Baker v. Van Dolder: ONCA Upholds ‘At Any Time’ Termination Clauses

Baker v. Van Dolder: ONCA Upholds ‘At Any Time’ Termination Clauses

by | Aug 19, 2026 | Employment Law

In Baker v. Van Dolder’s Home Team Inc., 2026 ONCA 568, the Ontario Court of Appeal clarified how courts should interpret termination clauses that permit an employer to terminate employment “at any time” or “for any reason.”

The Court held that these phrases do not automatically violate the Employment Standards Act, 2000 (the “ESA”). Termination provisions must be read practically, in the context of the employment agreement as a whole, rather than by isolating individual words and considering hypothetical interpretations.

The Facts of the Two Cases

Frederick Baker began working for Van Dolder’s Home Team Inc. in November 2020 as its Controller and Head of Finance. His employment agreement allowed the company to terminate his employment without cause “at any time” by providing the minimum notice, termination pay and, if applicable, severance pay required by the ESA.

The agreement also contained a for-cause provision. Although it defined cause more broadly than the ESA’s wilful-misconduct standard, it expressly preserved any minimum compensation and entitlements required by the ESA. A separate clause stated that the employer would comply with the ESA “at all times.”

Van Dolder terminated Mr. Baker’s employment without cause in March 2023. He received his minimum ESA entitlement of two weeks’ termination pay. Mr. Baker brought a wrongful dismissal action, arguing that the termination clauses were unenforceable and that he was entitled to common-law reasonable notice.

The Superior Court agreed with Mr. Baker. It found that the words “at any time” could permit termination in circumstances prohibited by the ESA. The employer appealed.

The Court heard the appeal together with Li v. Wayfair Canada ULC. Song Li’s agreement allowed Wayfair to terminate his employment without cause “at any time and for any reason,” while repeatedly confirming that he would receive no less than his minimum ESA entitlements.

Wayfair terminated Mr. Li’s employment after approximately nine months and provided one week of salary and benefit continuation. The Superior Court upheld his termination clause, and Mr. Li appealed.

The result was two appeals involving similar contractual language but conflicting lower court decisions.

Are “At Any Time” and “For Any Reason” Enforceable?

The Court of Appeal upheld both without-cause termination provisions.

The Court confirmed that employment agreements require careful scrutiny because of the power imbalance between employers and employees and the remedial purpose of the ESA. An employment contract cannot provide less than the ESA requires, and a genuinely ambiguous termination clause should generally be interpreted in the employee’s favour.

However, a clause is not ambiguous merely because counsel can identify a possible or hypothetical interpretation. There must be two or more reasonable interpretations when the agreement is read as a whole.

In Mr. Baker’s agreement, the phrase “at any time” meant that a without-cause termination could be contractually effective whenever it occurred, provided that the termination complied with the agreement and applicable legislation. It did not authorize dismissal following a protected leave, as an unlawful reprisal or in other circumstances prohibited by law.

The Court reached the same conclusion concerning “for any reason” in Mr. Li’s contract. Those words meant that Wayfair did not need to establish cause or provide a particular business reason for ending the employment relationship. They did not permit Wayfair to terminate an employee for a reason prohibited by the ESA, the Human Rights Code or another statute.

The For-Cause Provision

The Court also upheld the for-cause provision in Mr. Baker’s agreement.

Common-law just cause and the ESA’s wilful-misconduct standard are not the same. An employer may have just cause at common law but still be required to provide the employee’s minimum ESA entitlements because the statutory standard is more demanding.

Although Mr. Baker’s agreement defined cause broadly, it expressly preserved any minimum compensation and entitlements required by the ESA. The Court found that this language brought the provision into compliance with the ESA.

The agreement was not required to explain the legal difference between common-law just cause and statutory wilful misconduct. It was sufficient that the employee’s minimum ESA entitlements were clearly preserved.

What Was the Outcome?

The Court allowed Van Dolder’s appeal and dismissed Mr. Baker’s wrongful dismissal action. It also dismissed Mr. Li’s appeal and upheld Wayfair’s termination clause.

Because the clauses were enforceable and both employees had received their ESA minimums, neither was entitled to common-law reasonable notice.

Does Waksdale Still Apply?

Yes. Waksdale v. Swegon North America Inc., 2020 ONCA 391, remains binding law in Ontario.

Under Waksdale, termination provisions are generally considered together. A clause that violates the ESA may render the entire contractual termination scheme unenforceable, even if the employer relied on another provision when dismissing the employee.

The Court declined to reconsider Waksdale because the termination provisions before it were ESA-compliant. Employers should therefore not treat Baker as overruling or weakening Waksdale.

What Does This Mean for Ontario Employers and Employees?

Baker provides welcome clarity, but it does not mean that every agreement containing the words “at any time” or “for any reason” will be enforceable. The entire agreement must still comply with the ESA and clearly preserve minimum notice, termination pay, benefit continuation and any applicable severance pay.

Employers should review their employment agreements following this decision. Employees should obtain legal advice before accepting a termination package or signing a release, as the difference between ESA minimums and common-law reasonable notice can be substantial.

Our Ontario employment lawyers advise employers and employees on employment contracts, wrongful dismissal, termination packages and ESA compliance. Contact our firm to discuss how Baker v. Van Dolder may affect your rights or obligations.

This article provides general information only and does not constitute legal advice.

Ontario Court Upholds Termination Clause in Li v. Wayfair Canada ULC

by | 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.

Dufault v. The Corporation of the Township of Ignace – Invalid “Without Cause” Termination Clause in Employment Contract

by | 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:

  1. the “for cause” termination clause allowed for termination without notice in broader circumstances than permitted by the ESA;
  2. 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
  3. 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:

  1. 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;
  2. 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.

Termination of Employment: With Cause, Without Cause and Reasonable Notice

by | Sep 10, 2020 | Blog Post, Employment Law

In Ontario, an employee can be dismissed in one of two ways:

  1. Termination for cause; or
  2. Termination without cause.

Termination for cause

When an employer terminates an employee for cause the employee will not be entitled to any compensation with regards to the dismissal. At law, this form of compensation is typically referred to as “reasonable notice”, “common law notice” or “termination pay”. Given that termination for cause is extremely prejudicial to the former employee, it has been labelled as being an extremely severe and punitive measure to be taken only in the most serious circumstances. As such, the courts have established a very high standard for an employer seeking to terminate an employee for cause.

Standards for terminating an employee with cause

There are two different standards that can be applied to determine if “just cause” for termination has been established:

  1. Under the Employment Standards Act: the employee was guilty of “wilful misconduct…that is not trivial and has not been condoned by the employer” ; or
  2. Under Common Law: the employee was guilty of basis prolonged incompetence and/or serious misconduct which led to “just cause” for termination.

The standard applied depends on whether or not there is an enforceable termination clause in the employment agreement.

If there is an enforceable, binding employment agreement, with an enforceable termination clause, that is in compliance with the Employment Standards Act, the standard of “willful misconduct” will apply. Alternatively, in the absence of an enforceable employment agreement, the common law standard of “just cause” will apply.

In the case of Plester v. PolyOne Canada Inc. 2011 ONSC 6068, the Ontario Superior Court of Justice made the following assertions on the difference between termination for cause under the Employment Standards Act (“wilful misconduct”) and at common law (“just cause”):

“Just cause involves a more objective test, albeit one that takes into account a contextual analysis and therefore has subjective elements. Wilful misconduct involves an assessment of subjective intent, almost akin to a special intent in criminal law.”

In summary, in order for an employer to terminate an employee under the Employment Standards Act, the employer will have to demonstrate that the employee intentionally engaged in serious misconduct. In the absence of an enforceable termination provision or an employment agreement, the burden to establish termination for cause at common law is lowered as the employer is only required to prove the act of serious misconduct.

Termination Without Cause

Termination without cause refers to when an employer terminates an employee without providing a reason for terminating the employee. To put it simply, termination for cause is when an employer dismisses an employee for reasons that are usually not related to serious workplace misconduct.

When an employee is dismissed without cause they are entitled to reasonable notice of termination – that being a reasonable amount of time in which the employee should be notified that their employment will be terminated.

What is reasonable notice?

There are two ways in which reasonable notice can be provided to the dismissed employee:

Working Notice – the amount of time the employee will working prior to the set termination date; or

Pay in lieu of Notice – payment equal to the amount of working notice the employee should have received.

Common law notice or statutory notice

The length of reasonable notice afforded to employees dismissed is determined by whether or not they are receiving statutory notice or common law notice. The length of statutory notice is determined by the Employment Standards Act, whereas common law notice is determined by evaluating several factors, which are discussed below.

Statutory notice is applicable when the employee has a valid employment agreement, with a valid termination clause, which limits the notice period to the notice period provided in the Employment Standards Act.

Reasonable notice under the Employment Standards Act

The reasonable notice periods under the Employment Standards Act are as follows:

Amount of notice required if an employee has been continuously employed for at least three months:

Period of employment                              Notice required

Less than 1 year                                                  1 week

1 year but less than 3 years                         2 weeks

3 years but less than 4 years                       3 weeks

4 years but less than 5 years                       4 weeks

5 years but less than 6 years                       5 weeks

6 years but less than 7 years                       6 weeks

7 years but less than 8 years                       7 weeks

8 years or more                                                   8 weeks

Reasonable notice requirements at common law

An employee who receives statutory notice may claim that they were wrongfully terminated as they did not receive sufficient notice and seek common law notice as the common law notice period is typically longer. An employee who is terminated without reasonable notice is entitled to damages for breach of contract asserted on the employment income the employee would have earned during the reasonable notice period. The length of reasonable notice is determined by the following principles as listed in the case of Paquette v. TeraGo Networks Inc., 2015 ONSC 4189:

  1. The character of employment. A longer notice period is provided for senior management or highly skilled and specialized employees and a shorter period is provided for lower rank or unspecialized employees
  2. The length of employment. Generally, the longer the duration of employment, the longer the notice period;
  3. The age of the employee at termination. A longer notice period will usually be justified for older long-term employees; and
  4. The availability of similar employment having regard to the experience, training and qualifications of the employee. Economic factors such as a downturn in the economy or in a particular industry or sector of the economy can also play a factor as they may indicate that an employee may have difficulty finding another position and may justify a longer notice period.

It is important to note that the determination of what period constitutes reasonable notice of termination is a principled art and not a mathematical science that turns on the particular facts of each case. There is no “right” figure for reasonable notice. Most cases yield a range of reasonable figures;

Conclusion

It is crucial for employers and employees alike to understand their rights and responsibilities as set out both in statute and in common law.

Employers should be cautious in drafting their employment agreements as particular language and reference to the Employment Standards Act is required to limit notice period to the statutory minimum. Invalid termination clauses can cause expensive litigation for both parties.

If you have questions regarding your employment contracts, whether or not you have been provided adequate notice, or any other employment issue contact by phone at 905-471-6161 or email us at info@eruditelaw.com.