“It was just a free promise that was legally inapplicable.” As my contract teacher in our first-year law class explained, the difference between a binding contract and a free promise lies in the existence or lack of consideration. One example he used was to go to class, admire a student`s shirt and give them $1,000,000. If the student accepted the offer, there would be a binding contract since both parties would receive consideration (a benefit) from the other. Conversely, if our teacher went into the room and offered to give $1,000,000 to one of the students, and the student agreed, it would not be a contract, but a free promise. The difference is that the teacher would receive nothing for pay. When the parties enter into such an agreement, it is clear that the employer receives a benefit because the worker has accepted a number of conditions that benefit the employer. But what does the employee receive in return? In the typical scenario, they will have already agreed on their position, their duties and various forms of compensation and benefits. You will not get anything new under the written contract. In other words, they did not receive consideration and most lawyers and courts would find that the written employment contract is not applicable.
How does this represent labour law? Like any other contract, the principle of consideration applies. The fundamental basis of any employment contract is that the worker works and the employer pays them. Unfortunately, the typical recruitment process includes a series of interviews in which there may be some discussion about key concepts of the relationship, such as salary expectations, weeks off and the workplace. At some point, the employer`s representative will likely inform the applicant that he or she has been selected, confirm the salary and other essential conditions of the agreement, and propose a launch date. If the employee agrees, a verbal agreement has been reached. Under the law, this agreement encompasses all terms that have been explicitly debated, as well as many other terms that are subject to the law (both the Labour Standards Act and the Common Law). These include the employer`s obligation to terminate an appropriate dismissal unless there is a reasonable reason.