In Li v. Wayfair Canada Inc. 2025 ONSC 2959 ("Li"), the Ontario Superior Court of Justice upheld a minimum standards termination clause which provided the employer with the ability to terminate the employee's employment, "at any time". While this outcome is welcomed news by employers, the Court's reasoning raises some unresolved questions, particularly when compared with recent conflicting decisions.
Facts
The plaintiff, Li, was employed by Wayfair Canada Inc. as a Senior Product Manager. His employment contract contained a termination clause that allowed Wayfair to terminate him "at any time and for any reason," subject to providing Li with his ESA minimum entitlements. Li was dismissed without cause after approximately nine (9) months of service and brought a claim challenging the enforceability of the termination clause, relying in part on recent decisions such as Dufault v. Township of Ignace, 2024 ONSC 1029, affirmed 2024 ONCA 915 ("Dufault") and Baker v. Van Dolder's Home Team Inc ("Baker").
In Dufault and Baker, the courts found similarly worded clauses unenforceable, on the basis that words such as "at any time" or "at its sole discretion" could permit termination for prohibited reasons under the ESA (e.g., reprisal, taking a statutory leave), rendering the clauses void.
In Li, however, Justice Dow found the termination clause to be distinguishable and ultimately enforceable. Accordingly, Li's claim for common law damages was dismissed.
The wording "for any reason" found within Li's termination clause, however, replicates the language used in Dufault and Baker, which raises the question of whether the outcome in Li reflects a genuine legal distinction or a shift in judicial approach.
Main Takeaways for Employers
- Full context matters: Using the phrase "at any time", does not automatically render a termination clause unenforceable.
- Clarity is key: Courts continue to scrutinize termination clauses closely. While Li shows that ESA-only clauses can be enforced, the inconsistency across decisions means employers should tread carefully.
- Contracts should evolve with the law: Regularly review and update employment agreements to reflect the most current updates in the law.
Li may be a win for employers in the short term, but until the Court of Appeal resolves the inconsistencies regarding whether use of the words "at any time" render a termination clause unenforceable, conservative drafting remains the best defence.
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