Few issues in Ontario employment law have generated as much uncertainty for employers as the enforceability of termination clauses containing the phrase “at any time.” Since the 2024 decision in Dufault v. The Corporation of the Township of Ignace, Ontario’s Superior Court has issued a string of conflicting rulings that have left employers, and their legal counsel, without a clear answer on whether this common contractual language will survive judicial scrutiny.
With the Ontario Court of Appeal scheduled to hear appeals in both Baker v. Van Dolder’s Home Team Inc. and Li v. Wayfair Canada ULC on March 26, 2026, this question may finally be resolved. For Ontario employers, the stakes could not be higher: the enforceability of your existing employment agreements may depend on how the Court of Appeal answers this question.
Why This Matters to Every Ontario Employer
Termination clauses serve a critical function in employment agreements. When properly drafted, they allow employers to limit an employee’s entitlements upon dismissal to the statutory minimums prescribed by the Employment Standards Act, 2000 (ESA), rather than the far more generous common law reasonable notice standard.
The difference is significant. Under common law, a terminated employee may be entitled to months, sometimes years, of reasonable notice or pay in lieu, depending on factors like their age, length of service, position, and the availability of comparable employment. By contrast, the ESA minimum entitlements are considerably more modest. For an employer terminating a long-service senior employee, the gap between common law notice and ESA minimums can easily represent hundreds of thousands of dollars in exposure.
A well-drafted termination clause can bridge that gap, but only if a court finds it enforceable. That’s precisely where the “at any time” debate enters the picture.
The Origin: Dufault v. The Corporation of the Township of Ignace(2024)
The current uncertainty traces back to a 2024 decision of the Ontario Superior Court of Justice. In Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029, the Court examined a termination clause that granted the employer the right to terminate the employee’s employment “at any time” and at its “sole discretion,” subject to providing ESA minimum entitlements.
The Court found the clause unenforceable. The reasoning was that the ESA does not grant employers an absolute right to terminate. Employers cannot, for instance, dismiss an employee upon the conclusion of a job-protected leave (s. 53 of the ESA) or as a reprisal for exercising a statutory right (s. 74 of the ESA). By purporting to allow termination “at any time” and at the employer’s “sole discretion,” the clause, at least theoretically, contemplated terminations that would contravene the ESA. Under the principle established in Waksdale v. Swegon North America Inc., 2020 ONCA 391, a provision that could permit a contravention of the ESA is void, even if no actual contravention occurred.
The clause in Dufault had additional deficiencies: the definition of “cause” did not align with the ESA standard of wilful misconduct, disobedience, or wilful neglect of duty, and the clause failed to address all types of wages payable during the statutory notice period.
When Dufault was appealed, the Ontario Court of Appeal (2024 ONCA 915) declined to address the “at any time” language directly. The Court upheld the trial decision on other grounds, specifically, the flawed “for cause” provision, and expressly left the “at any time” issue for a future appeal where it would be determinative of the outcome. The Supreme Court of Canada subsequently dismissed an application for leave to appeal (2025 CanLII 51603 (SCC)).
The Divide Deepens: Conflicting Decisions in 2025
What followed in 2025 was a series of Superior Court decisions that took Dufault in opposing directions.
Decisions Following Dufault
In Baker v. Van Dolder’s Home Team Inc., 2025 ONSC 952, the Court found itself bound by Dufault and struck down a termination clause that allowed the employer to terminate “at any time” without cause. Notably, the clause in Baker did not include the phrase “sole discretion”, yet the Court treated the “at any time” language alone as sufficient to render the provision unenforceable.
Later in 2025, Chan v. NYX Capital Corp. reached a similar conclusion, striking a clause containing “at any time and for any reason” language. The decision did not reference the contrary authorities discussed below.
Decisions Departing from Dufault
In Li v. Wayfair Canada Inc., 2025 ONSC 2959, the Court upheld a termination clause despite the inclusion of “at any time and for any reason” language. Justice Dow distinguished Dufault on several grounds: the clause in Li clearly and repeatedly referenced the ESA as the measure of the employer’s obligations; the definition of “cause” properly tracked the ESA standard; and the provision addressed all types of wages payable during the statutory notice period.
Similarly, in Jones v. Strides Toronto, 2025 ONSC 2482, Justice Moore explicitly held that Dufault does not stand for the proposition that the words “at any time,” divorced from the words “sole discretion,” are improper in an employment contract. While the termination clause in Jones was ultimately found unenforceable on other grounds, ambiguity in the “for cause” section, the decision provided important guidance on the scope of Dufault.
The Court of Appeal’s “Gold Standard”: Bertsch v. Datastealth Inc.
Amidst this uncertainty, the Ontario Court of Appeal delivered a welcome decision for employers in Bertsch v. Datastealth Inc., 2025 ONCA 379. The Court upheld a termination clause that limited the employee’s entitlements to ESA minimums upon termination “with or without cause.” The clause was straightforward: it stated that the employee would receive only the minimum payments and entitlements under the ESA and its regulations, and that compliance with the ESA satisfies any common law or contractual entitlement.
The Court rejected the argument that an ordinary person untrained in law might find the clause ambiguous, holding that the relevant question is how the agreement can reasonably be interpreted, not whether someone might misunderstand it.
The Datastealth clause has since been widely recognized as a model for Ontario employers seeking to draft enforceable termination provisions. Its simplicity is its strength: it avoids the problematic “at any time” and “sole discretion” language entirely while clearly and unambiguously limiting entitlements to ESA minimums.
What’s Coming: The March 26, 2026 Court of Appeal Hearing
The Ontario Court of Appeal is scheduled to hear the appeals in Baker and Li together on March 26, 2026. These two cases present the issue squarely: Baker invalidated a clause for containing “at any time,” while Li upheld a clause with the same, and arguably broader, language.
The Court of Appeal will need to address whether the phrase “at any time” is inherently problematic, or whether the enforceability of a termination clause depends on a holistic reading of the provision in context. Whatever the Court decides, the outcome will have significant implications for employers across Ontario.
If the Court follows the reasoning in Baker and Dufault, employment agreements containing “at any time” language, which describes a substantial number of existing contracts, may be unenforceable. If it follows the approach in Li and Jones, the focus will shift to whether the clause, read as a whole, complies with the ESA.
What Ontario Employers Should Do Now
Regardless of how the Court of Appeal rules, employment lawyers know that the best time to address termination clause risk is before a dispute arises. There are several practical steps employers should consider.
Review your existing employment agreements. If your current termination clauses contain language like “at any time,” “for any reason,” or “sole discretion,” those provisions may be vulnerable to challenge, depending on how the Court of Appeal rules. Identifying the issue now is far less costly than discovering it during litigation.
Consider adopting the Datastealth model. The clause upheld in Bertsch v. Datastealth Inc. is currently the most authoritative template endorsed by the Ontario Court of Appeal. It avoids the contentious language at the centre of the Dufault debate and clearly limits entitlements to ESA minimums. Your employment lawyer can tailor this language to your business needs while preserving its enforceability.
Ensure the entire clause is compliant, not just the “without cause” section. A recurring lesson from this line of cases is that a deficient “for cause” provision can invalidate the entire termination clause, including the “without cause” provision. Your definition of “cause” should track the ESA standard, and your clause should address all types of wages payable during the statutory notice period, including vacation pay, benefit contributions, and any other entitlements required under the ESA.
Don’t rely on saving language alone. General statements that an agreement “will comply with the ESA” have repeatedly been found insufficient to rescue a clause that substantively contravenes the statute. The clause itself must be compliant, not merely accompanied by a good-faith promise of compliance.
Provide fresh consideration when updating existing agreements. When presenting a current employee with a revised employment agreement, the new agreement must be supported by fresh consideration, something of value beyond the continuation of existing employment. This might include a one-time signing bonus, a salary increase, or another tangible benefit. Without fresh consideration, the new termination clause may not be enforceable.
Monitor the Court of Appeal’s decision. The outcome in Baker and Li will shape termination clause drafting for years to come. Once the decision is released, employers should move quickly to assess its impact on their existing agreements and update their templates accordingly.
How Greenwood Law Can Help
At Greenwood Law, our employment lawyers regularly advise Ontario employers on drafting, reviewing, and defending termination provisions. We understand that employment agreements are not just legal documents, they are risk management tools that protect your business when the employment relationship comes to an end.
Whether you need a comprehensive review of your current employment agreement templates, guidance on updating existing contracts with fresh consideration, or defence of a termination clause that has been challenged in litigation, our team can help. Led by Jessyca Greenwood, whose experience spans all court levels across Canada, we provide strategic, practical counsel that aligns legal protection with business objectives.
If you have questions about how the Dufault line of cases affects your organization, get in touch for a consultation.
This article provides general information about employment law in Ontario and does not constitute legal advice. The enforceability of termination clauses is highly fact-specific and depends on the precise language of each agreement. For advice tailored to your specific situation, contact Greenwood Law for a confidential consultation with an experienced employment lawyer.
Sources & References
Legislation
- Employment Standards Act, 2000, S.O. 2000, c. 41, ss. 53, 54, 57, 60, 61, 74
- Employment Standards Act, 2000, O. Reg. 288/01
Case Law
- Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029 (ONSC)
- Dufault v. Ignace (Township), 2024 ONCA 915 (ONCA)
- Dufault v. Ignace (Township), 2025 CanLII 51603 (SCC) (leave to appeal dismissed)
- Baker v. Van Dolder’s Home Team Inc., 2025 ONSC 952 (ONSC)
- Li v. Wayfair Canada Inc., 2025 ONSC 2959 (ONSC)
- Jones v. Strides Toronto, 2025 ONSC 2482 (ONSC)
- Chan v. NYX Capital Corp., 2025 ONSC (ONSC)
- Bertsch v. Datastealth Inc., 2025 ONCA 379 (ONCA)
- Waksdale v. Swegon North America Inc., 2020 ONCA 391 (ONCA)
- Amberber v. IBM Canada Ltd., 2018 ONCA 571 (ONCA)
