Employment And Labour Law: 2025 Year In Review And Future Trends

The Canadian labour and employment law landscape continued to evolve in 2025 with important developments in wrongful dismissal litigation and human rights. In addition, Canadian legislators introduced new laws intended to provide greater pay transparency for Canadian workers.

Together with our Review of the Landmark Labour and Employment Law Developments Rendered in Québec in 2025 and our recent webinar Dentons - Legal updates for Canadian employers: Stay ahead of workplace trends in 2026, this insight summarizes the legal developments that mattered most for Canadian workplaces in 2025.

1. Important wrongful dismissal cases from 2025

(a) The never-ending saga over the enforceability of termination provisions

As we noted in our summer case law update, Ontario remained the key battleground for employers and employees fighting over the enforceability of contractual termination provisions. In Baker v. Van Dolder's Home Team Inc.,¹ the Ontario Superior Court of Justice held that the employer's termination provision which purported to allow the employer to terminate the employee's employment without cause "at any time" was unenforceable. In so doing, Justice Sproat noted that he was bound to follow the Court's precedent in Dufault v. The Corporation of the Township of Ignace² which had invalidated a similar termination provision on the basis that Ontario's employment standards laws do not actually permit an employer to terminate an employee's employment "at any time" (e.g., employees are protected from dismissal due to reprisal and upon their reinstatement from a statutory leave of absence).

However, faced with a similarly worded termination provision, the Ontario Superior Court of Justice reached a different decision in Li v. Wayfair Canada ULC.³ In that case, the without cause termination provision stated "[a]fter your probationary period concludes, in the absence of Cause, the Company may terminate your employment at any time and for any reason." In upholding the termination provision, Justice Dow ruled that, in his view, "...reading of the employment agreement, as a whole, leads to the conclusion the agreement sought only limit the employer's obligation of that provided by the provisions of the [Employment Standards Act, 2000]. The sentence defining "Cause" begins with 'For all purposes in this letter' and ends with 'that constitutes 'cause' under the ESA'." On that basis, Justice Dow found the wording in that employment contract to be distinguishable to that contained in Baker and therefore a different conclusion was required.

Employers will now turn their attention to the Ontario Court of Appeal, as both cases are under appeal and expected to be heard in the Spring of 2026.

(b) Two different "options" when considering the treatment of equity-based compensation on termination

In addition to the debate over termination provisions, the Canadian judiciary also grappled with decisions concerning an employee's right to incentive compensation over their notice period.

In a case involving an employee of a social media technology company, the Ontario Superior Court of Justice concluded that equity need not vest over an employee's minimum statutory notice period when the employee receives pay in lieu of notice. In its decision, the Court distinguished between sections 60 and 61 of the Ontario Employment Standards Act, 2000. Section 60 governs an employer's obligations upon the provision of working notice of termination and provides that, in addition to continuing an employee's wages and benefit plan contributions over the working notice period, an employer must not alter any other term or condition of the employee's employment during the notice period. Alternatively, section 61 governs an employer's obligations upon the provision of pay in lieu of working notice and, by contrast, while requiring the payment of wages and continuation of benefits, does not include the same language with respect to maintaining all terms and conditions of employment.

In the case at hand, the employer provided the dismissed employee with pay in lieu of notice upon termination, and thus section 61 was engaged in respect of his notice entitlements. The Court concluded that, as the employee's equity did not constitute "wages" nor benefit plan contributions, the equity agreement, which provided that all equity would immediately be forfeited upon termination of employment without regard to the statutory notice period, was enforceable and not contrary to section 61 of the Employment Standards Act 2000.

However, in Liggett v. Veeva Software Systems, Inc. and Veeva Systems Inc.,⁴ the Ontario Superior Court of Justice came to the opposite conclusion. In that case, the Court took issue with the language in the equity plan which provided that an employee's equity would be forfeited upon termination of their "service." In the Court's view, this language was contrary to the Employment Standards Act, 2000 as an employee's service actually ends upon the conclusion of the employee's statutory notice period. Notably, the Court did not distinguish between a working notice period and notice period provided by way of pay in lieu. For this reason, amongst others, the Court concluded that the equity plan undercuts the Employment Standards Act, 2000 and did not unambiguously extinguish the employee's right to their equity-based compensation.

Like the issues surrounding termination provisions, employers may receive greater clarity on this subject as the Ontario Court of Appeal is set to hear the employee's appeal in 2026.

(c) Favourable decisions on the employee's duty to mitigate their damages

Canadian employers received some good news on the issue of mitigation with two decisions worth highlighting.

In Mac's Convenience Stores Inc. v. Basyal,⁵ the British Columbia Court of Appeal held that in British Columbia, absent a term in the employment agreement to the contrary, an employee under a fixed term contract has a duty to mitigate their damages.

In a case involving an employee of an electrical products manufacturer, the Manitoba Court of Appeal confirmed that courts will not reward employees that refuse reasonable offers of continued employment with a successor employer based on concerns that are not supported by the evidence or the relevant offer context. In this case, the Plaintiff sold his company, and, in the process, he entered into an employment agreement, a retention bonus agreement (RBA) and a restrictive covenant agreement with the Defendant. Based on the RBA, the employee was eligible to receive a CA$300,000 retention bonus on the five-year anniversary of the closing date if he remained a full-time employee.

Before the five years elapsed, the company entered into a deal with a purchasing company to sell some of its assets and liabilities, including the portion of the business that employed the Plaintiff. The purchasing company subsequently issued an offer of continued employment to the Plaintiff which confirmed that his terms of employment would continue without change, including recognition of his prior service, his current title, reporting structure, compensation and benefits. Further, the company assured the Plaintiff that the purchasing company would honour the RBA as it formed part of the assets and liabilities that were being purchased.

Despite these assurances, the Plaintiff did not believe the RBA would be honoured, rejected the offer of employment and sued the company claiming constructive dismissal. The Court of Appeal ruled that the employee failed to mitigate his damages by refusing a reasonable offer of employment. In the Court's view, there was no evidence of any material changes to the employee's terms of employment, or other factors that would have made accepting the offer from the successor employer unreasonable.

This decision serves as a reminder to employers that courts will not reward employees who refuse reasonable offers of continued employment with a successor employer absent evidence that the terms of employment are not comparable.

(d) Beware the perils of dismissing a whistleblower

In September 2025, employers regulated by the Ontario Securities Commission received a clear warning about the perils of improperly terminating the employment of a whistleblower.

In McPherson v. Global Growth Assets Inc.,⁶ the Ontario Superior Court of Justice interpreted the anti-reprisal sections of the Securities Act to award a whistleblower an unprecedented damage award of over CA$5 million when he was dismissed after making complaints of corporate noncompliance. Significantly, and unlike traditional wrongful dismissal damages, these damages were awarded without reduction for other income earned by the employee following dismissal.

In coming to its decision, the Court interpreted the anti-reprisal provisions in Part XXI.2 of the Securities Act and drew guidance from interpretations of the anti-reprisal provisions of the Ontario Employment Standards Act and the Ontario Occupational Health and Safety Act. The Court made three key findings:

1. even where there are other legitimate reasons to terminate an employee, a reprisal occurs if the employee's protected activity is taken into account at all in the decision to terminate their employment;
2. an employee "must have a subjective belief that is objectively reasonable in light of the information available at the time" to be protected by the anti-reprisal provisions; and,
3. the legislation created a reverse-onus burden of proof requiring the employer to establish that no reprisal occurred.

Having found that the employer contravened the Securities Act, the Court ordered the employer to pay the Plaintiff two times the amount of his salary plus his discretionary bonus from the date of the reprisal to the date of the order, with interest, amounting to CA$5,379,808 plus prejudgment interest, in accordance with the payment remedy expressly provided for in the Act.

As the first case addressing the anti-reprisal provisions under the Securities Act, McPherson provides important guidance for employers and employees in Ontario's capital markets facing employee management and reprisal allegations.

2. Important human rights cases from 2025

(a) Human Rights Tribunal of Alberta awards costs against complainant

Shodunke v. Paladin Security Group Ltd.⁷, constitutes a rare example of when a human rights tribunal may exercise its power to award costs against a complainant. In that case, the Human Rights Tribunal of Alberta concluded that the complainant had engaged in an abuse of process by recording the proceedings without permission, concealing key documents and failing to disclose relevant information, filing a claim with no evidence to substantiate the allegations, engaging in improper conduct, including making untruthful, improper allegations and threats against the employer's counsel and sending many emails to the Tribunal requiring repeated intervention of the Tribunal, and failing to follow the Tribunal's directions regarding deadlines. The Tribunal awarded costs of CA$25,000 against the complainant.

(b) Employee's medical leave does not protect against dismissal in all circumstances

In Amies v. Lethbridge Family Services⁸, the Human Rights Tribunal of Alberta confirmed that an employee's medical leave does not preclude an employer from dismissing the employee for non-discriminatory reasons on their return to work. In that case, the employer terminated the complainant's employment on the day she returned from medical leave. The employer denied any discrimination, stating that the complainant's employment was terminated for just cause, for reasons unrelated to any disability. Prior to going on medical leave, the complainant was subject to three separate workplace investigations. Due to the findings of these investigations, and the complainant's existing disciplinary record, the employer determined that the employment relationship was no longer tenable. However, the employer decided to suspend the termination of the complainant's employment until she returned from medical leave. The Tribunal Member concluded the delay in the respondent's decision was reasonable, as it had chosen to accommodate the complainant's leave and found that the termination was not discriminatory as the reasons were unrelated to her leave or disability.

3. Key legislative updates from 2025

(a) Pay transparency in Ontario and British Columbia

As of January 1, 2026, provincially regulated employers with 25 or more Ontario employees are required to comply with new pay transparency requirements, which include the following:

• Publicly advertised job postings must disclose total compensation (which term includes not just base salary but also incentive bonuses and commissions) or a range of expected compensation. If a range is provided, it cannot exceed CA$50,000.
• Compensation information is required only for positions where the expected compensation or the upper limit of the range is CA$200,000 or less.

The following exceptions therefore apply to this new pay transparency requirement. It doesn't apply to: (i) general recruitment campaigns that don't advertise a specific position; (ii) positions that are restricted to existing employees of a company; (iii) postings for positions to be performed outside of Ontario; (iv) federally regulated employers; (v) employers with fewer than 25 Ontario employees; or (vi) postings with an expected annual compensation or expected range of compensation which is more than CA$200,000 annually.

The sorts of things which will not be included in the compensation number or range are the following: true discretionary bonuses (which are rare), referral bonuses, signing bonuses, equity such as stock options, RSUs and PSUs, and benefits plan contributions.

While the new requirements clearly speak to expected compensation, that can be difficult for a company to estimate when it is looking to hire someone that it does not know and a large portion of the potential compensation will be based on the employee's performance. Expected compensation is not the same thing as desired compensation, and it can be difficult to draw a line between expected compensation and the employee's performance ability. It remains to be seen how the Ministry will interpret these new requirements when one is posting for a job where the expected variable compensation is difficult to quantify in advance and where the total expected compensation will not exceed CA$200,000. Employers may want to consider a posting which clearly breaks out the expected base compensation and then separately breaks out the range of expected potential incentive compensation, having regard to such factors as the applicant's skills, prior relevant experience, specific degrees, and certifications, individual and/or corporate performance, and geographic location.

In British Columbia, all provincially regulated employers with 50 or more employees in British Columbia must complete and post a pay transparency report by November 1, 2026. The report is to be posted on a publicly accessible website or in a visible place in each workplace and be made available to anyone upon request. Employers must determine whether they meet the reporting threshold based on the number of employees working in British Columbia as of January 1 of the applicable reporting year. The Government of British Columbia provides an online reporting tool and guidelines to assist employers in completing their pay transparency reports. After the initial report, reports must be prepared and published annually by November 1.

(b) New job posting requirements for Ontario employers

In addition to the above pay transparency obligations, as of January 1, 2026, provincially regulated employers in Ontario must comply with the following when it comes to publicly advertised job postings:

• No Canadian experience requirement: No publicly advertised posting shall include any Canadian experience requirements.
• AI disclosure: If artificial intelligence will be used to screen, assess or select applicants, this must be disclosed in the job posting.
• Retention: Employers must retain copies of every publicly advertised job posting and any associated application for three years after access to the posting by the public is removed.
• Vacancy: The job posting must disclose whether the position is currently vacant; and
• Keep applicants informed: Employers must update applicants who were interviewed within 45 days and retain the interview information for three years after the applicant was informed.

Job posting platform requirements

Also effective, January 1, 2026, operators of job posting platforms (defined as an online platform that displays publicly advertised job postings but does not include a platform operated by an employer that only advertises its own positions) are required to: (i) have a mechanism for users to report fraudulent publicly advertised job postings; (ii) develop a written policy with respect to any fraudulent publicly advertised job postings which is kept for three years after the policy ceases to be in effect; and (iii) display both the policy and the reporting mechanism in a conspicuous location on the job posting platform.

(c) Introducing job seeking leave for provincially regulated employers in Ontario

Effective November 27, 2025, if 50 or more employees receive notice of termination, an employee who receives such a notice is entitled to three days of unpaid leave to engage in activities related to obtaining employment. Employees who wish to take this leave are to advise the employer at least three days in advance, if possible.

4. What's next for 2026?

As noted above, Canadian employers will be anxiously awaiting several decisions from the appellate courts as they look for clarity on issues related to the enforceability of termination provisions and the extent of an employee's entitlements to equity based compensation over the notice period.

In addition, compliance deadlines for new pay transparency laws become effective at various points in 2026. In particular, the requirement for all provincially regulated employers with 50 or more employees in British Columbia to complete and post a pay transparency report by November 1, 2026, is likely to garner significant attention.

Finally, Canadian employers will continue to steel themselves for the potential disruption posed by the continued emergence of artificial intelligence and the upcoming negotiations between Canada, the United States and Mexico over the Canada-United States-Mexico Agreement (CUSMA).

We wish to thank the national Employment and Labour team for their valuable contributions and expertise showcased in this publication.

Footnotes

1. 2025 ONSC 952.↩

2. 2024 ONSC 1029.↩

3. 2025 ONSC 2959.↩

4. 2025 ONSC 7010.↩

5. 2025 BCCA 284. For more information, see BC Court of Appeal affirms duty to mitigate for fixed-term employees - Dentons Canadian Employment & Labour Law.↩

6. 2025 ONSC 5226.↩

7. 2025 AHRC 2.↩

8. 2025 AHRC 19.↩

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Specific Questions relating to this article should be addressed directly to the author.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.