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Is an employment contract signed one day after Employee starts work enforceable?

I’ve noted a few times before the dangers for an employer of allowing an employee to start working before they have signed a written employment contract.   Rejdak v. Fight Network Inc. is a great case that  deals with this problem.

Rejdak was offered a job by a manager of Fight Network in a phone call on a Friday night in which the parties agree to a start date, title, and salary.  On Monday, Rejdak quit his old job and reported for work with the Fight Network.  He worked all day Monday, and was given a written contract to sign that day.  He took it home, signed it, and returned it to the employer the next day.  It was a standard form employment contract used by the Fight Network.  The contract included a three month probationary period during which the employee could be dismissed without notice.

Redjak was dismissed within that three month period, and the employer argued, relying on the probationary period in the contract, that it did not need to give Redjak any notice.  Redjak sued for wrongful dismissal, claiming ‘reasonable notice’ entitlements.  He wins, because the employer made an all too common error–it allowed Redjak to start work before he had signed the written employment contract.

Redjak was already employed under an oral contract when he was given the written contract–albeit his oral contract was only 1 day old.  The oral contract did not include a probationary period, or say anything about notice of termination for that matter.  Therefore, he was entitled to ‘reasonable notice’ under that oral contract, since courts imply an obligation to give reasonable notice when an employment contract is silent on how much notice of termination is needed.

So when the employer introduced the written contract with the probationary period, it was really seeking to alter the existing verbal contract.  Redjak signed the new written contract, because, according to the court, he ‘had no choice’, but that doesn’t matter, because he did not receive any new consideration for the amendment.  An employment contract cannot be amended unless both sides receive something new in the amendment (new consideration must flow both ways).  Here the employer got a new benefit (a probationary period), but the employee got nothing new.

The employer argued there was new consideration in the form of a 2 week holiday provision and a benefits package.  But the court rejected that argument.  The holiday pay was simply what Redjak was entitled to anyways under the Employment Standards Act, and new consideration cannot come in the form of a promise to comply with a statute.  The benefits were provided to all Fight Network employees, so the Court rejected the argument of the employer that Redjak was not already receiving them under the oral contract.

In the result, the Court ruled that the written contract was unenforceable for lack of consideration to the employee.  Therefore, the oral contract applied, including the implied term requiring reasonable notice.  The Court set reasonable notice at 4 months, even though Redjak had been employed for less than 3 months and took into consideration that Redjak had quit a secure job to come to Fight Network.

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One Response to Is an employment contract signed one day after Employee starts work enforceable?

  1. Kelsey Campagnolo Reply

    December 7, 2016 at 9:10 pm

    What should the employer offered to ensure there was valid consideration? A signing bonus? What are the other options?

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