Starting a new job can be exciting. A new role may offer better compensation, stronger benefits, or greater career opportunities. In that moment, the employment agreement may seem like a formality standing between the candidate and the position.

However, an employment agreement can affect important rights and obligations throughout the employment relationship and after it ends. It may address termination entitlements, bonuses, commissions, confidentiality, restrictive covenants, intellectual property, remote work, and workplace policies.

For employees in Toronto and across Ontario, reviewing an agreement before signing can help identify terms that require closer attention. A red flag does not necessarily mean a clause is improper or unenforceable, but its meaning and potential consequences should be understood.

Red Flag #1: Unclear Termination Language

Termination clauses describe what an employee may receive if their employment is ended without cause, including notice, pay in lieu of notice, severance pay, and benefits continuation. A concern may arise where the clause is confusing or difficult to reconcile with Ontario’s Employment Standards Act. Employment agreements generally cannot provide less than the minimum statutory entitlements.

Some agreements attempt to limit an employee to statutory minimums. These clauses may be enforceable when properly drafted, but Ontario courts continue to scrutinize their wording closely.

Red Flag #2: Overly Broad “For Cause” Provisions

Some agreements state that an employee may be dismissed without notice or compensation for “cause” or “just cause.”

A red flag may arise where the definition is broad enough to include conduct that would not necessarily justify removing minimum statutory entitlements. Even where misconduct occurs, employment standards entitlements may still apply in some circumstances. Broad or unclear cause language can, therefore, be a reason to examine the termination provisions more carefully.

Red Flag #3: Non-Compete and Broad Non-Solicitation Clauses

A non-compete clause generally restricts an employee from working for a competitor or operating a competing business after leaving a job. Most non-compete agreements are prohibited in Ontario, subject to limited exceptions.

Employees should also review clauses that operate like non-competes, even if they use a different label. Restrictions covering broad industries, services, locations, or business opportunities may significantly affect future employment.

Non-solicitation clauses are different. They may prevent a former employee from approaching clients, customers, suppliers, or colleagues. A concern may arise where the restriction applies to people the employee never worked with, lasts for an excessive period, or prohibits passive contact. Employees should understand who is covered, what conduct is restricted, and whether the clause applies after resignation, dismissal, or both.

Red Flag #4: Uncertain Bonus and Commission Entitlements

Variable compensation can represent a substantial part of an employee’s income. A red flag may arise where an agreement describes bonuses or commissions as entirely discretionary, requires the employee to be “actively employed” on the payment date, or allows compensation to be forfeited after resignation or dismissal. The agreement may also permit the employer to change targets, territories, commission rates, or eligibility rules.

Any promises made during recruitment about bonuses, commissions, equity, or earning potential should be compared with the written agreement. The written terms may ultimately determine how compensation is calculated and paid.

Red Flag #5: Broad Rights to Change Employment Terms

Some agreements allow the employer to change duties, compensation, schedules, reporting relationships, work locations, benefits, or incentive plans. Employers may require some operational flexibility, but broad unilateral change language can create uncertainty. This is especially important for employees accepting remote work, commission-based compensation, management responsibilities, or a defined sales territory. The written agreement should be compared with the position described during recruitment.

Red Flag #6: Unclear Probationary Periods

Probationary clauses may state that the first three or six months of employment are subject to different conditions.

A concern may arise where the agreement suggests that the employee has no rights during probation or may be dismissed without regard to minimum employment standards. A probationary period does not automatically eliminate all legal obligations. This issue may be especially important for someone leaving secure employment, relocating, or giving up other opportunities to accept the new position.

Red Flag #7: Overly Broad Confidentiality and Intellectual Property Clauses

Confidentiality clauses commonly protect trade secrets, customer information, financial records, business strategies, and other sensitive information. A red flag may arise where the clause also appears to capture public information, general industry knowledge, or material developed independently by the employee. Employees should also understand obligations relating to personal devices, cloud storage, company records, and file deletion when employment ends.

Intellectual property clauses may be particularly important in software, engineering, design, marketing, research, and creative roles. A broad clause could attempt to capture work created outside working hours, using personal equipment, or before employment began. Employees with side businesses, portfolios, inventions, or pre-existing projects may want to ensure those materials are clearly addressed.

Red Flag #8: Policies Incorporated Without Review

Employment agreements often state that workplace policies form part of the contract. These policies may govern bonuses, commissions, remote work, discipline, privacy, technology use, expenses, confidentiality, and conflicts of interest.

A concern may arise where employees are asked to accept policies they have not received. Agreements may also allow the employer to change policies in ways that affect compensation, scheduling, or work location. Employees may want to request and review all referenced policies before signing.

Red Flag #9: Prior Promises Are Missing

An entire agreement clause typically states that the written contract replaces all previous discussions, promises, and representations. This can be significant where an employee was promised remote work, a defined bonus opportunity, future equity, a promotion track, or a particular territory during recruitment.

If the promise is not included in the agreement, it may be more difficult to rely on later. Employees should compare the written contract with the terms discussed during interviews and negotiations.

Red Flag #10: Pressure to Sign Immediately

Time pressure can also be a practical warning sign. An employment agreement may contain detailed provisions with consequences that extend well beyond the employee’s first day.

Employees accepting executive, commission-based, relocation-dependent, or competitor-facing roles may require additional time to understand the agreement. They should also retain copies of the contract, compensation plans, workplace policies, and written communications about important terms.

Understanding the Agreement Before Signing

An employment agreement can shape the relationship from the first day of work to the last. Some concerns are obvious, while others are buried in technical language.

Termination clauses, incentive compensation, restrictive covenants, confidentiality obligations, intellectual property provisions, and incorporated policies may all affect an employee’s rights and future opportunities.

The goal is not to assume that every restrictive or employer-friendly clause is invalid. It is to understand the agreement, identify uncertainty, and consider the practical consequences before accepting the role.

Concerns About Your Toronto Employment Agreement? Call Grosman Gale Fletcher Hopkins LLP

Before signing an employment agreement in Toronto, the GTA, or elsewhere in Ontario, employees should carefully review termination clauses, bonus and commission provisions, non-solicitation language, confidentiality obligations, and executive compensation terms.

At Grosman Gale Fletcher Hopkins LLP, our knowledgeable employment lawyers assist employees, executives, professionals, and sales employees with employment agreement reviews, contract negotiations, restrictive covenant concerns, and workplace contract disputes across Ontario. To schedule a consultation on your employment agreement issue, please contact us online or call (416) 364-9599.