Ask the ExpertConsideration Given for New contracts
hri_Admin Staff asked 3 years ago

Hello,
We are looking at having all of our employees sign updated contracts as ours are currently outdated and inconsistent. From what I understand, there needs to be a form of consideration given for an employee to sign a new contract. Do you know if we could simply have employees sign at raise time and that would be the consideration? Each year our employees receive an increase in March, so we were hoping to have them re-sign then with new salaries. But I was not sure if an annual increase would not be considered consideration.

2 Answers
Glenn Demby Staff answered 3 years ago

Funny you should ask. We just did a bunch of stuff on precisely that issue, i.e., the need to provide consideration for contract changes. If it’s not up yet and u want to see it, email me at glennd@bongarde.com and I’ll send it to u.
As for your specific question, NO, a raise that was previously agreed to would not constitute consideration. Basic contract law: Something you’re already contractually obligated to do isn’t consideration. You need to provide some form of new value. Of course, this is assuming that the raise is exactly the one agreed to previously. If you increase the raise amount or offer more generous terms, that would be consideration.
Hope that  helps. Glenn

Glenn Demby Staff answered 3 years ago

Thanks so much for your help.
In this case we do not have anything written that states employees receive a raise each year, it has just become customary for us to do this. So technically we could not provide raises one year and there would be no documentation that we were doing anything wrong. Does that change anything?