Positive News For Employers: ONCA Rules On “At Any Time” Termination Clauses

The Ontario Court of Appeal (“ONCA”) recently released its rulings on two conflicting lower court decisions,¹ finally providing some clarity for employers on the enforceability of termination clauses. In doing so, the pendulum has swung back in favour of employers generally having the opportunity for more certainty on termination costs.

Ontario Superior Court Decisions

In the lower court decision of Baker,² the motion judge found that the phrase “at any time” in a termination clause violated the Ontario Employment Standards Act, 2000 (“ESA”) because it implied the employer had discretion to terminate employment in violation of the ESA. The motion judge in Baker relied on an earlier decision, Dufault,³ where the termination language went farther than just termination “at any time” and included termination in the employer’s “sole discretion”. In Dufault, the combination of “at any time” and “sole discretion” was interpreted as a violation of an employee’s s. 53 right to not be dismissed at the conclusion of a leave and s. 74 right to not be dismissed in reprisal for attempting to exercise a right under the ESA. In Baker, this same violation was found despite the absence of “sole discretion” and the presence of saving language indicating the employer would comply with the ESA.

In contrast to Baker, in another lower court decision of Li,⁴ the motion judge did not take any issue with the phrase about termination “at any time” or “for any reason”. The motion judge in Li distinguished the termination clause from Dufault due to the latter containing other deficiencies (such as a poorly drafted with cause clause) and the former containing statements complying with the ESA. Thus, no ESA violation was found in Li.

Understandably, the uncertainty around the phrase “at any time” — which has long been used by employers in their termination clauses — required the intervention of the ONCA.

Ontario Court of Appeal

The ONCA elected to hear both the Baker and Li decisions together, as both dealt with the use of “at any time” in the termination provisions. The ONCA held that the use of “at any time” in a termination clause is legally compliant and enforceable.

The ONCA argued that a literal reading of “at any time”, in isolation from the context of the provision and contract, would mean ignoring that the parties expressed an intention to comply with the ESA throughout the employment agreements. The ONCA also made it clear that in interpreting employment contracts, the objective mutual intentions of both the employer and the employee must be considered.

For Baker, the ONCA noted that the motion judge acknowledged having no doubt that the employer intended to comply with the ESA. This intention was sufficient to conclude that “at any time” did not create an inconsistency with the ESA. The ONCA found that neither the employer nor the employee would have intended that “at any time” would deprive the employee of his rights under the ESA and other Ontario statutes. Further, the intention to comply with the ESA was reinforced by the fact that the employment agreement included explicit language acknowledging that the ESA would be complied with “at all times”.

Also for Baker, the ONCA upheld the “with cause” termination provision in the employee’s employment agreement. While the definition of “cause” was broader than the ESA standard of “wilful misconduct”, the provision expressly stated that in the event of a with cause termination, the employee would still be entitled to any minimum entitlements under the ESA.

Similarly, in Li, the ONCA found that the employment agreement included several commitments that the employer would comply with the ESA. These included references to minimum statutory entitlements “required by the ESA” or “under the ESA”, like termination pay and severance pay, and a sentence that the employee will “in no event…receive less than your statutory minimum entitlements under the ESA”. Given the multiple commitments, it was implausible to conclude that there was a mutual intention between the employer and the employee to violate the ESA.

Finally in Li, just as “at any time” was unproblematic, “for any reason” was also legally compliant and enforceable. “For any reason” simply conveyed that the termination would be consistent with the contract and therefore legally effective regardless of the reason for the termination. The ONCA added that employers are not required to give employees a reason for termination; an employer is only required to provide their contractual entitlements which must, at minimum, be ESA entitlements.

Overall, the ONCA rejected “formalistic or technical interpretations of contractual language” and instead applied a contextual approach based on precise termination clause drafting that complied with the ESA.

Key Takeaways

These important ONCA decisions confirm that while termination clauses continue to be held to a high standard, the context of a termination provision is crucial. Here, the ONCA took a commonsense approach and found that the phrases “at any time” and “for any reason” cannot on their own render a termination provision unenforceable when the parties otherwise evinced an intention to comply with the ESA with precise drafting.

Given many employers have long had termination clauses containing the phrase “at any time”, employers that are currently litigating such termination clauses may now likely rely on this ONCA decision to significantly reduce their exposures.

Although this latest decision brings positive news for many employers, the ONCA explicitly rejected a request to reconsider its 2020 decision of Waksdale v Swegon North America Inc.⁵ In Waksdale, the ONCA broadly held that if one termination provision in an employment agreement violates the ESA, then all termination provisions are invalid and unenforceable.

As such, Waksdale remains good law and financially prudent employers should still review their template employment agreements in response to both these ONCA decisions, as well as at least yearly in future. Even in other provinces where similar language pertaining to termination “at any time” or “for any reason” has not been invalidated, it is still wise for all employers to regularly update their termination clauses. All employers should take a cautious approach to their termination clauses and ensure drafting only by experienced employment lawyers.

Our Employment and Labour team is always available to update your business’ termination provisions to help ensure statutory compliance as the law continues to evolve.

Footnotes

1 Baker v Van Dolder’s Home Team Inc., 2026 ONCA 568.

n sp;Baker v Van Dolder’s Home Team Inc., 2025 ONSC 952 (CanLII) [Baker].

3 Dufault v The Corporation of the Township of Ignace, 2024 ONSC 1029 (CanLII) [Dufault]. For further information about this decision, please see our colleagues’ bulletin here.

4 Li v Wayfair Canada ULC, 2025 ONSC 2959 (CanLII) [Li]. See also Jones v Strides Toronto, 2025 ONSC 2482 (CanLII) where the court also did not invalidate the termination clause because of the same “at any time” language.

5 Waksdale v Swegon North America Inc., 2020 ONCA 391 (CanLII) [Waksdale]. For further information about this decision, please see our colleagues’ bulletin here.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2025