Hot Topics, Big Shifts: Five Key Employment Law Developments From Summer 2025

This summer brought major developments that are reshaping the employment law landscape across Canada. From the ever-evolving enforceability of Ontario termination clauses to sweeping legislative reform in Québec and a record-setting notice period in Alberta, employers are facing new challenges—and opportunities. Below is a quick-hit summary of the top five stories (so far), with links to our full articles for those who want to dive deeper.

1. Let uncertainty ring – Ontario termination clauses

If there's anything clear about termination provisions in Ontario, it's that the law around their enforceability is anything but clear.

The Ontario courts first sent the termination provision world spinning in 2020 with the Waksdale v. Swegon decision. That was followed up in 2024 with the decision in Dufault v. Ignace (Dufault), where the courts struck down any termination provision stating that an employee can be terminated "at any time." The reasoning was that those words undercut the minimum requirements of the Ontario Employment Standards Act, 2000 (the ESA) because employers cannot dismiss employees as a matter of reprisal or due to a protected leave under the ESA (i.e., at any time). In the subsequent case of Baker v. Van Dolder's Home Team (Baker), the court referenced Dufault and agreed with it. Of note, however, the court in Dufault completely ignored the earlier decision in Henderson v. Slavkin in which a termination provision stating that an employee could be terminated "for any reason" was fine. Read more about that decision here.

Skip forward to 2025. In both the cases of Li v. Wayfair Canada and Jones v. Strides Toronto, the court found the contractual termination clauses to be valid despite the fact that the termination clauses included the "at any time" language which both Dufault and Baker had taken issue with. On the other hand, in August the court decided in the case of Chan v. NYX Capital Corp. that both the "at any time" and "for any reason" language were invalid. Finally, the employer in Baker is appealing that decision to the Ontario Court of Appeal. Moreover, in a rare move, the Court of Appeal has granted the Ontario Chamber of Commerce intervener status to make submissions on behalf of employers.

While employers and employment lawyers alike wait to see where the dust settles on all of this, in May, the Ontario Court of Appeal upheld different language in a termination provision in the case of Bertsch v. Datastealth (Bertsch) in its entirety.¹ Never mind that the termination provision in Bertsch could potentially be challenged under prior decisions of the Ontario court – the provision in Bertsch was effectively given a gold stamp of approval. Does this mean that all employers should move to a termination provision like that in Bertsch? Not necessarily because as our courts have shown, nothing is certain in Ontario when it comes to the enforceability of termination provisions. Stay tuned...

2. A revamp of Québec employment laws

This summer, Québec's Bill 101, An Act to improve certain labour laws, moved forward. Following special consultations in May and June, the National Assembly adopted the Bill's principle on June 5, meaning it will now proceed to article-by-article study in parliamentary committee this fall.

This omnibus bill proposes to amend most workplace-related statutes, including the Act respecting labour standards, the Labour Code and the Act respecting occupational health and safety, to introduce shorter timelines and greater encouragement to use mediation in grievance arbitration, new and expanded statutory leaves, CNESST reimbursement to employers when pregnant or breastfeeding employees must be reassigned, and significantly increased fines for non-compliance.

While the Bill remains under review, employers should begin considering how these reforms could affect their policies and practices.

Read more.

3. Blast off – Alberta Court awards a 26-month reasonable notice period

In Alberta's latest wrongful dismissal case, Lischuk v. K-Jay Electric Ltd., 2025 ABKB 460, the Court of King's Bench of Alberta awarded a common law reasonable notice period of 26 months, marking the first time an Alberta court has exceeded the 24-month "rough upper limit" that employers in the province have relied upon for many years.

The Court made its decision based on what it ultimately determined to be "exceptional circumstances," particularly the combination of the employee's age, his lifelong career with the employer and the difficulty he would have in securing a job in an industry with few other comparable opportunities.

As the possibility of increasing common law reasonable notice periods becomes tangible in Alberta, employers can take steps to protect themselves through enforceable termination provisions and clear policies.

Read more.

4. Duty to mitigate fixed-term agreements - A British Columbia (BC) perspective

In Mac's Convenience Stores Inc. v. Basyal, 2025 BCCA 284 the BC Court of Appeal confirmed that employees on fixed-term contracts are required to mitigate if the contract is terminated early, unless there is an express term to the contrary. This differentiates BC from other jurisdictions, notably Ontario, where that province has concluded there is no duty to mitigate in the context of a fixed-term agreement (meaning that early termination of a fixed-term agreement would result in the balance of the term being payable to the employee in the context of a without cause termination).

In reaching its conclusion, the BC Court of Appeal acknowledged that the barriers to mitigation were likely "significant" for these employees (foreign workers on employer-specific work permits), but noted it was important to "distinguish between the duty to mitigate and the capacity for mitigation." The Court of Appeal agreed that it would likely be difficult for the employer to meet its burden to prove that the employee had not taken reasonable steps to avoid loss in the circumstances; however, that did not mean there was no duty to mitigate at law.

The decision continues the welcome trend in BC of the courts applying a practical, common sense approach to contractual interpretation in the context of employment agreements, using accepted contractual interpretation principles. This gives more confidence that the terms of a well-drafted employment agreement will continue to be enforced between the parties in BC. That said, employers in BC should likely continue to include early termination provisions in their fixed-term employment agreements to avoid any implication on early termination that the balance of the term was required to be paid as "notice" or "severance" to avoid any debate as to what is payable on early termination.

Read more.

5. Ontario courts continue trend of awarding damages against employers for failing to comply with statutory obligations

In Carroll v. Oracle Canada ULC, 2025 ONSC 4889, the plaintiff employee claimed punitive damages on the basis that the employer delayed paying certain commission amounts until eight months after his dismissal. The employer's evidence was that it was not able to pay the employee's commissions because it was missing information necessary to make the payments. However, following the cross-examination of the employer's affiant, it became clear that the employer did in fact have the necessary information to pay the commission but had simply not done so. The employer's conduct was compounded by the fact that it was attempting to rely on a contractual termination provision to limit the employee's termination entitlements despite the fact that the court had struck down a similarly worded termination provision from the same employer several years earlier.

In reviewing the situation, the judge noted that employees are most vulnerable and most in need of protection at the time of their dismissal. As such, to ensure that the award provided "...an adequate level of denunciation and disincentive to deter others from engaging in such conduct in the future," the judge awarded punitive damages of CA$57,740.55 representing the amount of the improperly withheld commissions.

Apart from the issue of punitive damages, the judge also took issue with the employer's failure to provide the employee with a letter of reference. The employer stated that it was company policy not to write letters of reference. However, the judge noted that by failing to reference that company policy in its letter confirming employment, it left the reader "...with the impression that [the employee] was at best a mediocre employee."
This decision serves as a reminder to employers of taking care to comply with all of their statutory obligations when dismissing an employee. Moreover, employers should revisit the form that their letters confirming employment take so that they clearly reference any policy which limits the employer's ability to provide letters of reference.

These recent developments highlight just how quickly the employment law landscape can shift—and the importance of staying informed. If you have questions about how any of these changes might impact your organization, or if you'd like to review your current policies or contracts in light of these updates, please reach out to any member of our Employment and Labour group.

Stay informed—and stay compliant.

Footnote

1. You can read more about this case on our blog: https://www.employmentandlabour.com/holy-grail-for-ontario-employers-ontario-court-of-appeal-upholds-what-could-be-model-termination-provision-for-ontario-employers-for-now/.