In a rare but significant "win" for employers, the Ontario Court of Appeal confirmed that an employer can enforce a termination provision limiting an employee's entitlements strictly to the minimum standards under the Employment Standards Act, 2000 (the "ESA"). The decision, in Bertsch v Datastealth Inc. (2025 ONCA 379), may mark a turning point in a legal landscape where such provisions are often struck down for ambiguity or statutory non-compliance. We have written previously on the challenges of enforcing employment termination provisions here.
The Termination Provision at Issue
The termination provision reads as follows:
Termination of Employment by the Company: If your employment is terminated with or without cause, you will be provided with only the minimum payments and entitlements, if any, owed to you under the Ontario Employment Standards Act, 2000 and its Regulations, as may be amended from time to time (the "ESA"), including but not limited to outstanding wages, vacation pay, and any minimum entitlement to notice of termination (or termination pay), severance pay (if applicable) and benefit continuation. You understand and agree that, in accordance with the ESA, there are circumstances in which you would have no entitlement to notice of termination, termination pay, severance pay or benefit continuation.
You understand and agree that compliance with the minimum requirements of the ESA satisfies any common law or contractual entitlement you may have to notice of termination of your employment, or pay in lieu thereof. You further understand and agree that this provision shall apply to you throughout your employment with the Company, regardless of its duration or any changes to your position or compensation.
The employment agreement also contained a "failsafe" provision:
If any of your entitlements under this Agreement are, or could be, less than your minimum entitlements owing under the Ontario Employment Standards Act, 2000, as amended from time to time, you shall instead receive your minimum entitlements owing under the Ontario Employment Standards Act, 2000, as amended from time to time.
The Court of Appeal Affirms the Enforceability of the Termination Provision
The Ontario Court of Appeal dismissed an appeal by the employee of the motion judge's decision, which had rejected his challenge to the termination provision and dismissed the action. The Court of Appeal affirmed that the provision was compliant with the ESA and that it was clear and unambiguous. In so holding, the Court also noted the following:
- The inclusion of a fail-safe provision was not needed as the termination provision itself was clear and unambiguous.
- The inclusion of "with or without cause" in the provision ensured that ESA minimums would be provided even if the employer terminated the employee for cause at common law while the ESA's higher standard of "wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer" was not met.
- The language used was clear and plain rather than a case where the agreement uses legal terms or language that might be confusing to a person not versed in the law.
A Rare Affirmation
While the Ontario Court of Appeal has occasionally upheld ESA-limiting termination provisions, such as in Amberber v IBM Canada Ltd (2018 ONCA 571), such decisions have been relatively infrequent and often fact-specific.
What makes this case notable is that it comes after a string of appellate decisions that invalidated termination provisions, including:
- Rossman v Canadian Solar Inc. (2019 ONCA 992), where the Court held that ambiguous language suggesting benefits would end immediately upon termination violated the ESA and invalidated the provision.
- Waksdale v Swegon North America Inc. (2020 ONCA 391), where the Court held that an invalid "for cause" provision rendered the entire termination clause unenforceable, even if the "without cause" portion was otherwise compliant and relied upon.
- Dufault v Ignace (Township) (2024 ONCA 915), where the Court declined to convene a five-judge panel to reconsider Waksdale and a three-judge panel ultimately held that the "for cause" termination provision defined "cause" more broadly than the ESA and was therefore unenforceable.
Why This Case Matters
Bertsch is the first clear and broadly applicable endorsement of a termination provision by the Ontario Court of Appeal in several years. Courts have long favoured employees in interpreting employment agreements, and while this case does not change that, it may signal a more balanced approach to come.
Following the Bertsch decision, employers in Ontario should review and, if necessary, update the termination provisions in their employment agreements for both new hires and existing employees. For existing employees, the enforceability of revised provisions may depend on whether fresh consideration—such as a one-time bonus or a salary increase—is provided, which will vary based on the specific circumstances.
A cautionary note on using the termination provision language endorsed in Bertsch: given the ever-changing landscape of employment legislation in Canada, what is enforceable now has no guarantee of being enforceable in the future. While providing employers with a currently enforceable provision to include in their employment agreements, Ontario employers who use the termination provision from Bertsch should continue to monitor jurisprudential and statutory developments regarding termination of employment matters.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
