What is Fresh Consideration?
Any time you ask an employee to sign new terms—like a termination clause, non-solicit, bonus plan rules, or a contract replacing the offer letter—you run into the rule of fresh consideration. If there’s no new value exchanged, the new paper can be unenforceable (and you may be stuck with common-law notice or pre-existing terms).
This guide explains the concept, what counts as fresh consideration, how to roll out changes lawfully, and common traps for both employers and employees.
The 30-second answer
Fresh consideration = new value given in exchange for new or changed terms (beyond the employee’s existing obligation to work and your existing obligation to pay).
Continued employment alone is not enough to support mid-employment changes in Ontario.
If you don’t have fresh consideration, you can use the “reasonable notice of change” method instead—done properly—or wait until a true promotion or other value event to paper changes.
Courts care about the existence of consideration, not its dollar adequacy, but token or illusory perks invite trouble.
When do you need fresh consideration?
You present a new contract after the employee has already accepted an offer.
You add restrictive covenants (non-solicit / non-deal / confidentiality tweaks) after the start date.
You replace an offer letter with a longer form agreement after onboarding.
You change key terms (termination clause, bonus plan eligibility, commission mechanics, location) mid-employment.
If the employee has already given their side of the bargain (they’re working under an existing deal), you generally need new value to make new terms stick.
What counts as fresh consideration?
Think tangible, bankable value that the employee wouldn’t otherwise have:
A raise or signing bonus (even modest), paid or committed when the new terms take effect.
A promotion with real increases to pay, title, responsibility, or reporting level.
Additional paid vacation or personal days (not just “we’ll consider it”).
A one-time payment in exchange for the new paper (document the quid-pro-quo).
Equity or RSUs/PSUs (with clear grant details).
Enhanced notice/severance or a fixed-term commitment the employee didn’t have before.
Valuable training/certification the employer pays for (stated clearly).
Courts don’t price the bargain like a business deal, but they do sniff out illusory consideration. Make it real and contemporaneous.
What doesn’t count (or is risky)
“Continued employment” or “we won’t fire you today.”
A future, discretionary raise (“we’ll review comp soon”).
Perks the employee already has (benefits, title, remote day) dressed up as “new.”
Back-dating consideration to make a paper trail.
A “promotion” in title only (no pay/responsibility change).
The other path: reasonable notice of change
If you don’t want to (or can’t) offer fresh consideration, Ontario law allows you to implement future changes by giving reasonable working notice that the new term will take effect later. Key points:
Give clear written notice that if the employee does not accept, the existing contract will end at the end of the notice period and you will offer re-employment on the new terms.
The notice must be reasonable (often mirroring the employee’s common-law notice), not a weekend.
If the employee keeps working past the notice period, they’re generally taken to have accepted the new term.
If they clearly refuse, you must either back down or treat the employment as terminated with notice and offer re-employment on the new terms. Mishandling this can trigger constructive dismissal.
Day-1 and offer-letter traps
If the employee has accepted an offer (even verbally) and you present tougher terms on Day 1, you usually need fresh consideration.
Safe practice: send the full agreement with the offer and make the offer conditional on signing—no last-minute swaps. If you must change terms post-acceptance, add real value.
How to roll out changes (employers)
Pick your lane: fresh consideration or reasonable-notice-of-change. Don’t muddle them.
If using consideration, say it: “In exchange for signing the attached agreement, you will receive X.” Pay or grant it now, not “later maybe.”
Keep it narrow: only the clauses you need (e.g., updated termination clause + non-solicit).
Give time to review and encourage independent legal advice—it helps enforceability.
Avoid “cascade” clauses and vague scope; clarity wins.
Keep signed copies and proof of consideration paid in the file.
Employee checklist before signing new terms
What’s new? Termination pay limits? Bonus eligibility? Non-solicit reach?
What’s the consideration? Is there actual new value (money, vacation, title, equity)?
Timing: Is the consideration paid now or contingent on something uncertain?
Trade-offs: Are you giving up valuable rights (e.g., common-law notice) for a token?
If you refuse: The employer may give notice of change or terminate with notice and re-offer. Get advice before declining.
FAQs
Is $1 enough as consideration?
Courts don’t price the bargain, but pure token consideration can look sham-like. Use meaningful, clearly delivered value.
Does a promotion automatically provide consideration?
Only if it’s real—increased pay/responsibility or a material title change. A cosmetic title swap is risky.
Can “we promise not to dismiss you for a reasonable time” be consideration?
That theory has limited traction and is fact-sensitive. It’s far safer to give concrete value (cash, vacation, equity) than to rely on implied forbearance.
We forgot to paper a termination clause before start—can we fix it later?
Yes, but pair it with fresh consideration or use the notice-of-change route properly.
Do contractors need fresh consideration too?
Yes—this is a contract law concept. But check classification first; if the person is actually an employee, employment standards and human-rights overlays also apply.
Bottom line
If you’re changing key employment terms after work has begun (or after the offer was accepted), assume you need fresh consideration—and make it real. When that’s not feasible, use the reasonable-notice-of-change method correctly. Either way, clarity, timing, and clean documentation are what keep your new terms enforceable.
This article is legal information, not legal advice. For guidance on your specific situation, contact Vanguard Law.