January is synonymous with fresh starts and resolutions, but for many Canadian employers, it also marks a season of significant legal peril. The common practice of updating the company handbook at the start of the year, often seen as simple administrative housekeeping, can inadvertently lay the groundwork for costly wrongful and constructive dismissal lawsuits, according to employment lawyers Howard Levitt and Candice Malan.
The "Consideration" Crisis in Contract Changes
A fundamental legal principle often overlooked during handbook updates is the requirement for fresh consideration. Under Canadian contract law, you cannot unilaterally impose new, more restrictive terms on an existing employee—such as shorter termination notice periods, stricter disciplinary rules, or altered work conditions—and expect them to be legally binding. Simply continuing an employee's job is not considered valid consideration in exchange for these new terms.
This was powerfully reaffirmed by the Ontario Court of Appeal in the 2024 case Giacomodonato v. PearTree Securities Inc. The court's message was clear: for a contract modification to be enforceable, both parties must receive something of value. To make new policies stick, employers must offer a tangible quid pro quo, such as a signing bonus, a salary increase, or additional vacation time. Without this exchange, a January policy update is a legal mirage that will not withstand judicial scrutiny.
The Legal Minefield of Return-to-Office Mandates
January is also a popular time for employers to attempt to roll out return-to-office mandates, a move that has become a legal minefield. Recent jurisprudence across Canada indicates that workplace flexibility, solidified during the pandemic, has evolved into a vested contractual right for many employees.
Several key rulings illustrate this shift. In Byrd v. Welcome Home Children’s Residence Inc. (2024), the Ontario Superior Court found that recalling an employee to the office after over a year of remote work constituted constructive dismissal. Similarly, in Parolin v. Cressey Construction Corp. (2025), a British Columbia court ruled that long-standing flexible work arrangements were implied, binding terms of employment. An Alberta court went even further in Nickles v. 628810 Alberta Ltd. (2025), determining that a 37-year remote work arrangement was so fundamental to the employment contract that mandating a return to the office was a wholesale breach.
Employers who issue abrupt January return-to-office edicts without employee consent or adequate notice are not simply managing their workforce—they are potentially financing expensive severance packages. A unilateral change to a core term like work location can give employees the legal grounds to resign and sue for full common-law notice periods.
The Termination Clause Trap
Perhaps the most dangerous piece of January policy housekeeping is tinkering with termination provisions. A widespread and costly misconception among employers is that simply inserting a new termination clause into an updated handbook automatically overrides any prior employment agreements. This assumption is legally incorrect and can render the new clause unenforceable, leaving the employer liable for significantly higher termination payouts based on common law, rather than the more limited Employment Standards Act minimums.
The consistent message from Canadian courts is that employers must navigate handbook updates with extreme caution. What is intended as routine corporate maintenance can quickly transform into a lawsuit-in-waiting if the legal principles of consideration, unilateral change, and contractual modification are ignored. The best practice is to treat any substantive change to employment terms as a formal contract amendment, supported by fresh consideration and clear, documented agreement from the employee.
