How to Get Existing Employees to sign off on a new Employee handbook? Enter Consideration.

consideration to sign off employee agreement before hire

Congratulations. You're finally ready to launch that new employee handbook - the one that sets out new conduct policies and rules that your existing employees are now expected to adhere to.

Now what? How do you get existing employees to sign off on your shiny new handbook when what you're essentially doing is changing their terms of employment?

Enter Consideration

Enter 'consideration'. Here's a quick example to demonstrate the difference between a gratuitous promise and a contract. 

If someone said to you, “I'll give you a "Porsche," and you said, "That sounds good," that would be a gratuitous promise that's not enforceable. But if that same person said, “I'll give you a Porsche for $5," and you said, “I accept,” that would be a binding contract.

The difference? In the second example, there's “consideration” flowing both ways — you get the car, they get the cash. In order to have a valid contract, both parties must receive some sort of benefit from the other.

This is important because in the case of employment, all employees have an employment contract. Your company may have written agreements, verbal agreements, or agreements that are 'understood by the law'. If your company wants to put new rules in place (aka an amended contract that changes the terms of employment), you have to offer something to the individual in exchange for their signed agreement. 

You can't launch a Handbook and expect sign-off without consideration

You can't put a new contract in front of a staff member during a performance review or during a quick after-work cocktail and tell them to sign. It aggravates the situation when a person in authority assures the individual that there's “nothing to worry about”; that the new contract simply confirms what "we both already know".  Another vodka soda, Bill?  

We all know that's not the case.  The company's intention is to insert new terms and conditions into the employment contract, otherwise, there'd be no reason to have the new agreement in the first place.

Two options for getting sign-off

Once there is an existing agreement, written or otherwise, there are two ways to establish a new written agreement.

Option 1. Provide Consideration (Recommended) 

The first, and usually preferable, approach is to provide some sort of consideration. The law is clear in saying the consideration must be something of value, but otherwise vague in defining what that might be. It could be an increase in compensation, a promotion, new benefits, additional vacation time or anything else of value. Promotions are an excellent opportunity to put a new contract in place.

Similarly, salary increases and bonuses are appropriate consideration as long as they would not have been paid regardless of whether the individual signs the new contract. If it's an automatic bonus or salary increase, it won't be deemed consideration since the company had to provide it anyway.

TIP:   While consideration is often thought of as a monetary payment, it can also include some of the new or improved benefits that are provided in the Employee Handbook. Odds are that your new Handbook will include some kind of additional perk for employees and not just a list of conduct policies. For example, if you've never had sick days, or your vacation policy provided the bare minimum, but now with the launch of your new handbook you're adding or improving these benefits, that's consideration!  

Option 2.  Provide Notice

The other way to put a new contract in place is to provide notice of the change. Effectively, what your company would be doing is providing notice that the existing employment contract will terminate on a specified date in the future and be replaced by the new agreement. The amount of notice required would be equivalent to the amount of notice required if your company was going to dismiss the employee without cause, as opposed to the amount of notice required by Employment Standards. Common law notice can be substantial. While some recent cases have resulted in a degree of uncertainty, it's still effective in most circumstances to provide notice in this manner.

Why we mention this up front

It's important that you understand the concept of consideration in contract law, particularly as it applies to employees, whom the courts see as having reduced and unfair bargaining power when compared to that of your company.  

You'll need to discuss the matter of consideration with a decision maker in your company, and determine what your strategy will be to get employees to sign off on your new Employee Handbook.  This is a one-time issue. Once you launch your Handbook and get sign-off from existing Staff, all new hires will sign-off before they start as part of their engagement contract.

Ariane Laird Vancouver

Ariane Laird is CEO & Founder of ConnectsUs HR, a company that provides tools & resources to quickly set up a Human Resources department.  
You can contact her directly from the Inquiry Type drop down menu.