Employers often ask existing employees to sign a new employment agreement partway through the relationship, sometimes alongside a raise or a new benefit program. The new document frequently contains a termination clause limiting the employee to statutory minimum notice, in place of the much longer reasonable notice the common law would otherwise imply.
In Chowanetz v Ivor Forest Products Ltd., 2026 BCSC 1760, the Court held that a termination clause introduced roughly four years into the employment relationship was unenforceable because the employer did not provide fresh consideration for it. The employee was awarded six months of pay in lieu of notice at common law.
The Rule: A Contract Amendment Requires Fresh Consideration
Once an employment contract is formed, the employer cannot unilaterally rewrite it. Where an employer wants the employee to accept a less favourable term, such as a clause displacing common law reasonable notice, the employee must receive fresh consideration: a material advantage beyond what the employee is already entitled to under the existing contract or by statute.
Continued employment, on its own, does not qualify. British Columbia courts have applied this principle since Watson v Moore Corp., 1996 CanLII 1142 (BC CA), and it remains a frequent basis on which a termination clause is found unenforceable in wrongful dismissal litigation.
Chowanetz v Ivor Forest Products Ltd., 2026 BCSC 1760
The Facts
Mr. Chowanetz accepted an offer of employment with Ivor Forest Products Ltd. in November 2020 and relocated from Calgary to Chilliwack to begin work as a moulder technician in January 2021. The parties agreed that the offer letter was a binding contract. It contained no termination clause and included a commitment that the employer would review his wages annually to keep them competitive.
In November 2024, the employer had him sign a new agreement. It contained an entire agreement clause and a termination provision limiting his entitlements on a without cause dismissal to the minimum notice, or pay in lieu, under the Employment Standards Act, plus one additional week of base salary, conditional on his signing a release. He was dismissed without cause in October 2025, after almost five years of service.
Why the Wage Increase Was Not Fresh Consideration
The employer relied on three items as consideration: a wage increase from $35.00 to $38.50 per hour, an RRSP matching program, and a bonus program. The Court rejected each of them.
The RRSP and bonus programs were not mentioned in the new agreement, and its entire agreement clause stated that no commitments existed outside its terms. The employer could not rely on benefits that its own integration clause excluded.
The wage increase failed for a different reason. Under the original offer, the employee was already contractually entitled to an annual wage review, and the employer had not conducted those reviews in the intervening years. The Court held that the 2024 increase gave the employee nothing beyond what he was already owed under the existing contract. A benefit that satisfies a pre-existing obligation cannot serve as consideration for a new promise. With no fresh consideration, the termination clause could not be enforced, and the employee was entitled to reasonable notice at common law.
Six Months’ Notice and the Failed Mitigation Defence
Applying the familiar Bardal factors, the Court considered the employee’s age of 48, his nearly five years of service, and his specialized but non-managerial technical role, and fixed reasonable notice at six months.
The employer also argued that damages should be reduced because the employee had not done enough to find new work. Although his job search was limited, the defence failed. Following Evans v Teamsters Local Union No. 31, 2008 SCC 20, the onus rests on the employer to prove that comparable employment was available and would likely have been obtained through reasonable efforts. Employees should still take their duty to mitigate seriously, but the burden of proving a failure to mitigate lies with the employer. A claim for aggravated damages was dismissed because the evidence did not establish distress beyond the ordinary upset that accompanies a dismissal.
The Authorities Behind the Decision
Hobbs v TDI Canada Ltd. and Francis v CIBC
The Court in Chowanetz relied on Hobbs v TDI Canada Ltd., 2004 CanLII 44783 (ON CA), (2004), 246 DLR (4th) 43, a leading Ontario Court of Appeal decision. Mr. Hobbs was presented with a non-negotiable agreement shortly after he started work that adversely changed his commission terms. Following Francis v Canadian Imperial Bank of Commerce, 1994 CanLII 1578 (ON CA), (1994), 21 OR (3d) 75 (CA), the Court of Appeal held that the law does not permit employers to present employees with changed terms of employment, threaten to fire them if they do not agree, and then rely on the continued employment relationship as the consideration for the new terms. The Court stressed that this requirement is especially important given the inequality of bargaining power once an employee is hired.
Sui v HungryPanda Tech Ltd., 2024 BCSC 1856
Chowanetz also adopted the three-part analysis applied in Sui v HungryPanda Tech Ltd., 2024 BCSC 1856, drawn from Krieser v Active Chemicals Ltd., 2005 BCSC 1370. The court asks whether the new contract contains terms detrimental to the employee, what consideration is required for those terms, and whether the employer has established it.
In Sui, the employee accepted an emailed offer, and a formal agreement limiting him to statutory termination entitlements was signed the next day. The Court held that a contract was formed on acceptance of the emailed offer, so the later agreement was an amendment requiring fresh consideration. Expense reimbursement and paid vacation did not qualify because the employer was already obliged to provide them under the Employment Standards Act. A vague reference to benefits described in an employee manual that said nothing about benefits was, in the Court’s words, “a thing writ in water.” The employee, a senior manager with about 18 months of service, was awarded six months’ notice. We discussed Sui in more detail in our earlier article on fresh consideration.
What This Means for Employees in British Columbia and Alberta
These decisions rest on general principles of contract law, and the same analysis arises in wrongful dismissal claims in both provinces. If you signed a new agreement after your employment began, its termination clause may depend on what you received in exchange. A raise you were already owed, benefits you would have received anyway, statutory minimums, or simply keeping your job will generally not be enough.
Fresh consideration is only one route to challenging a termination clause. Clauses that fail to comply with employment standards legislation or are ambiguous may also be unenforceable, as illustrated in our discussion of a recent Alberta decision rejecting a termination clause.
If you have already been dismissed and your employer relies on a later agreement, the original offer, emails and pay records will often decide the case. Our guide to severance pay in British Columbia and Alberta and BC severance calculator are a useful starting point, but neither substitutes for advice on your specific contract.
Frequently Asked Questions
Is continued employment enough consideration for a new employment contract in BC?
Generally, no. Merely continuing an existing employment relationship is not fresh consideration for new terms that disadvantage the employee.
Does a raise count as fresh consideration?
It can, but only if it is genuinely new and given in exchange for the new terms. In Chowanetz, the increase did not qualify because it satisfied the employer’s existing contractual obligation to review wages annually.
What happens if my termination clause is unenforceable?
You are presumptively entitled to reasonable notice at common law, assessed with reference to age, length of service, the character of the employment and the availability of similar work. Both Chowanetz and Sui resulted in six months’ notice.
Do these principles apply in Alberta?
The requirement of consideration is a general principle of contract law and is regularly raised in Alberta wrongful dismissal claims, although every case turns on its own documents and facts.
Speak With an Employment Lawyer
TZ Law acts for employees across Alberta and British Columbia in wrongful dismissal, severance and termination pay and employment contract matters, from our Calgary office and for clients in Vancouver and throughout BC. If you have been asked to sign a new employment agreement, or your employer is relying on one to limit your severance, you may book a consultation with TZ Law to review your position.
Disclaimer: This article provides general information and does not constitute legal advice
