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Ontario Court Confirms Termination Clause Enforceable
Termination clauses remain the most litigated part of Ontario employment agreements, and a single phrase can be the difference between an ESA-minimum payout and months of common law notice. Recent decisions, especially Dufault and Baker, had cast doubt on common wording such as "at any time" and "for any reason." The Superior Court's decision in Li v. Wayfair Canada Inc. (2025 ONSC 2959) pushed back, upholding a termination clause that used exactly that language because the agreement, read as a whole, clearly preserved the minimums under the Employment Standards Act, 2000. It is a genuinely helpful decision for employers, with one important caveat covered below: it is a first-instance ruling that is now before the Court of Appeal.
Read this as encouraging, not settled. Li is an unreported first-instance decision that openly departs from the reasoning in Dufault and Baker, and the court gave little explanation for distinguishing the "at any time" language. The Court of Appeal heard the appeals in Li and Baker together on March 25, 2026, and a decision is pending. Until that ruling lands, the safe approach is to treat Li as helpful support, not a green light to load contracts with extra language.
When did you last have your employment agreements reviewed against the current case law?
The enforceability of "at any time" and "for any reason" language is genuinely unsettled and is before the Court of Appeal right now. A clause that holds up today may read differently after the appeal. Get your agreements reviewed so they do not depend on a contested point.
Call: 1-800-771-7882 Review My Employment AgreementsBackground: a short-service dismissal and a five-month claim
The employee was a senior, well-paid product manager hired in January 2023. He was terminated without cause on October 17, 2023, just under nine months into his employment, and was paid one week of base salary and benefit continuation, the ESA minimum for his length of service. He sued for about five months of common law reasonable notice and for restricted share units (RSUs) scheduled to vest in February 2024.
The agreement's termination provisions did the work for the employer. The "with cause" provision allowed termination without notice for cause unless the ESA required otherwise, and the definition of "Cause" was tied explicitly to the ESA's wilful misconduct standard. The "without cause" provision allowed the company, after probation, to terminate "at any time and for any reason" by providing only the minimum notice, termination, severance, and benefits required by or under the ESA. The Court held the provisions enforceable and dismissed the claim for anything beyond the ESA minimums. Had the clause failed, the claim for common law notice, and potentially for the RSUs scheduled to vest during that period, would have been live.
What the Court decided
The clause was enforceable
The Court upheld both the with-cause and without-cause provisions and dismissed the wrongful dismissal claim beyond the ESA minimums. The one week of pay and benefits the employer had provided satisfied the employee's entitlement, and no common law notice was owed.
Read the clause as a whole
The Court applied the principle that termination provisions are read as a whole, not disaggregated word by word. Because the without-cause provision clearly and repeatedly stated that payments would be made as required by or under the ESA, it could not fairly be read as an attempt to contract out of the statute.
"Cause" was tied to the ESA standard
The agreement defined cause by reference to the ESA's wilful misconduct threshold rather than the broader common law concept. That anchoring removed the kind of for-cause defect that, under Waksdale, can void an entire termination clause.
Dufault and Baker were distinguished
The Court found the clause distinguishable from those in Dufault and Baker, holding that "at any time" and "for any reason" did not automatically invalidate it where the agreement preserved ESA minimums throughout. Commentators have noted the Court gave little reasoning for the distinction, which is part of why the point is now on appeal.
"Termination clauses can protect your business, but if they're not carefully drafted, they may expose you to costly claims. Consulting a lawyer ensures your contracts are both enforceable and tailored to your needs."
Christopher Achkar, employment lawyer and founder of Achkar Law
Drafting lessons for Ontario employers
Anchor entitlements to the ESA throughout
What saved the Wayfair clause was that it repeatedly and consistently tied entitlements to the ESA across the termination provisions. Make that anchoring explicit in every related section, so the agreement read as a whole cannot be read as contracting out of the statute.
Define "Cause" by the ESA standard
Tie your for-cause language to the ESA's wilful misconduct threshold rather than the broader common law idea of just cause. Under Waksdale, an over-broad for-cause provision can void the entire termination clause, so this is one of the highest-value fixes in any agreement.
Treat "at any time" and "for any reason" as risk, not safety
These words did not sink the clause in Li, but they are exactly the language that struck down the clauses in Dufault and Baker, and their fate is now before the Court of Appeal. There is little upside to including them and real downside, so the prudent choice is to leave them out.
Be precise about bonuses and equity
If you intend to exclude incentives such as bonuses or RSUs during or after the notice period, use clear, specific, scenario-based language in the plan and the agreement. Vague exclusions are vulnerable, and unvested equity is often the largest number in dispute.
Draft for consistency across the whole agreement
Inconsistency between sections can taint the entire termination regime. The clause, the cause definition, the incentive plans, and any related provisions should align, because a court reading the agreement as a whole will hold a contradiction against the employer.
Do not build your contracts on Li alone
Li is encouraging but unreported and under appeal. Until the Court of Appeal rules, build agreements that would hold up even under the stricter Dufault and Baker approach. That way your contracts are defensible whichever way the appeal goes.
Would your termination clauses survive the stricter reading, not just the favourable one?
With the Court of Appeal set to rule on "at any time" language, the safest agreements are the ones that do not depend on a contested phrase. A review now means your contracts hold up whichever way the appeal goes.
Audit My Agreements Or call us: 1-800-771-7882How Achkar Law helps employers
Achkar Law helps Ontario employers review and update employment agreements to ensure ESA-compliant termination provisions, clear treatment of bonuses and equity, and consistent drafting throughout. We also conduct agreement audits and defend claims where termination clauses are challenged.
Related resources
For the rule that drives termination clause enforceability and the for-cause trap, see our summary of Waksdale v. Swegon North America Inc. (2020 ONCA 391).
For a full guide to how and why termination clauses fail, see When Is a Termination Clause Unenforceable in Ontario?
For drafting and reviewing employment agreements, see our employment agreement services.
Call us at 1-800-771-7882 for a confidential consultation.
The article in this client update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Achkar Law Professional Corporation and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Achkar Law Professional Corporation. ©