The idea that employers cannot terminate employees "at any time,” without constraint, has been a point of contention in employment law. While Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029, (“Dufault”) was initially viewed by some as an outlier decision, the recent ruling in Baker v. Van Dolder’s Home Team Inc., 2025 ONSC 952, (“Baker”) suggests otherwise.
Baker represents a continuation of the judicial scrutiny applied in Dufault, reinforcing the limitations courts impose on termination provisions that purport to allow dismissal without adherence to statutory and common law principles.
The effect of Baker was either one of disappointment or clarity, but it makes one thing clear: an employer cannot fire an employee “at any time” without running afoul of Ontario’s Employment Standards Act 2000 (the “ESA”).
In Baker, Justice Sproat was tasked with determining the enforceability of the “with cause” and “without cause” termination provisions. In his finding, Justice Sproat gave deference to Dufault, and concluded that the “without cause” provision was unenforceable because the ESA does not allow an employer to terminate employment “at any time.” It is worth noting that the explicit language in the clause indicating the employer’s intent to comply with the ESA was irrelevant.
For ease of reference, the without-cause provision stated:
Termination without cause: we may terminate your employment at any time, without just cause, upon providing you with only the minimum notice, or payment in lieu of notice and, if applicable, severance pay, required by the Employment Standards Act. If any additional payments or entitlements, including but not limited to making contributions to maintain your benefits plan, are prescribed by the minimum standards of the Employment Standards Act at the time of your termination, we will pay same. The provisions of this paragraph will apply in circumstances which would constitute constructive dismissal.
At first glance, the phrase “at any time” might seem innocuous, but the problem is that it suggests employers have an unrestricted right to terminate an employee’s employment. In Dufault, the same phrase was enough to invalidate the entire termination clause simply because the ESA explicitly prohibits certain types of terminations, including those that happen:
- when an employee is on a protected leave;
- in retaliation for exercising their rights under the ESA;
- that circumvent the required notice or severance entitlements; and/or
- where the termination is made in bad faith, often to sidestep legal obligations.
In light of Baker and Dufault, a termination clause suggesting that an employer has unfettered discretion in firing an employee likely violates the ESA. When part of a termination clause potentially violates the ESA, the entire provision is struck down due to the Waksdale effect, which aligns with section 5(1) of the ESA, nullifying any contractual term that provides less than the statute’s minimum protections.
Released one year after Dufault, and barely two months after the Ontario Court of Appeal declined to directly address the “at any time” argument raised in Dufault, Baker demonstrates that the lower courts are applying the reasoning in Dufault rather than treating it as an anomaly. This suggests an emerging consensus at the Superior Court level that such termination provisions contravene employment standards legislation and established jurisprudence.
The significance of Baker lies not only in its application of Dufault, but also in its potential to escalate the issue to the Court of Appeal. Should Baker be appealed, the appellate court will have the opportunity to clarify whether Dufault is now settled law in Ontario, or if further refinement is necessary. Until then, Baker serves as a strong indication that the reasoning in Dufault is gaining traction and shaping the legal landscape for employment termination clauses. In other words: time’s up for “at any time”!
Interestingly, the Court of Appeal for British Columbia in Egan v. Harbour Air Seaplanes LLP, 2024 BCCA 222, in a case in which the employer was federally regulated, took a “practical, common-sense approach to contractual interpretation.” It enforced the termination clause allowing an employer to terminate the employee’s employment “at any time.” The Court noted that the clause in question clearly expressed the parties’ intention to comply with the Canada Labour Code. However, the Ontario Court of Appeal rejected this approach with respect to the ESA in Rahman v. Cannon Design Architecture Inc., 2022 ONCA 451.
Takeaways
Baker doubles down on the lessons from Dufault and reinforces the growing complexity of drafting enforceable termination clauses in compliance with ESA requirements. As the standards continue to evolve, what was once considered permissible is now more likely to attract legal scrutiny.
The bar for clarity and precision in termination provisions is rising, making it essential for practitioners to stay attuned to the nuances of case law and statutory requirements to avoid inadvertently rendering such clauses unenforceable. The risks of vague or overly broad language are more pronounced than ever, and even minor missteps in contract drafting can lead to significant legal challenges.
About the Author
An employment and research lawyer, Tara Seosankar specializes in contract drafting, workplace compliance, and employment law claims. She works with lawyers and businesses to simplify complex legal issues and help with navigating employment matters, including those involving RSUs and M&A. You can connect with Tara on LinkedIn.
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