In the February 11, 2025 decision of Baker v. Van Dolder's Home Team Inc., the court confirmed that a termination provision permitting an employer to terminate an employee "at any time" without cause contravenes the Employment Standards Act, 2000 (ESA) and is therefore unenforceable.1
FACTS
Frederick Baker sued his former employer, Van Dolder's Home Team Inc., for wrongful dismissal after his employment was terminated without cause on May 24, 2023.2 The employment contract contained "without cause" and "with cause" termination provisions.
Termination "Without Cause"
The contract contained the following "without cause" termination provision:
"We may terminate your employment at any time, without just cause, upon providing you with only the minimum notice, or payment in lieu of notice and, if applicable, severance pay, required by the Employment Standards Act..." 3
"Without Cause" Termination Provision Unenforceable
The court determined that the "without cause" termination provision was unenforceable.4 In reaching this decision, Justice Sproat followed the trial and appellate decisions in Dufault v. The Corporation of the Township of Ignace (previously discussed in blog entitled Court of Appeal Declines to Comment on the "Without Cause" Termination Provision in Dufault v. Ignace (Township). In Dufault, language permitting an employer to terminate an employee's employment "at any time" and in the employer's "sole discretion" was found to invalidate the termination clause.5 The court upheld this conclusion in Baker.6]
As the "without cause" termination provision was found to be in contravention of the ESA, the court held that the entire termination scheme was unenforceable.7 The employee was therefore entitled to a reasonable notice period at common law.
TAKEAWAY
Employers should consult with their employment lawyers to ensure that the termination provisions in their employment contracts are enforceable.
Employees should also obtain legal advice prior to signing an employment contract and in the event of termination, to determine whether any termination provisions in their contract may be unenforceable, which would result in an increased severance entitlement.
Footnotes
1. 2025 ONSC 952 (https://canlii.ca/t/k9dwf) [Baker, ONSC
2. Ibid at para 4.
3. Ibid at para 3.
4. Ibid at para 12.
5. Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029 (https://canlii.ca/t/k46k4) at para 46 [Dufault, ONSC].
6. Baker, ONSC, supra at para 12.
7. Waksdale v. Swegon North America Inc., 2020 ONCA 391(https://canlii.ca/t/j89s5) at para 10.
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