If the termination provisions in your organization’s employment contracts use the words “at any time” or “for any reason,” you know that the last two years have been full of uncertainty.

In early 2024, the Ontario Superior Court of Justice held in Dufault v. The Corporation of the Township of Ignace (“Dufault”) that a termination provision permitting the employer to terminate employment “at its sole discretion and … at any time” contravened Ontario’s Employment Standards Act, 2000 (the “ESA”) and was therefore unenforceable. In the years that followed, Ontario’s courts split, with some decisions following Dufault and others upholding nearly identical language. Employers were left guessing whether their termination language would hold up in court.

The stakes were significant. When an employee is dismissed without cause, the common law (judge-made law) establishes a presumption of “reasonable notice” of termination. A properly drafted termination provision in an employment contract can rebut that presumption and limit an employee’s entitlements, but courts read these provisions strictly. A termination clause that violates the ESA is unenforceable, and the employee may then claim wrongful dismissal damages based on common law reasonable notice.

The Ontario Court of Appeal has now granted employers a much-needed reprieve. In two appeals heard together, Baker v. Van Dolder’s Home Team Inc. (“Van Dolder”) and Li v. Wayfair Canada ULC. (“Wayfair”), the Court confirmed that the presence of “at any time” or “for any reason” in a termination provision is not fatal to its enforceability where the contract, taken as a whole, reflects an objective intention to comply with the ESA.

The termination provisions at issue

The impugned “without cause” termination provisions in the two cases were similar:

Van Dolder

Termination without cause: 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. If any additional payments or entitlements, including but not limited to making contributions to maintain your benefits plan, are prescribed by the minimum standards of the Employment Standards Act at the time of your termination, we will pay same. The provisions of this paragraph will apply in circumstances which would constitute constructive dismissal. [Emphasis added.]

Wayfair

After your probationary period concludes, in the absence of Cause, the Company may terminate your employment at any time and for any reason by providing you with only the minimum statutory amount of written notice required by the ESA or by paying you the minimum amount of statutory termination pay in lieu of notice required by the ESA, or a combination of both, as well as paying statutory severance pay required by the ESA, providing benefits continuance for the requisite minimum statutory notice period under the ESA and all other outstanding entitlements, if any, owing under the ESA. These payments and benefits shall fully satisfy all of the Company’s notice, severance and benefits continuance obligations upon the termination of your employment, whether arising under the ESA, the common law or this Agreement, and you agree you shall have no further entitlements unless expressly required by the ESA. In no event will you receive less than your statutory minimum entitlements under the ESA. [Emphasis added.]

 

The contract in Van Dolder also contained a “termination with cause” provision, which permitted termination “at any time for just cause, without prior notice or compensation of any kind, except any minimum compensation or entitlements prescribed by the Employment Standards Act” and defined “just cause” as including “any conduct which would constitute just cause under the common law or statute.”

Both employees argued that the phrases “at any time” (in the Van Dolder contract) and “at any time and for any reason” (in the Wayfair contract) purported to let their employers terminate their employment at times or for reasons prohibited by statute. The ESA and other Ontario statutes prohibit termination in certain circumstances, such as dismissing an employee because they took a protected leave or asserted a statutory right. On a literal reading, they argued, the provisions allowed exactly what the statutes forbid and were therefore unenforceable.

Despite their similarities, the two cases reached different outcomes in the courts below. In Van Dolder, the motion judge found the “without cause” provision inconsistent with the ESA and therefore unenforceable. In Wayfair, a different judge of the same court upheld the provision at issue in that case.

The “with cause” provision in the Wayfair contract drew a separate challenge. Under the ESA, an employee forfeits their statutory termination and severance entitlements only where they have engaged in “wilful misconduct,” a narrower standard than “just cause” at common law. The motion judge held that the clause was worded such that many employees would wrongly assume they had no entitlements at all if they breached the contractual standard and that, for this reason, the clause was void.

Each losing party appealed to the Court of Appeal: the employer in Van Dolder, and the employee in Wayfair.

The Court of Appeal’s unanimous decision

In a decision dated August 6, 2026 (Baker v. Van Dolder’s Home Team Inc., 2026 ONCA 568), Justice Monahan, writing for the Court of Appeal, concluded that the “without cause” termination provisions in both cases are valid and enforceable. The Court accordingly allowed the employer’s appeal in Van Dolder and dismissed the employee’s appeal in Wayfair.

The “without cause” provisions

Justice Monahan explained that courts must interpret contracts, including contracts of employment, based on the objective intention of the parties in all the surrounding circumstances. He found it “contrary to common sense” to read the provisions as meaning that the employers intended to violate the ESA and face the attendant penalties (up to $100,000 in fines or 12 months’ imprisonment), particularly when both contracts repeatedly affirmed each employer’s intention to comply with the ESA. These express commitments reinforced the Court’s conclusion that the parties could not have intended the provisions to permit terminations in circumstances prohibited by the ESA.

The Court considered the additional phrase “for any reason” in the Wayfair contract separately and held that it, too, was consistent with the ESA. Read in context, the phrase meant that the employer need not give the employee a reason for the termination.

The “with cause” provision

The Court of Appeal also upheld the “with cause” termination provision in Van Dolder’s employment contract, which the Ontario Superior Court of Justice had found unenforceable. Although the contract defined “just cause” more broadly than the ESA standard of “wilful misconduct,” the provision expressly preserved the employee’s minimum entitlements under the ESA upon a “with cause” termination. Justice Monahan confirmed that employers may referentially incorporate ESA entitlements in this manner and need not explain in the contract how the statutory standard of “wilful misconduct” differs from the contractual standard of “just cause.”

Waksdale remains good law

Finally, the employer in Van Dolder invited the Court of Appeal to reconsider Waksdale v. Swegon North America Inc. Under Waksdale, if a single termination provision in an employment contract violates the ESA, every termination provision in the contract is invalidated, including provisions that comply on their own. The Court declined to revisit this finding. Waksdale therefore remains good law.

Key takeaways

The decision of the Court of Appeal is good news for employers and a win for clarity and common sense. It restores a measure of predictability to an area of the law that has been uncertain since Dufault.

The central theme of the decision is a rejection of what Justice Monahan called a “legalistic ‘magic words’ approach,” under which the fate of a provision turns on particular words read in isolation. A provision is not ambiguous merely because a hypothetical alternative reading can be constructed; genuine ambiguity requires “two or more reasonable but differing interpretations” in the context of the entire contract, and courts “should not strive to find an ambiguity where none reasonably exists.”

While careful drafting is still required, the case confirms that courts must interpret termination provisions as a whole and in light of the parties’ objective intentions, rather than seizing on isolated phrases and treating them as fatal defects.

We encourage you to contact one of Miller Thomson’s Labour and Employment lawyers if you have any questions.