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“A basic premise of contract law is that all contracts require consideration to flow from each party to the other — each side must give and receive a benefit. Without consideration flowing both ways, all you have is a gratuitous promise,” writes Rudner, founding partner at Rudner MacDonald LLP.
Consideration – a new benefit to the employee like an improved medical plan, for example – is required to form a contract, and it is also required to amend one, the article says.
In the United States, continued employment is generally included as consideration, but that is not the case in Canada, with certain exceptions, writes Rudner.
The issue has been touched upon in several decisions, with the latest case law suggesting if an employer wants to impose new terms and conditions that are less advantageous to the employee than the existing ones, it will have to offer some form of consideration or an appropriate period of notice, the article says.
Another issue that often arises is whether there is some minimum amount of consideration required, writes Rudner, author of You’re Fired! Just Cause for Dismissal in Canada.
“Unfortunately, there is no clear law on the issue,” he says.
It is always advisable, Rudner adds, “for the employer to provide employees with a reasonable amount of time to review the contract, consider its implications and obtain legal advice if they choose. It is not something to celebrate if the employee takes the contract from you and signs it immediately without giving it any thought.”