but the amounts and timeframes should be proportional.

Any provision that purports to waive your rights under the Employment Standards Act. The ESA sets absolute minimum standards that cannot be contracted out of, and any provision that attempts to do so is void.

A Word on Negotiation

Many people assume employment contracts are "take it or leave it." In my experience, that's not always the case. Employers expect some back-and-forth, particularly for more senior roles. Having a lawyer review your contract and identify specific concerns to raise is not adversarial; it's professional. Employers who draft careful contracts generally respect employees who read them carefully.

That said, there is a meaningful difference between asking for reasonable modifications (clarifying a vague non-solicitation clause, narrowing an overly broad IP provision, ensuring the termination clause reflects at least the ESA minimums) and attempting to renegotiate the entire contract. A focused, informed request is far more likely to be well-received than a long list of objections. When reviewing employment contracts with prospective employees, I will frequently offer suggested changes that would better protect the employee’s interest, while still being something the employer would likely agree to.

What I'd Recommend

If you're starting a new job and you've been given an employment contract to sign, here's what I'd suggest:

Read it, even if it's long and dry. Pay particular attention to the termination clause, any restrictive covenants, and the IP provisions. If there are things in the contract that you don't understand, or that don't match what you were told during the hiring process, ask about them before you sign.

And if you want a lawyer to look it over and explain what you're actually agreeing to, that's a service I offer. I'll review your contract, flag anything that's unusual or potentially problematic, and go through my findings with you so you can make an informed decision. If your contract is time-sensitive, I can often have it reviewed at meet with you as soon as the next day - feel free to email me at charlotte@andromeda.law to inquire. In any case, it is far less expensive than dealing with the consequences of a contract you signed without understanding years later.