In a decision that will be of interest to employers, the Ontario Superior Court of Justice in Li v. Wayfair Canada Inc.1 upheld a termination clause in an employment agreement that permitted the employer to terminate the employment relationship “at any time”. The Court rejected the employee's argument that this language rendered it unenforceable because it did not comply with the minimum standards of the Employment Standards Act, 2000 (ESA). In doing so, the Court distinguished the case from earlier decisions—most notably Dufault v. The Corporation of the Township of Ignace2 (Dufault)—where similar wording was found to invalidate a termination clause.
What you need to know
- The Court reaffirmed that standard principles of contractual interpretation apply to employment agreements. This means courts will look at the parties' intent at the time the contract was signed, reading the contract “as a whole” and the surrounding context.
- The inclusion of language in a termination clause that allows an employer to terminate employment “at any time” does not automatically render the clause unenforceable. What matters is whether the agreement, when read as a whole, complies with the minimum standards of the ESA. If the clause satisfies ESA entitlements—such as minimum notice of termination and severance pay—it may still be upheld
Summary of the decision
Song Li was hired by Wayfair Canada Inc. under a fixed-term contract. After approximately nine months, Wayfair terminated Li's employment without cause, relying on a clause in his contract that permitted termination “at any time” with notice or pay in lieu in accordance with the ESA. Li challenged the enforceability of the clause, arguing that the phrase “at any time” gave the employer an unfettered right to terminate, potentially in violation of ESA protections—such as the prohibition against reprisal for exercising statutory rights.
Li relied on Dufault, where the Ontario Superior Court of Justice found an employment contract termination clause unenforceable because it provided for termination “at any time” and it could, therefore, not comply with ESA minimum standards. In that case, the termination clause permitted termination of employment without ESA minimum notice in some scenarios (even though those scenarios were not in evidence before the Court). For example, the clause allowed the employer to dismiss the employee at the conclusion of an ESA leave or when attempting to exercise an ESA right, which would be a contravention of the ESA and, therefore, unenforceable.
However, the Court in Li distinguished from Dufault. The termination clause in Li's employment agreement, when read as a whole, explicitly required compliance with the ESA and did not purport to limit Li's statutory rights. Thus, including the words “at any time” was not fatal to the enforcement of the clause.
In reaching its decision, the Court reaffirmed that employment contracts are interpreted using general principles of contractual interpretation, with the goal of discerning the parties' objective intent at the time of contracting. While courts will resolve genuine ambiguities in favour of employees, they will not manufacture ambiguity where none exists.
Practical considerations for employers
In the wake of Dufault, many employees and their counsel have taken the position that any termination clause containing the phrase “at any time” is automatically unenforceable. This has led to a wave of challenges, with employees asserting entitlement to common law reasonable notice on the basis that such language violates the ESA.
The decision in Li provides welcome clarification for employers. It confirms that the inclusion of “at any time” does not, by itself, automatically invalidate a termination clause—so long as the clause, when read in its full context, clearly complies with the ESA and does not represent an attempt to contract out of minimum statutory entitlements.
That said, the case is a timely reminder for employers to review existing termination clauses in their employment contracts to ensure they are unambiguous and ESA-compliant.
Footnotes
1. 2025 ONSC 2959.
2. 2024 ONSC 1029, affirmed 2024 ONCA 915.
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