December 16, 2025

By Brian Babcock

We have written several articles on the tendency of Ontario courts to favour employees in wrongful dismissal claims.

THE ISSUE

In particular, courts have seldom upheld clauses in employment contract that attempt to limit payments available to the employee upon dismissal.

One of these is Dufault v. Township of Ignace which emphasized the phrase which stated that the clause applied to termination “at any time” as a violation of the Employment Standards Act, which made the clause unenforceable. The employee received common law damages.

The Court of Appeal upheld that result, without an express decision about the “at any time” clause and the Supreme Court of Canada declined to allow a further appeal.

You might think this was the last word from the courts on “at any time”.

Not so fast.

THE CASES

Despite the result in Duffault, a Superior Court judge in Li v. Wayfair Canada ULC  found a similar clause containing the phrase “at any time to be enforceable.

How can he do that?

He does what lawyers call “distinguishing the decision”. In other words, the judge in Li relied on the difference in the two clauses, not the similarities.

What might be more surprising however is that the judge in relied on a 2018 Court of Appeal decision to support his decision, despite the result in Duffault.

Where does this leave us?

Another case, Baker v. Van Dolder’s Home Team Inc is pending at the Court of Appeal. The parties are seeking further clarification of the “at any time” issue. The case is considered of enough general importance that the Ontario Chamber of Commerce has been granted leave to intervene and make submissions. It appears that the court will attempt to bring greater certainty and clarity to the interpretation of termination provisions.

Until Baker is decided, both employers and employees are left in limbo, which is very unfortunate. How can employers revise their contracts to conform to the law if we do not know what the law is? How can employees enforce their rights if those rights are not defined?

TAKEAWAYS

• The law as it applies to termination clauses is once again unsettled.
• Employers will likely continue to rely on Duffault.
• It will be more difficult for employees to determine whether the settlement offer is reasonable.
• Lawyers will do their best to help the parties to resolve disputes, but many disputes will be stalled until the decision in Li comes out.

 

WHAT WEILERS LLP CAN DO TO HELP YOU

The cost of having a lawyer review or draft your employment contract template, or where appropriate, create a custom agreement, is modest compared to the cost of litigation. Templates should be updated regularly to keep current with the law, and it is always risky to use a form of contract found on the internet or drafted by a non-professional.

Where you decide that you intend to terminate, Weilers LLP can also look at your existing agreement, consider all the relevant facts, and advise you regarding the potential for it to be found either valid or invalid, so that you can approach offers and negotiations on a well-informed basis.

We can assist with negotiating a severance package and defend employers in wrongful dismissal cases.

At Weilers LLP, we also advise employees and assist them in understanding and negotiating employment contracts at the front end of the relationship, and as to their rights on termination. It is always smart to have a lawyer review any termination offer before you accept it.