What Must Be in an Ontario Employment Contract?
How to check an Ontario employment contract for compliance
Ontario has no law that forces an employer to put an employment relationship into a signed written contract. The Employment Standards Act, 2000 (ESA) sets minimum standards that apply whether or not a written agreement exists, and an employee “may have greater rights under an employment contract, collective agreement, the common law or other legislation.” In practice, most employers do use written contracts, and the ESA imposes specific rules on what those contracts (and separate written notices) must say. The steps below walk through what has to be checked, in the order it matters most.
- Confirm the termination clause meets or exceeds ESA minimums. This is the single highest-stakes item in any Ontario contract.
- Remove or avoid any non-compete clause, unless a narrow statutory exception applies.
- Check wage-deduction language is specific, not a blanket authorization.
- Separately, issue the mandatory written disclosures the ESA requires outside the contract itself: wage statements, the ESA poster, and (for larger employers) job-information notices and workplace policies.
1. The termination clause must meet the ESA floor, or it is void
A termination clause in an Ontario employment contract sets out what notice or pay the employee gets if the employer ends the relationship without cause. The ESA sets a statutory minimum for this. Under the common law, if a contract’s termination clause provides for notice periods less than the ESA minimum, that clause is null and void, not just reduced to the minimum. The Supreme Court of Canada established this principle in Machtinger v HOJ Industries Ltd: where a termination clause fails to meet the statutory minimum, the employee is instead entitled to reasonable notice as implied by the common law, which is typically far more generous than the ESA floor. A clause that looks compliant on its face can still fail if it is ambiguous or tries to contract out of the ESA in substance.
2. Non-compete clauses are void, with narrow exceptions
Since October 25, 2021, Part XV.1 of the ESA prohibits Ontario employers from entering into non-compete agreements with employees. Any such clause entered into on or after that date is void. There are narrow exceptions, including certain business-sale situations and arrangements involving very senior executives, but outside those exceptions, a non-compete clause in a new Ontario employment contract has no legal effect even if the employee signs it.
3. Wage-deduction authorizations must be specific
If a contract (or a separate signed document) is meant to authorize the employer to deduct amounts from an employee’s wages, oral authorization or a general “blanket” statement that the employee owes money under certain circumstances is not enough. The written authorization must specifically state that the employer may make that particular deduction. A contract clause that broadly says “the employer may deduct any amounts owed” will not satisfy this requirement.
4. Separate written disclosures the ESA requires, outside the contract
These are not necessarily clauses inside the employment contract itself, but they are written documents the ESA obliges the employer to provide, and a contract review is incomplete without checking them.
| Requirement | Who it applies to | Timing |
|---|---|---|
| Written job information before first day | Employers with 25+ employees on the new hire’s first day (as of July 1, 2025) | Before first day, or as soon as reasonably possible after, if not practicable beforehand |
| Written wage statement | All employers covered by the ESA | On or before every pay day |
| ESA poster (official Ministry poster) | All employers covered by the ESA | Within 30 days of the person becoming an employee |
| Written disconnecting-from-work policy | Employers with 25+ employees on January 1 of the year | Copy given to new employee within 30 days of becoming an employee |
| Written electronic monitoring policy | Employers with 25+ employees | Must be maintained; does not restrict employer’s use of monitoring information already obtained |
The wage statement must set out the pay period, the gross wages and how they were calculated (unless provided some other way), vacation pay, deductions, and the net amount paid. The 25-employee threshold recurs across several of these obligations, so an employer sitting near that headcount should check its count on the relevant trigger date (the new hire’s first day, or January 1) for each rule separately, since the thresholds are not all measured the same way.
Why the ESA floor still controls even with a signed contract
An employer and employee can agree to terms more generous than the ESA, but they cannot contract below it. Any contract clause that tries to provide less than the statutory minimum on notice, deductions, or similar protected terms risks being struck down rather than simply topped up to the minimum, as the Machtinger case shows for termination clauses. This is why a template contract used for years without review can become a liability: if the ESA changes (as it did with the July 2025 written job-information rule, or the 2021 non-compete ban) and the contract is not updated, individual clauses can be voided even if the rest of the agreement remains valid.
Frequently asked questions
Is a written employment contract legally required in Ontario?
No. The Employment Standards Act, 2000 does not require every employment relationship to be documented in a signed contract; it sets minimum standards, and an employee may have greater rights under a contract, collective agreement, or the common law. This applies in Ontario.
Can an Ontario employment contract include a non-compete clause?
Generally no. In Ontario, non-compete agreements entered into on or after October 25, 2021 are void under Part XV.1 of the ESA, subject to narrow exceptions such as certain business-sale situations or very senior executives.
What happens if a termination clause pays less than the ESA minimum?
In Ontario, if an indefinite-term contract's termination clause falls below the statutory minimum notice, that clause is null and void, and the employee is instead entitled to reasonable notice under the common law, per the Supreme Court's decision in Machtinger v HOJ Industries.
Do small employers in Ontario have the same written-disclosure obligations as larger ones?
No. Some ESA obligations, such as written job information before a new hire's first day, a disconnecting-from-work policy, and an electronic monitoring policy, apply only to employers with 25 or more employees. Wage statements and the ESA poster apply to all employers covered by the Act, regardless of size.
Sources
- Ontario.ca, Your guide to the Employment Standards Act (overview) , Employment Standards Act, 2000, SO 2000, c 41 (ESA overview guide) (retrieved July 17, 2026)
- Ontario.ca, ESA Guide - Mandatory information for employees , Employment Standards Act, 2000, SO 2000, c 41 (written job-information requirement, in force July 1, 2025) (retrieved July 17, 2026)
- Employment Standards Act, 2000 (CanLII), s. 12(1) wage statements , Employment Standards Act, 2000, SO 2000, c 41, s. 12(1) (retrieved July 17, 2026)
- Employment Standards Act, 2000 (CanLII), ESA poster and disconnecting-from-work policy , Employment Standards Act, 2000, SO 2000, c 41, ss. 2(7), 21.1.2 (retrieved July 17, 2026)
- Ontario.ca, ESA Policy & Interpretation Manual, Part XI.1 Written Policy , Employment Standards Act, 2000, SO 2000, c 41, Part XI.1, s. 41.1.1(7) (retrieved July 17, 2026)
- Ontario.ca, ESA Policy & Interpretation Manual, Part XV.1 Non-Compete Agreements , Employment Standards Act, 2000, SO 2000, c 41, Part XV.1 (retrieved July 17, 2026)
- Ontario.ca, ESA Guide - Payment of wages , Employment Standards Act, 2000, SO 2000, c 41, s. 13(3) (retrieved July 17, 2026)
- Machtinger v HOJ Industries Ltd (SCC, CanLII) , Machtinger v HOJ Industries Ltd, [1992] 1 SCR 986, 1992 CanLII 102 (SCC) (retrieved July 17, 2026)