Most people sign their employment contract on the same day they receive it — excited about the new job, not wanting to seem difficult, and assuming the standard language is just that: standard. But employment contracts are legal documents, and what is buried in them can cost you significantly if things go wrong down the road.
Here are the ten red flags we see most often — and what they actually mean for you.
1. A Termination Clause That Limits You to ESA Minimums Only
This is the most consequential clause in any employment contract — and the most commonly misunderstood.
A termination clause that says something like “the employee is entitled to notice as required by the Employment Standards Act” sounds reasonable. What it actually does is strip away your common law right to reasonable notice — which, depending on your age, seniority, and years of service, could be worth months or even years of additional compensation.
Red flag: Any clause that caps your termination entitlement at ESA minimums alone. Get it reviewed before you sign.
2. A Probation Period Longer Than Three Months
As we have covered before, Ontario’s ESA only recognises a three-month probationary window — after which you are entitled to notice regardless of what your contract says. A contract that sets a six-month or longer probation period is attempting to extend a protection that the law does not actually permit beyond three months.
Red flag: Any probation clause exceeding three months without a corresponding termination entitlement after that point.
3. A Non-Compete Clause
Since 2021, non-compete agreements in Ontario are void and unenforceable for most employees — with the exception of executives and in the context of a business sale. If your contract contains a non-compete clause preventing you from working in your industry after leaving, that clause is almost certainly unenforceable.
The concern is not just enforceability — it is that many employees don’t know this and self-impose restrictions that were never legally binding to begin with.
Red flag: Any clause preventing you from working in your field after leaving the employer.
4. A Vague or Unlimited Hours Clause
Watch for language like “the employee agrees to work such hours as are necessary to fulfill the requirements of the role.” This is an attempt to contract out of Ontario’s maximum hours and overtime protections.
Under the ESA, hours beyond 48 per week require your written agreement and can be revoked. A blanket clause burying unlimited hours in your contract does not override those protections — but it signals an employer who may push boundaries.
Red flag: Any clause that implies unlimited working hours without referencing ESA overtime entitlements.
5. A Discretionary Bonus Clause
Bonus clauses that describe payments as “entirely at the employer’s discretion” or “not guaranteed” can be used to deny you bonus compensation you legitimately earned — including during a termination notice period.
Ontario courts have increasingly scrutinised these clauses. Depending on the circumstances, you may still be entitled to a pro-rated bonus during your notice period even if the contract calls it discretionary. But a poorly drafted clause makes that fight harder than it needs to be.
Red flag: Bonus described as fully discretionary with no formula, target, or criteria attached.
6. A Unilateral Variation Clause
This is a clause that allows the employer to change the terms of your employment — your role, compensation, location, or hours — without your consent. Language like “the employer reserves the right to modify the terms of employment at any time” is a significant red flag.
Unilateral changes to fundamental terms of employment can amount to constructive dismissal under Ontario law. But a signed contract that appears to permit those changes can complicate your claim.
Red flag: Any clause giving the employer the right to change your terms without your agreement.
7. An Entire Agreement Clause That Contradicts What You Were Promised
If you were verbally promised a signing bonus, a specific title, a flexible work arrangement, or a performance review at six months — and none of that appears in the written contract — an entire agreement clause will typically override those promises.
This clause says the written contract is the complete agreement between the parties. Anything said during recruitment that is not written down effectively disappears.
Red flag: Verbal promises made during recruitment that do not appear anywhere in the written contract.
8. Ownership of Intellectual Property — Including Personal Projects
Many contracts contain broad IP clauses that assign ownership of anything you create — during or outside of work hours — to the employer. If you have side projects, freelance work, or creative endeavors outside your employment, a broad IP clause could mean your employer owns them.
Red flag: IP clauses that extend beyond work-related creations to anything developed during the period of employment, regardless of when or how it was created.
9. A Repayment or Clawback Clause
Some contracts require you to repay signing bonuses, relocation allowances, or training costs if you leave within a specified period. These clauses are not inherently illegal — but they can be excessive, poorly defined, or structured in a way that effectively traps you in a role.
Watch carefully for the triggering conditions, the repayment formula, and whether the clause applies even if the employer terminates you — not just if you resign.
Red flag: Repayment clauses with no cap, unclear triggering conditions, or that apply even when the employer ends the relationship.
10. No Written Contract at All
This cuts both ways. The absence of a written contract means your employer cannot rely on any clause to limit your common law rights on termination — which is actually good for you. But it also means there is no written record of what was promised, what your compensation includes, or what your role actually entails.
If you are starting a new job and your employer has not provided a written contract, ask for one. If they resist, that itself is a red flag about how they approach their obligations.
Red flag: An employer who offers employment verbally with no written documentation of terms.
The Bottom Line
An employment contract is not a formality — it is the legal foundation of your working relationship. The clauses buried in it can determine how much you receive if you are ever terminated, whether you can work in your industry after leaving, and whether promises made during recruitment are enforceable.
Read it carefully. Ask questions. And if anything looks unusual — especially around termination, hours, bonuses, or non-competes — get it reviewed by an employment lawyer before you sign. That conversation is far less expensive than the alternative.
