Introduction
Termination clauses and the limits of employer discretion under the Employment Standards Act, 2000 (ESA) continued to be a central focus in employment law in 2025. Courts scrutinized both “for cause” and “without cause” provisions, particularly clauses allowing termination “at any time” or limiting entitlements to ESA minimums, with decisions producing mixed results depending on the language in the contract.
The year also marked the conclusion of the Dufault saga, with the Supreme Court of Canada denying leave to appeal, leaving the Ontario Court of Appeal’s ruling intact. While this provides some guidance on the enforceability of overbroad termination clauses, unresolved questions remain regarding “at any time” language and overall compliance with ESA protections.
The cases summarized below offer a snapshot of the top termination clause decisions from 2025 and the lessons they provide for employers as we move into 2026. Collectively, these decisions underscore the ongoing importance of careful drafting, clarity, and alignment with ESA standards.
The Dufault Saga Concludes, But Questions Remain
1. Corporation of the Township of Ignace v. Karen Dufault, 2025 CanLII 51603 (SCC) (June 5, 2025)
Background – The Dufault Saga At A Glance
This summer, the Supreme Court of Canada brought the Dufault saga to a close by denying leave to appeal the Ontario Court of Appeal decision.
While the series of rulings has officially ended, important questions remain about the enforceability of termination clauses.
Given the significance of Dufault to the landscape of termination clauses, we have provided a brief review of the case below. This refresher highlights where the saga began, the aspects of it that have influenced the 2025 termination clause decisions summarized later on in the article, and what it may signal for 2026.
The Termination Provision That Started It All – Superior Court of Justice Decision
The Dufault saga began in February 2024, when the Ontario Superior Court of Justice decided a motion for summary judgment in Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029.
At issue was a now-infamous termination clause. The clause contained both “with cause” and “without cause” provisions (both found at para. 9 of the decision).
The “with cause” provision provided as follows:
4.01 The Township may terminate this Agreement and terminate the Employee’s employment at any time and without notice or pay in lieu of notice for cause. If this Agreement and the Employee’s employment is terminated with cause, no further payments of any nature, including but not limited to, damages are payable to the Employee, except as otherwise specifically provided for herein and the Township’s obligations under this agreement shall cease at that time. For the purposes of this Agreement, “cause” shall include but is not limited to the following:
(i) upon the failure of the Employee to perform the services as hereinbefore specified without written approval of Municipal Council and such failure shall be considered cause and this Agreement and the Employee’s employment terminates immediately;
(ii) in the event of acts of willful negligence or disobedience by the Employee not condoned by the Township or resulting in injury or damages to the Township, such acts shall be considered cause and this Agreement and the Employee’s employment terminates immediately without further notice. [Emphasis added]
The “without cause” provision provided in relevant part as follows:
4.02 The Township may at its sole discretion and without cause, terminate this Agreement and the Employee’s employment thereunder at any time upon giving to the Employee written notice as follows:
(i) the Township will continue to pay the Employee’s base salary for a period of two (2) weeks per full year of service to a maximum payment of four (4) months or the period required by the Employment Standards Act, 2000 whichever is greater...
(ii) with the exception of short-term and long-term disability benefits, the Township will continue the Employee’s employment benefits throughout the notice period in which the Township continues to pay the Employee’s salary. The Township will continue the Employee’s short-term and long-term disability benefits during the period required by the Employment Standards Act, 2000 and will pay all other required accrued benefits or payments required by that Act.
…
[Emphasis added]
The Court made several key findings about these clauses.
First, the “with cause” termination clause was unenforceable. This was because the clause established an overly broad and open-ended definition of “for cause” that extended well beyond the “wilful misconduct” (i.e. “being bad on purpose”) standard established under the ESA.
Specifically, the Court held that the employment contract’s “for cause” termination provisions contravened the ESA by improperly conflating the common law concept of “just cause” with the ESA’s much narrower standard for withholding termination pay and severance pay. The ESA permits disentitlement only in cases of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned. By defining “for cause” broadly to include failures such as poor performance and negligence, and by omitting key statutory qualifiers, the contract impermissibly expanded the circumstances in which statutory entitlements could be withheld. The Court emphasized that the ESA imposes a higher threshold than common law just cause, requiring intentional wrongdoing. Because the agreement obscured these protections from the employee and enlarged the employer’s termination rights, it was inconsistent with the ESA and unenforceable.
Second, the Court also found the contract’s “without cause” termination provisions unenforceable for failing to comply with the ESA’s notice and wage-continuation requirements. The clause provided for pay based on base salary alone; however, the ESA requires continuation of all “regular wages” during the notice period, which may include commissions, vacation pay, and other contractual compensation. The Court noted that the clause omitted key elements of compensation such as vacation pay, paid sick days, and paid leave provided in lieu of overtime, all of which formed part of the employee’s regular wages.
In addition, the Court found that the clause misstated the law by granting the employer “sole discretion” to terminate employment “at any time,” and that this was contrary to the ESA’s prohibitions on termination for taking protected leave or in retaliation for exercising statutory rights. Taken together, these deficiencies rendered the termination provisions inconsistent with the ESA and therefore unenforceable.
Finally, applying the Ontario Court of Appeal’s decision in Waksdale v. Swegon North America Inc., 2020 ONCA 391, the Court held that because components of the termination clauses violated the ESA, the termination clause was unenforceable in its entirety. Under Waksdale, termination provisions must be read as a whole, and a single provision that falls below ESA minimum standards will invalidate all termination-related clauses in the agreement.
On appeal, in Dufault v. Ignace (Township), 2024 ONCA 915, the Ontario Court of Appeal upheld the motion judge’s conclusion that the termination provisions in the employment contract were unenforceable, deciding the case solely on the basis of the “for cause” clause and the definition of “for cause” under the contract.
The Court agreed that the clause impermissibly defined “cause” more broadly than the narrow exception in the ESA permitting termination without notice only for wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned. By allowing termination without notice for conduct such as a “failure to perform services” and by using open-ended, non-exhaustive language (“includes but is not limited to”), the clause authorized termination in circumstances falling below the ESA’s high statutory threshold. Relying on Waksdale, the Court held that because the “for cause” clause violated the ESA, all termination provisions in the contract were void, regardless of whether the employee was terminated without cause. The appeal was dismissed.
Notably, the Court did not deal explicitly with the “at any time” language contained in the “without cause” provision, stating as follows:
[25] Given our conclusion that the “for cause” termination clause of the employment contract is unenforceable as contrary to the ESA and that, pursuant to Waksdale, this renders all of the termination provisions unenforceable, it is not necessary to consider the appellant’s arguments that the motion judge erred in finding the “without cause” termination clause also unenforceable as contrary to the ESA, and we expressly do not rule on that submission. The appellant argued that the motion judge’s findings in relation to the “without cause” termination clause may affect other employment contracts. In our view, resolution of the issues the appellant raises regarding the “without cause” termination clause should be left to an appeal where it would directly affect the outcome. [Emphasis added]
The Final Act – Supreme Court of Canada Decision
In its June 2025 decision in Corporation of the Township of Ignace v. Karen Dufault, 2025 CanLII 51603, the Supreme Court of Canada declined to grant leave to appeal, leaving the Ontario Court of Appeal’s decision in Dufault intact and bringing this long-running saga to a formal close. While this provides certainty regarding the enforceability of the specific termination clause at issue, it does not resolve all of the broader questions raised by the case. This outcome is of particular concern to employers, given the prevalence of “at any time” language in termination provisions.
But Wait, There’s More – “Spin-Off” Decisions
As a result, 2025 saw a number of lower-court decisions grappling with the unresolved status of “at any time” language in termination provisions. These cases, which may be described as Dufault’s progeny, have produced mixed results, reflecting the fact-specific nature of the analysis and the absence of definitive appellate guidance on this issue.
It is anticipated that an appeal from one of these decisions, potentially Baker (discussed below), may provide the Ontario Court of Appeal with an opportunity to address this question directly. Until then, the law continues to develop incrementally, requiring employers and counsel to navigate termination clause drafting with particular care rather than relying on settled certainty.
Another “At Any Time” Termination Clause Bites the Dust
2. Baker v. Van Dolder’s Home Team Inc., 2025 ONSC 952 (February 11, 2025)
Overview
In the first “Dufault” decision of 2025, Baker v. Van Dolder’s Home Team Inc., the Ontario Superior Court of Justice applied the precedent established in Dufault to a “without cause” termination provision that contained “at any time” language, finding it in conflict with the ESA and therefore unenforceable. For the sake of completeness, the Court also addressed the “with cause” termination provision and found it unenforceable.
(We note that this decision is currently under appeal. More details are provided below.)
The Contract
The impugned provision provided as follows:
2. 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.
3. Termination with cause: we may terminate your employment 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. Just cause includes the following conduct:
a. Poor performance, after having been notified in writing of the required standard;
b. Dishonesty relevant to your employment (such as misleading statements, falsifying documents and misrepresenting your qualifications for the position you were hired for);
c. Theft, misappropriation or improper use of the company’s property;
d. Violent or harassing conduct towards other employees or customers;
e. Intentional or grossly negligent disclosure of privileged or confidential information about the company;
f. Any conduct which would constitute just cause under the common law or statute. [Emphasis added]
The Decision
The plaintiff argued that the clause was invalid because it limited entitlements to only the ESA minimum while granting the employer unrestricted termination rights. The Court agreed, citing Dufault. Under the ESA, employers cannot terminate employees in certain circumstances, such as for taking protected leaves or exercising statutory rights, and general language stating compliance with the ESA could not cure the overbroad “at any time” wording.
Relying on Dufault, the Court held that a provision granting unrestricted discretion to terminate is inconsistent with the ESA. General language stating that the employer will comply with the ESA does not cure the overbroad wording.
The Court also reviewed the “with cause” clause, which defined “just cause” broadly, covering poor performance, dishonesty, and other misconduct, while allowing termination without notice or severance except as required by the ESA. The Court found that ordinary employees cannot reasonably be expected to understand the difference between contractual just cause, common law just cause, and the ESA’s wilful misconduct standard. As a result, this clause was also unenforceable because it risked unfairly denying employees their statutory entitlements.
Because both the “with cause” and “without cause” provisions failed to comply with the ESA, the Court dismissed the employer’s motion for summary judgment. The decision highlights the critical importance of ensuring termination clauses are carefully drafted to align with the ESA and its standards for notice, severance, and other employee entitlements.
The Pending Appeal and Intervenor Status Motions
This decision is currently under appeal. The Ontario Court of Appeal has granted intervenor status to two parties:
- In Baker v. Van Dolder’s Home Team Inc., 2025 ONCA 578, the Court allowed the Ontario Chamber of Commerce to intervene, recognizing its expertise and interest in labour and employment policy. The Canadian Association of Counsel to Employers’ motion was dismissed to prevent duplication and to maintain fairness in the appeal process.
- In Baker v. Van Dolder’s Home Team Inc., 2025 ONCA 829, the Court granted leave for the Income Security Advocacy Centre and Parkdale Community Legal Services to intervene as a coalition. The Coalition’s submissions are expected to provide additional perspective on the effects of termination clauses on employees and to address certain aspects of the ESA, including its remedial purpose and legislative intent, that are not fully addressed by the parties.
This appeal will be one to watch in 2026, as it will hopefully provide further guidance on the use of “at any time” language in termination clauses and ESA compliance.
Court of Appeal Affirms Termination Clause Invalid for Broad “Cause” Definition
3. De Castro v. Arista Homes Limited, 2025 ONCA 260 (April 3, 2025)
Introduction
In De Castro v. Arista Homes Limited, the Ontario Court of Appeal upheld the Superior Court’s ruling that an overly broad “for cause” termination provision in an employment contract violated the ESA and was therefore unenforceable.
The Contract
The impugned clause provided as follows (at para. 5 of the decision):
If you are terminated for Cause or you have been guilty of wilful misconduct, disobedience, breach of Employment Agreement or wilful neglect of duty that is not trivial and has not been condoned by ARISTA, then ARISTA will be under no further obligation to provide you with pay in lieu of reasonable notice or severance pay whether under statute or common law.
Immediately afterward, it provided the following definition of “cause” (at para. 6):
For the purposes of this Agreement “Cause” shall include your involvement in any act or omission which would in law permit ARISTA to, without notice or payment in lieu of notice, terminate your employment.
The Court upheld the motion judge’s decision, finding that the provision’s disjunctive and non-exhaustive language allowed termination in situations below the statutory threshold in the ESA, which limits “cause” to wilful misconduct, disobedience, or wilful neglect of duty that is not trivial and has not been condoned. For example, a simple breach of the employment agreement could justify termination under the contract, even if it did not meet ESA standards.
As a result, the entire termination provision was void, and the employee was entitled to common law reasonable notice rather than the contractual ESA minimum entitlements.
Ontario Court of Appeal Upholds ESA-Only Termination Clause
4. Bertsch v. Datastealth Inc., 2025 ONCA 379 (May 16, 2025)
Introduction
In Bertsch v. Datastealth Inc., the Ontario Court of Appeal upheld the Superior Court’s finding that an employment agreement providing only the minimum entitlements under the ESA was clear, unambiguous, and enforceable.
The Contract
The termination provision explicitly stated that the employee would receive only the ESA minimum entitlements, regardless of cause (found at para. 4 of the decision):
Termination of Employment by the Company: If your employment is terminated with or without cause, you will be provided with only the minimum payments and entitlements, if any, owed to you under the Ontario Employment Standards Act, 2000 and its Regulations, as may be amended from time to time (the “ESA”), including but not limited to outstanding wages, vacation pay, and any minimum entitlement to notice of termination (or termination pay), severance pay (if applicable) and benefit continuation. You understand and agree that, in accordance with the ESA, there are circumstances in which you would have no entitlement to notice of termination, termination pay, severance pay or benefit continuation.
You understand and agree that compliance with the minimum requirements of the ESA satisfies any common law or contractual entitlement you may have to notice of termination of your employment, or pay in lieu thereof. You further understand and agree that this provision shall apply to you throughout your employment with the Company, regardless of its duration or any changes to your position or compensation.
The contract also included a “failsafe” clause under the “General” provisions to ensure compliance with the ESA (at para. 5):
If any of your entitlements under this Agreement are, or could be, less than your minimum entitlements owing under the Ontario Employment Standards Act, 2000, as amended from time to time, you shall instead receive your minimum entitlements owing under the Ontario Employment Standards Act, 2000, as amended from time to time.
The Decision
The Court affirmed the lower court’s reasoning, noting that the termination provision was unambiguous and did not exceed or deviate from the ESA’s minimum standards. As a result, the clause was enforceable and effectively barred the employee from claiming common law damages for wrongful dismissal.
“At Any Time” Termination Clause Survives Litigation
5. Li v. Wayfair Canada ULC., 2025 ONSC 2959 (July 9, 2025)
Introduction
In Li v. Wayfair Canada Inc., the Ontario Superior Court of Justice upheld a termination clause that limited entitlements strictly to those required under the ESA, even though it allowed the employer to terminate “at any time.”
The Contract
The plaintiff challenged the clause, which stated that the company could terminate employment “at any time for Cause without notice, pay in lieu of notice, severance, benefits continuance or other compensation or damages of any kind… unless expressly required by the ESA, in which case only the minimum statutory entitlements will be provided.”
The agreement clarified, under the “Joining Bonus” provision, that “‘Cause,’ for all purposes in this letter… means any willful misconduct, disobedience, or willful neglect of duty that is not trivial and has not been condoned by the company and that constitutes ‘cause’ under the ESA.”
The Decision
Reviewing the agreement as a whole, the Court concluded that both the “for cause” and “without cause” clauses were intended solely to limit the employer’s obligations to those mandated by the ESA. The definition of “Cause” explicitly referenced the ESA, and the clauses ensured that statutory entitlements, including notice, severance, and benefits, would be provided where required.
The Court distinguished this case from Dufault, discussed in detail above, where the “anytime for cause” clause was broader, did not reference the ESA, and the “without cause” clause failed to account for statutory entitlements such as vacation or sick pay. By contrast, the Wayfair agreement explicitly tied termination and entitlements to ESA standards, preserving employee protections.
Ultimately, the Court emphasized that termination clauses are enforceable when read as a whole and consistent with employment standards legislation. The agreement was upheld, and the plaintiff’s claim for common law damages beyond the ESA-mandated minimum was dismissed.
Termination Clause Invalid for Multiple ESA Violations
6. Chan v. NYX Capital Corp., 2025 ONSC 4561 (August 6, 2025)
Introduction
In Chan v. NYX Capital Corp., the Ontario Superior Court of Justice held that a termination clause, including a probationary employment provision, conflicted with the ESA in multiple ways and was therefore void and unenforceable.
The Contract
The termination clause provided as follows (at para 8 of the decision):
10. Termination
Your employment with the Company may be terminated as follows:
(a) The first three months of your employment are probationary, during which time the Company may terminate your employment at any time and for any reason at its discretion, without notice or pay in lieu of notice, or other obligation.
…
(c) After you successfully complete the first three months of your employment, the Company may terminate your employment at any time without cause, upon providing you with notice, or pay in lieu of notice, benefits continuation and severance pay (if applicable) and any other benefits or entitlements strictly required in accordance with the minimum requirements set out in the ESA. It is agreed and understood that the provision of such notice or pay in lieu of notice, severance pay (if applicable), benefits continuation and any other benefits or entitlements required under the ESA shall constitute full and final satisfaction of any claim which you might have arising from or relating to the termination of your employment, whether such claim arises under statute, contract, common law or otherwise, save any claim that cannot be released by operation of a statute of Ontario.
(d) The Company may terminate your employment at any time for cause, without any obligation to you on account of notice or pay in lieu of notice, severance pay, or other obligation, other than accrued amounts owed to the date of termination. [Emphasis in the original decision]
The Decision
The Court found that the termination clause improperly attempted to contract out of ESA protections in several ways: allowing termination “at any time and for any reason” during the probationary period, permitting termination “at any time without cause,” releasing the employer from liability for termination-related claims, and allowing dismissal “for cause” without notice or severance pay.
Consistent with Waksdale, the Court held that any clause giving an employer broader termination rights than the ESA permits renders the entire termination provision void. As a result, all of the relevant termination clauses in the employee’s contract, including the probationary clause, were unenforceable, and the employee was entitled to reasonable notice at common law.
Termination Clause Struck Down for Overbroad “For Cause” Language
7. Ghazvini et al v. Canadian Imperial Bank Of Commerce, 2025 ONSC 5218 (September 25, 2025)
Introduction
In Ghazvini et al v. CIBC, the Ontario Superior Court of Justice invalidated a termination clause that defined “For Cause” too broadly, finding it contrary to the Canada Labour Code (CLC).
The Contract
The termination provision provided as follows:
By CIBC for Cause – CIBC may terminate your employment at any time without advance notice, or pay in lieu of notice, for Cause. Cause includes, but is not limited to, dishonesty, fraud, breach of trust, failure to perform your duties in a satisfactory manner, a breach of the Code, failure to obtain or maintain any required TLAs, failure to complete the pre-employment screening process to the satisfaction of CIBC, providing false, misleading or inaccurate information during the hiring process, a breach of any other term or condition of your employment, and any act or omission recognized as Cause under applicable law. If your employment is terminated for Cause, you will have no entitlement to any notice of termination, payment in lieu of notice of termination, severance or any other damages whatsoever (the “For Cause Provision”).
By CIBC without Cause – CIBC may terminate your employment at any time without Cause. If your employment is terminated without Cause, you will receive two weeks’ notice or pay in lieu of such notice, or a combination thereof, for each completed year of service, provided that you sign a full and final release in a form satisfactory to CIBC (the “Release”). The total period of notice or pay in lieu of notice, or combination thereof, shall be no less than three weeks and no more than eighteen months. Pay in lieu of notice may be provided in a lump sum, or by way of periodic payments and may be subject to mitigation, at the discretion of CIBC, in accordance with applicable laws.
If you do not sign the Release or if your employment is terminated within three months following the start of your employment, you will only receive your minimum entitlements pursuant to applicable employment standards legislation, and will not be entitled to any additional notice of termination, pay in lieu of such notice, or severance pay (the “Without Cause Provision”).
Compliance with Legislation – CIBC will comply with all requirements of applicable employment standards legislation. If any of the above Termination of Employment provisions do not conform to the notice and severance requirements of applicable employment standards legislation, the statutory minimums shall apply and be considered reasonable notice and severance (the “Saving Provision” and, in its entirety, the “Termination Provision”).
The Court found that the For Cause Provision was overbroad and ambiguous. While CIBC argued that “cause” meant just cause under the CLC, the clause included acts that may or may not constitute just cause depending on the circumstances, such as isolated dishonesty or minor breaches of company policy. The Court emphasized that employees must know with certainty when an employer can terminate their employment and that a provision that potentially allows termination without statutory entitlements violates the CLC.
The Court also noted that the Saving Provision could not rescue the defective termination provisions. Such clauses cannot reconcile a conclusory provision that conflicts with the statutory requirements from the outset, and employers must have an incentive to comply with the minimum requirements of the CLC.
As a result, the Court held that the For Cause Provision, and by extension the entire termination clause, was unenforceable. Consequently, the plaintiffs were entitled to common law reasonable notice of termination.
Key Takeaways for Employers
- Termination clauses must comply with the ESA: Clauses that clearly tie entitlements to ESA minimums are generally enforceable, while overbroad, vague, or inconsistent clauses risk being struck down.
- “At any time” language carries risk: Clauses granting employers unrestricted discretion to terminate without referencing statutory standards can render the entire provision unenforceable, as illustrated in Dufault and Baker.
- Define “cause” carefully: Broad or open-ended definitions of “for cause” that exceed ESA standards can expose employers to common law notice obligations.
- Remedial clauses are not a cure-all: General statements about compliance with the ESA or remedial clauses (e.g., “subject to the ESA”) cannot cure overbroad provisions that misstate employee rights.
- Context matters: Termination clauses are assessed as a whole. Under the Waksdale principle, a single defective provision can render the entire termination clause unenforceable.
- Ongoing uncertainty: Some aspects of “at any time” language remain unresolved at the appellate level. Employers should monitor developments in 2026, particularly appeals from cases like Baker, for further clarity.
This publication provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hunter Legal LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hunter Legal LLP.