The Ontario Superior Court of Justice has once again struck down a minimum standards termination clause within an employment contract.
In Baker v. Van Dolder’s Home Team Inc., 2025 ONSC 952 (“Baker“), an employee was terminated without cause. The employment contract contained a termination clause which purported to limit the employee’s entitlements upon termination. At issue was whether the termination provision was enforceable or in breach of the Employment Standards Act (the “ESA“). In order to address this dispute in an expeditious manner, the parties agreed to determine the case on a motion for summary judgment.
The Plaintiff submitted that the without cause portion of the termination provision breached the ESA by allowing the Defendant to terminate the Plaintiff’s employment “at any time“, albeit on a without cause basis.
Justice Sproat in reliance of the trial judge’s decision in Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029 held that termination clauses which allow an employer to terminate an employee “at any time” are in breach of the ESA and are therefore, unenforceable. Furthermore, Justice Sproat held that termination provision could not be saved by language stating that the employer will comply with the ESA.
Justice Sproat also reaffirmed the Court of Appeal’s decision in Waksdale v. Swegon North America Inc., 2020 ONCA 391, which held that a termination “with cause” provision must comply with the ESA’s standard of “wilful misconduct, disobedience, or wilful neglect of duty that is not trivial and has not been condoned by the employer.” In Baker, the employer’s termination clause failed to meet this standard, rendering it unenforceable.
The decision in Baker provides clarity that termination clauses permitting a termination “at any time” will be held unenforceable and that “with cause” provisions must meet the ESA’s wilful misconduct standard. This case serves as yet another reminder that termination clauses must be carefully drafted and frequently updated to comply with the ESA. Otherwise courts will not hesitate to strike down termination provisions, resulting in employers having to pay reasonable notice at common law.
This publication is intended for general information purposes only and should not be relied upon as legal advice.
