Recent BC Supreme Court decision highlights the importance of fresh consideration

A recent BC Supreme Court decision highlights how important it is for employers to provide fresh consideration to an employee for any changes to their employment contract.

In Adams v. Thinkific Labs Inc. 2024 BCSC 1129, the defendant employer was a software company that specialized in creating and marketing online courses. The plaintiff was a 31-year-old former employee. In August 2021, the plaintiff received an offer of employment from the defendant – the offer was detailed and extensive but did not contain a termination clause or any information about non-competition in the event of termination. The plaintiff accepted the offer by email the following day and also indicated her preferred start date. Later that day, the defendant also sent the plaintiff a formal document which included detailed and onerous termination and non-competition terms; the plaintiff signed that document and returned it to the employer. The plaintiff started working for the defendant in September 2021.

The plaintiff worked for the defendant up until May 2023 when she was terminated without cause. She then sued the employer for wrongful dismissal and brought an application for summary trial. At the hearing, her counsel argued that the terms of her employment were set out in the comprehensive August 19, 2021, offer that she had received from the employer and that the second contract was unenforceable because she had not received fresh consideration for signing it and it contained onerous termination and non-competition provisions that significantly altered her employment. The court agreed with the plaintiff’s argument, finding that the second contract consisted almost entirely of new restrictive terms regarding termination, intellectual property and non-competition, which significantly limited her ability to pursue employment in her chosen field. The court found that the initial employment offer (which did not contain a termination clause) was valid whereas the second contract was not and awarded the plaintiff reasonable notice in the amount of 5 months.

Implications for employers

This decision is an important reminder for employers that any changes to an employee’s employment contract may require fresh consideration (e.g. a signing bonus, salary increase or some other benefit to the employee). As this decision illustrates, this could be the case even if the change or amendment in question was made before the employee starts working with the employer.

If you have questions about this or similar topics, please reach out to Neal Parker or any other member of our Workplace Law group.