An employment contract review explains what your agreement really means, what rights it limits and what should be changed before you sign.
Salary and vacation are only part of the contract. A few lines about termination, bonuses, probation, temporary layoffs or future work can have a much bigger financial impact later.
The best time to review an employment contract is before you sign it, while you can still ask questions and negotiate changes. But if you have already signed—or have already been fired—the contract should still be reviewed before you assume every clause is enforceable.
On This Page:
- 1. Why Review an Employment Contract?
- 2. What Should Be Reviewed?
- 3. Termination Clauses & Severance
- 4. New Contracts During Employment
- 5. Can You Negotiate?
- 6. What If You Already Signed?
Why Should You Have an Employment Contract Reviewed?
You should review an employment contract because the agreement can affect your income, job security, severance and ability to work elsewhere after the job ends.
Most people naturally focus on the attractive parts of a job offer:
- Salary
- Job title
- Vacation
- Benefits
- Start date
Those terms matter. But some of the biggest risks are usually found later in the agreement.
A contract can try to limit what you receive if you are fired, give your employer greater power to change your job, restrict bonuses after termination or limit what you can do for a competitor or former client.
For the broader rules, see our guide to employment contracts in Canada.
Do you need a lawyer to review every job offer?
No. But a review becomes especially valuable when the agreement can significantly affect your money or future career.
Consider getting advice when:
- The contract contains a termination or severance clause
- You earn significant bonuses, commissions or equity
- You are joining as a manager or executive
- The agreement includes probation
- You are accepting a fixed-term position
- The employer wants broad power to change your duties, hours or location
- The contract restricts where you can work after leaving
- Your current employer wants you to sign a replacement agreement
What Should Be Reviewed in an Employment Contract?
An employment contract review should focus first on the clauses that can cost you money, change your job or restrict your choices later.
Salary, bonus and commissions
Check exactly how you are paid and when bonuses or commissions are earned.
If a large part of your income is variable, pay particular attention to what happens when your employment ends. Bonus and incentive-plan wording can affect whether those amounts continue during a termination notice period.
Termination clause
The termination clause can determine how much compensation your employer says it owes you if you are fired without cause.
For many employees, this is the most financially important clause in the entire agreement.
Probation
Check whether the agreement actually creates a probation period, how long it lasts and what the contract says happens if your employment is ended during that period.
Don’t assume “probation” automatically means you can be fired with no rights.
Job duties, hours and location
Look for wording that gives the employer power to change your duties, title, schedule, workplace or remote-work arrangement.
These clauses can become important if your job changes significantly later.
Temporary layoffs
A contract can give an employer rights to temporarily lay you off that it might not otherwise have.
That language deserves attention before you agree to it.
Restrictions after you leave
Check non-compete, non-solicitation and confidentiality clauses carefully.
These clauses can try to restrict where you work, which clients you contact or what information you can use after the employment relationship ends. The rules differ by province, and simply putting a restriction into a contract does not automatically make it enforceable.
How Can an Employment Contract Affect Your Severance?
An enforceable termination clause can substantially reduce the severance pay you receive when your employer ends your employment.
Without an enforceable contractual limit, many non-unionized employees in common-law Canada have greater reasonable-notice rights when they are fired without cause.
A properly drafted contract can limit those rights. That is why a termination clause that looks like a few harmless lines today can become worth thousands of dollars—or much more—years later.
Employment standards legislation still creates minimum rights that an employment contract can’t lawfully remove. Whether a particular termination clause successfully limits greater rights depends on its wording and the law where you work.
If you are terminated, don’t sign a release before having your full severance package reviewed—you may be owed as much as 24 months’ pay.
Can bonuses and commissions be part of severance?
Yes. Bonuses, commissions and other incentive compensation can form part of termination damages unless valid contract or plan language removes that right.
If variable compensation is a significant part of your income, don’t review the employment agreement alone. Bonus, commission, stock-option and incentive-plan documents can be just as important. See more in our guide on bonus and severance pay.
What If Your Current Employer Gives You a New Contract?
Don’t sign a replacement employment contract until you understand what rights you are being asked to change or give up.
A new agreement can appear when you receive a promotion, raise or bonus. An employer can also present one even though your day-to-day job is staying the same.
The new contract can:
- Reduce future severance rights
- Add a probation provision
- Allow temporary layoffs
- Give the employer more power to change your job
- Add restrictions after you leave
- Change bonus or commission rights
When an employer asks an existing employee to sign new terms, whether those terms are enforceable can also depend on what the employee receives in exchange and the law that applies in their province.
Does refusing a new contract mean you quit?
No. Refusing to sign a proposed new contract does not by itself mean that you resigned.
Your employer can decide how it wants to respond, including whether it will continue the existing relationship or properly end your employment. Don’t resign simply because you disagree with the proposed agreement.
Read our guide about your rights if you refuse to sign a new employment contract.
Can You Negotiate an Employment Contract?
Yes. You can negotiate an employment contract before you sign it.
Not every clause needs to become a negotiation. Focus on the terms that matter most to your compensation, job security and career.
Depending on the position, useful negotiation points can include:
- Termination and severance protection
- Salary
- Signing bonus
- Bonus and commission terms
- Equity or stock options
- Vacation
- Remote or hybrid work
- Recognition of previous service
- Probation
- Post-employment restrictions
The employer does not have to accept every requested change. But you are allowed to understand what you are signing and ask whether important terms can be improved.
What If You Already Signed the Employment Contract?
Having signed an employment contract does not automatically mean every clause in it is enforceable.
If a workplace problem has already developed, the contract should be reviewed in light of what is actually happening.
A review can be important when:
- Your employer changes your pay, duties, hours or location
- You are temporarily laid off
- Your employer threatens to enforce a non-compete or non-solicitation clause
- A bonus or commission is withheld
- You are terminated and the employer says the contract limits your severance
A major change to your job can also raise constructive dismissal rights. Don’t resign because the employer has changed the deal before determining what the contract actually allows.
Employment Contract Rules by Province
Employment contract rules differ across Canada. For province-specific guidance, see:
Employment Contract Review FAQs
When should an employment contract be reviewed?
Ideally, before you sign it. You should also have a contract reviewed when your employer gives you a replacement agreement, makes a major change to your job or relies on the contract after termination.
How long do you have to review a job offer?
There is no single Canada-wide period that every employer must give you to review an employment contract. If the deadline is too short to understand the agreement, ask for reasonable time to review it before signing.
Can an employment lawyer negotiate the contract for you?
Yes. An employment lawyer can identify the clauses that matter most, explain the risk and help negotiate changes where the value of doing so justifies it.
Get Your Employment Contract Reviewed
The best contract review tells you what actually matters—not just what every paragraph means.
Samfiru Tumarkin LLP helps non-unionized employees review and negotiate new job offers and replacement agreements, identify clauses that put severance or compensation at risk, and protect their rights before problems develop.
If the contract is already being used against you after a job change or termination, our employment lawyers can challenge unenforceable restrictions and secure the full severance pay and compensation you are legally entitled to receive.
For contract-specific advice, speak with our employment contract lawyers in Toronto or employment contract lawyers in Calgary.