by eruditelaw | Sep 30, 2025 | Blog Post, Employment Law, Uncategorized
On July 9, 2025, the Ontario Superior Court of Justice released its decision in Li v. Wayfair Canada ULC, 2025 ONSC 2959. The case addresses the enforceability of termination provisions in an employment contract and how they stand up against the Court of Appeal’s guidance in Dufault v. Township of Ignace.
Facts of the Case
Song Li was hired by Wayfair Canada ULC as a Senior Product Manager in January 2023. His compensation package was lucrative, including a salary of $221,564, benefits, RRSP contributions, and potential restricted stock units (RSUs). After just under nine months of service, Li was dismissed without cause in October 2023.
Upon termination, Li received one week of salary and benefits—exactly the minimum entitlements under Ontario’s Employment Standards Act, 2000 (the “ESA”). No letter of reference or outplacement services were provided.
Li brought an action for wrongful dismissal, seeking summary judgment. He argued that the termination clauses in his employment agreement were unenforceable, which would entitle him to common law reasonable notice.
The Plaintiff’s Arguments
Li challenged both the “for cause” and “without cause” provisions in the agreement:
- For Cause: The agreement allowed termination “at any time for Cause without notice… unless expressly required by the ESA.” Li argued this language unlawfully deprived employees of ESA protections, contrary to Dufault v. Township of Ignace.
- Without Cause: The clause restricted entitlements to “only the minimum statutory amounts” under the ESA. Li argued that this unlawfully narrowed his rights and therefore invalidated the entire termination provision.
Relying on Dufault, Li argued that because one aspect of a termination clause was non-compliant, the whole termination regime fell. He sought five months’ common law notice, which would also have captured a $73,017 USD RSU grant scheduled to vest in February 2024.
The Defendant’s Arguments
Wayfair countered that the contract was enforceable:
- The “for cause” language expressly incorporated the ESA definition of cause.
- The “without cause” language repeatedly tied entitlements to the ESA’s minimum requirements, making it ESA-compliant.
- Li had already received all that the ESA required.
The company also argued that Li failed to mitigate, noting he applied for only 28 jobs in five months, some at levels (such as Vice President) for which he was not qualified.
The Court’s Decision
Justice Dow upheld the enforceability of the termination provisions. Unlike in Dufault, the Wayfair contract expressly tied the definition of “cause” to the ESA and clearly provided ESA minimums for without-cause terminations. The Court distinguished Dufault on this basis, finding that the clause in that case omitted required entitlements and used broader language (“any time”) without tethering to the ESA.
Because the contract was valid, Li was limited to the ESA minimum of one week’s salary and benefits, which he had already received. His claim for common law notice was dismissed.
What If the Clause Had Been Invalid?
In obiter, the Court noted that if the termination clause were unenforceable, it would have awarded Li four months’ common law notice (not the five he claimed). This would have included entitlement to the February 2024 RSUs, as courts generally treat stock options and bonuses as part of compensation during the notice period (Paquette v. TeraGo Networks).
Key Takeaway
This decision reaffirms that Ontario courts will carefully parse termination provisions to ensure they comply with the ESA. Employers can take comfort that clauses explicitly referencing and incorporating ESA definitions—especially around “cause”—are more likely to be upheld.
At the same time, Li highlights that employees continue to test these clauses, often relying on Dufault. The difference lies in the drafting: if an agreement fails to track the ESA minimums precisely, it risks being struck down, with significant common law liability as the result.
Need More Information?
For more information or assistance related to employment contracts or ending the employment relationship, contact us at info@eruditelaw.com
The contents of this blog is not legal advice.
by eruditelaw | Mar 6, 2024 | Blog Post, Employment Law
Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029: Employers may not have “sole discretion” in terminating an employee without cause.
In recent years, employers have been dealt blow after blow as Ontario Courts continue to find ways to void termination provisions in employment contracts. Last month, the Ontario Superior Court of Justice continued this trend by finding that an employment contract was unenforceable because, among other reasons, it allowed the employer to terminate the employee’s employment in its “sole discretion” and “at any time”.
The employee, Karen Dufault, entered into a fixed-term employment contract of two years with the defendant employer, The Corporation of the Township of Ignance. The employer subsequently terminated her employment, without cause, two months into the employment relationship.
Ms. Dufault then brought an action against the Township for salary and benefits for the remaining term of the employment contract. She argued that the termination clauses in the employment contract violated the Employment Standards Act (“ESA”). Specifically, Ms. Dufault argued that:
- the “for cause” termination clause allowed for termination without notice in broader circumstances than permitted by the ESA;
- the “without cause” termination clause suggested that the employer could pay less payment in lieu of notice than would be required by the ESA; and
- the “without cause” termination clause opened the door to allow the employer to terminate employment in its “sole discretion” and “at any time”.
The Court accepted Ms. Dufault’s arguments and held that the employment contract was not enforceable because:
- the employment agreement would have allowed the employer to terminate the employment relationship “for cause” for reasons that did not meet the standards under the ESA for termination without notice;
- the employment agreement attempted to limit the payment in lieu of notice to “base salary”, which is less than the requirement amount pursuant to the
Finally, and perhaps most problematic of all for lawyers and employers is that the Court held that the termination “without cause” provision was invalid because it allowed the employer to terminate an employee in its “sole discretion” and “at any time”:
[46] Thirdly, the plaintiff submits that Article 4.02 misstates the ESA when it gives the employer “sole discretion” to terminate the employee’s employment at any time. I agree with this submission. The Act prohibits the employer from terminating an employee on the conclusion of an employee’s leave (s. 53) or in reprisal for attempting to exercise a right under the Act (s. 74). Thus, the right of the employer to dismiss is not absolute.
The Court reasoned that this would allow an employer to terminate an employee even if they were returning from protected leave or due to reprisal for the employee exercising their legal rights.
As a result, Ms. Dufault was entitled to her salary and benefits for the remainder of the fixed term employment contract.
Takeaways
While it remains to be seen whether this decision will be appealed, the growing body of case law voiding termination provisions are becoming increasing strict. Employers and their lawyers should be mindful of these new developments and review their employment agreements regularly to determine whether their contracts require revisions for both new and existing employees.
A copy of the decision is linked here: Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029
The contents of this blog is not legal advice. If you would like your employment contract reviewed, contact our team of lawyers at Erudite Law LLP for a consultation.
by Alvin Leung | Jul 20, 2021 | Blog Post, Employment Law
To begin, it is important to note that an employer cannot require an employee to be vaccinated for COVID-19. The federal and provincial governments have not made it mandatory for all people to be vaccinated; as such, an employer’s workplace policies cannot make it mandatory.
KEY TAKEAWAYS
• Employers cannot require employees to be vaccinated.
• Employers may ask if an employee has been vaccinated.
• Employers must be mindful of privacy and human rights concerns.
However, an employer may ask an employee if they have been vaccinated. And while this may be regarded as a violation of privacy rights, an employer has an obligation under law to maintain a safe workplace. This obligation overrides any privacy concerns. Having knowledge of which employees have been vaccinated can help an employer determine, among other things, how to assign duties and roles, and which employees are best suited for face-to-face contact with clients. Safety, not only for employees, but for customers as well, is a chief concern for employers who wish to avoid potentially serious liability. Interacting with employees that either lie about or do not wish to disclose their vaccination status or dealing with customers who sue because they contracted COVID-19 after interacting with an infected employee are but a few of the new challenges that businesses are faced with. Thus, it is crucial for an employer to know whether an employee has received any of the recommended vaccination shots.
When collecting such personal information from employees, employers should clearly communicate their reasons, and are advised to be reasonable in their approach, gathering only the amount of information that is necessary. More importantly, an employer must avoid creating a workplace in which non-vaccinated employees are stigmatized, harassed, or bullied. Employers must be mindful that some of their workers may have legitimate reasons for not getting vaccinated – reasons which may be protected under human rights law (e.g., medical or religious reasons).
The collected information is to be kept private and cannot be shared without the consent of the employee. For example, as businesses across Ontario begin to open up, customers may ask about the vaccination status of certain employees, particularly in the hospitality, personal care, and retail sectors. An employer must be cautious not to divulge the personal information of employees that have not consented.
The new COVID-19 landscape is forcing companies to adjust their workplace policies. Moreover, it is forcing business owners to ask uniquely tough questions. For example, can an employer require a new hire to be vaccinated? Can employees be incentivized to get vaccinated? What is the extent of the duty to accommodate and how does it apply to employees who refuse to get vaccinated?
Whether you are an employer or an employee, we would be glad to go into further detail on these recent issues and address any of your concerns.
Feel free to send us an e-mail at info@eruditelaw.com or call us at 905-471-6161 to speak with one of our Employment Law and Civil Litigation practitioners.
Authors: Ben Brillantes
