Howard Levitt: When updating the company handbook becomes a lawsuit-in-waiting 

Contract modifications are only binding if both sides receive something of value, write Howard Levitt and Candice Malan. Photo by Getty Images/iStockphoto

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January is the month for resolutions, fresh starts and, for far too many employers, the annual exercise in corporate self-sabotage known as ‘updating’ the company handbook.

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Across Canada, HR departments are busily circulating ‘enhanced’ codes of conduct and ‘modernized’ employment policies. But what looks like routine housekeeping often carries catastrophic legal consequences. Courts have been delivering a blunt, consistent message: employers cannot unilaterally rewrite employment terms under the guise of a New Year reset without exposing themselves to massive wrongful and constructive dismissal claims.

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The consideration crisis

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The most common pitfall in the ‘New Year, New Handbook’ ritual is the failure to provide fresh consideration, i.e., something of value in exchange for the new or modified term.

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Under Canadian law, you cannot simply hand an existing employee a more restrictive set of rules — a shortened notice period, a harsher disciplinary regime or tighter control over how and where work is done — and expect them to be enforceable. Continued employment is not consideration. That is a legal nullity.

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This was reaffirmed yet again by the Ontario Court of Appeal in Giacomodonato v. PearTree Securities Inc. (2024). Contract modifications are only binding if both sides receive something of value.

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To make new policies stick, employers must offer a tangible quid pro quo: a signing bonus, a salary increase or even an extra week of vacation. Without that, a January update is a legal mirage — impressive until it evaporates in court.

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The return-to-office illusion

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January is also when many employers attempt to ‘reclaim’ the office. This, too, is a legal minefield.

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Recent jurisprudence makes it clear that workplace flexibility is no longer a temporary pandemic perk. It has become, in many cases, a vested contractual right.

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In Byrd v. Welcome Home Children’s Residence Inc. (2024), the Ontario Superior Court held that recalling an employee after more than a year of remote work constituted constructive dismissal.

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British Columbia followed suit in Parolin v. Cressey Construction Corp. (2025), where long-standing flexible arrangements were found to be implied, binding terms of employment. Alberta went even further in Nickles v. 628810 Alberta Ltd. (2025), ruling that a 37-year remote arrangement was so fundamental to the contract that a return-to-office mandate was a wholesale breach.

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Employers who abruptly impose a January return-to-office edict without consent or meaningful notice are not ‘managing’ their workforce. They are financing early retirements. By unilaterally changing the location of work, they hand employees the legal ammunition to walk out and sue for every penny of common-law notice — all in the name of filling cubicles.

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The termination-clause trap

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Perhaps the most dangerous piece of January housekeeping is tinkering with termination provisions.

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Many employers assume that if a new policy appears in the handbook, it automatically overrides prior contracts. Wrong.