Recent case builds on previous decisions setting high standards for employers
In Baker v. Van Dolder’s Home Team Inc., 2025 ONSC 952, the Ontario Superior Court of Justice reinforced the importance of termination provisions in employment agreements. This case applied the principle that if a portion of a termination provision is unenforceable, the entire termination provision is unenforceable. Employers need to be wary of the language used in their employment agreements.
In Baker, the worker was terminated “without cause” by his employer, Van Dolder’s Home Team, in May 2023. The issue to be determined by the court was whether the “with cause” provision of the employment contract was enforceable. The court found that the termination provision was unenforceable and dismissed the motion for summary judgment.
In coming to this conclusion, the court went through an analysis of both the “with cause” and “without cause” termination provisions in the worker’s employment contract.
The court referred to the Ontario Court of Appeal decision Waksdale v. Swegon North America, 2020 ONCA 391, in discussing how to determine whether the “with cause” provision of the employment agreement was unenforceable. First, the court had to consider whether the “with cause” provision was unenforceable by reason of its wording, and second, whether the “without cause” termination provision was unenforceable, which would render the “with cause” provision unenforceable.
Part of the employer’s “without cause” termination provision read: “we may terminate your employment at any time, without just cause.” The “without cause” termination was deemed unenforceable because of the language “at any time” within the provision. The Ontario Employment Standards Act, 2000 (ESA) does not allow employers to terminate employment at any time.
The “with cause” termination provision in this case listed specific conduct that was included as just cause and was also determined to be unenforceable. While the language of the provision references the ESA and alerts the employee that the ESA may provide for something other than what is in the agreement, a regular employee cannot be expected to appreciate the differences between the contractual definition of just cause, the common law definition of just cause and the ESA definition of willful misconduct that disentitles an employe to termination and severance pay.
Employment contracts are treated differently than commercial contracts. Employees are provided with some grace as many are unfamiliar with the ESA and the obligations imposed on employers. Employers should have employment contracts reviewed by legal counsel at least once a year to ensure the contract accurately reflects changes in the law.
Looking at this from an employer’s perspective, employers should ensure that their termination provisions are enforceable. Employers should also note that an incorrect statement about what the ESA permits is not saved my other general language within the agreement that the employer will comply with the ESA.
As the court described in this case, the potential unfairness of a termination provision, such as the one that was in dispute here which references just cause, lies in the fact that the employer has described in detail the contractual standard of just cause without providing details about the ESA wilful misconduct standard and the differences of the contractual standard. Baker emphasizes the importance of the language used within the termination provision. Employers should consider whether their employment contracts are accurately reflecting the ESA.
Thaniya Jeyachandra is an employment lawyer at Turnpenney Milne LLP in Toronto.