Surprising Ontario Court of Appeal Decision on “At Any Time” Termination Clauses: Does the Decision Provide Clarity, or More Confusion for Employers?

Employment agreements in Ontario have become increasingly difficult for employers to navigate, particularly when it comes to termination clauses.

For years, employers have faced uncertainty over whether seemingly minor wording issues could invalidate an entire termination provision and expose the employer to common law reasonable notice. In some cases, courts have closely reviewed individual words or phrases in termination language to determine whether the agreement improperly contracted out of minimum statutory entitlements under the Employment Standards Act, 2000 (ESA).

A recent Ontario Court of Appeal decision may be one of the most significant employment law developments for employers in recent years. However, whether it truly provides clarity remains to be seen.

In Baker v. Van Dolder’s Home Team Inc. and Li v. Wayfair Canada ULC, 2026 ONCA 568, the Court of Appeal considered whether termination clauses using language such as “at any time” or “at any time and for any reason” were unenforceable because they were inconsistent with the ESA.

The Court upheld the termination clauses. However, employers should be careful before assuming this decision settles the issue entirely.

The Background: Why “At Any Time” Became a Problem

Many employment agreements contain language stating that the employer may terminate the employment relationship “at any time” by providing the employee with the minimum notice, termination pay, severance pay, benefits continuation, and other entitlements required by the ESA.

Historically, this type of language was common in employment contracts. The intent was usually straightforward: the employer wanted to preserve the ability to terminate employment without cause, provided the employee received the minimum entitlements required by law.

However, recent case law created significant uncertainty around whether words such as “at any time” or “for any reason” could make a termination clause unenforceable.

The concern was that the ESA and other employment-related statutes do not allow employers to terminate employees in certain circumstances. For example, an employer cannot terminate an employee as a reprisal for exercising a statutory right, because of a protected ground under human rights legislation, or in other legally prohibited circumstances.

As a result, some courts were prepared to find that broad language such as “at any time” or “for any reason” could suggest that the employer had reserved a broader right to terminate than the law actually permits.

That created uncertainty for employers, even where the employment agreement otherwise appeared to preserve ESA minimum entitlements.

Baker and Wayfair: Conflicting Lower Court Decisions

The Court of Appeal heard Baker and Wayfair together because the two cases raised similar issues but had resulted in different outcomes at the lower court level.

In Baker, the employment contract allowed the employer to terminate employment “at any time, without just cause,” upon providing ESA minimum entitlements. It also included a separate with-cause termination provision. The motion judge found the termination provisions unenforceable, including because the words “at any time” were viewed as inconsistent with ESA protections that restrict termination in certain circumstances.

In Wayfair, the employment contract permitted termination “at any time and for any reason,” but also repeatedly tied the employee’s entitlements to the ESA and stated that the employee would receive no less than the minimum statutory entitlements. In that case, the motion judge upheld the termination clause.

The result was more uncertainty for employers. Similar language was being treated differently depending on the court, the wording of the agreement, and how the contract was interpreted.

The Court of Appeal’s Decision

The Ontario Court of Appeal upheld both termination clauses.

The Court emphasized that employment agreements should be read as a whole. In other words, courts should not isolate a single phrase and decide enforceability based only on those words. Instead, the agreement must be reviewed in its full context to determine the objective intention of the parties.

The Court also confirmed that a termination clause should only be found ambiguous where there are genuinely two or more reasonable interpretations after the agreement is read as a whole.

This is important because, in employment law, ambiguity in a termination clause is typically interpreted in favour of the employee. However, the Court cautioned against manufacturing ambiguity where the parties’ intentions are otherwise clear.

“At Any Time” Does Not Automatically Breach the ESA

The Court found that the phrase “at any time” does not, by itself, mean that the employer intended to terminate an employee in circumstances prohibited by the ESA or other employment legislation.

Instead, the Court viewed the language as confirming that a without-cause termination can be legally effective at any point during the employment relationship, provided the employee receives the entitlements required under the contract and the ESA.

In other words, “at any time” does not necessarily mean “at a time prohibited by law.”

For employers, this is a surprising and potentially important finding. It may assist employers in defending termination clauses that include this type of language, particularly where the contract clearly preserves ESA minimum entitlements.

“For Any Reason” May Also Survive

The Court also addressed the phrase “for any reason.”

This language has been particularly concerning for employers because some statutory protections focus on the employer’s reason for termination. For example, an employer cannot terminate an employee for exercising certain workplace rights or for reasons that are discriminatory.

The Court held that “for any reason” does not necessarily mean that the employer intended to terminate an employee for a prohibited reason. Rather, in the context of a without-cause termination clause, the phrase may simply mean that the employer is not required to provide a reason for ending the employment relationship, provided the employee receives the required contractual and statutory entitlements.

Again, this may be helpful for employers, but it should not be taken as permission to use broad or careless drafting.

With-Cause Termination Clauses Still Require Careful Drafting

The Court also considered with-cause termination language.

This area remains important because of the distinction between common law “just cause” and the ESA’s higher threshold of “wilful misconduct, disobedience or wilful neglect of duty” that is not trivial and has not been condoned by the employer.

In recent years, many termination clauses have been found unenforceable where the with-cause language denied all termination entitlements in circumstances that fell short of the ESA standard.

In this case, the Court found that the with-cause provision was enforceable because the agreement preserved the employee’s minimum ESA entitlements where required. The Court rejected the view that an employer must explain the legal distinction between contractual cause, common law just cause, and ESA wilful misconduct directly in the agreement.

For employers, this may be helpful. However, the drafting must still be precise. A with-cause provision that fails to preserve ESA minimum entitlements can still create serious risk.

Waksdale Remains Good Law

Employers should not overlook one critical point: the Court did not eliminate the risk created by Waksdale.

The principle from Waksdale v. Swegon North America Inc. remains important. If one part of a termination scheme is unenforceable, it may invalidate the broader termination framework and expose the employer to common law reasonable notice.

That means employers should not focus only on the without-cause provision. The entire termination section, including with-cause language, without-cause language, benefits continuation, severance pay, statutory references, and limiting language, must be reviewed together.

Does This Decision Actually Provide Clarity?

This decision is certainly significant. It may be welcome news for employers who were concerned that words such as “at any time” or “for any reason” would automatically invalidate a termination clause.

However, whether the decision truly provides clarity remains to be seen.

Ontario employment contract law remains highly technical. Courts continue to closely scrutinize termination clauses. A clause may survive one challenge but fail on another issue, especially if the agreement does not clearly preserve ESA entitlements or if the contract contains inconsistent language elsewhere.

It is also possible that further guidance may be needed from the Supreme Court of Canada, particularly given the importance of termination clause enforceability for employers and employees across Ontario.

For now, the decision is best understood as an important development, not a complete resolution of all uncertainty.

Key Takeaways for Employers

Employers should take several practical lessons from this decision:

Do not assume old contracts are enforceable.
Even if the Court of Appeal upheld the clauses in these cases, older employment agreements may still contain language that creates risk.
Read the termination clause as part of the whole agreement.
The enforceability of a termination clause may depend on how the entire contract is drafted, not just one sentence.
ESA compliance must be clear.
Employment agreements should clearly preserve minimum statutory entitlements, including notice, termination pay, severance pay where applicable, benefits continuation, and any other required ESA entitlements.
With-cause language remains a major risk area.
Employers should ensure that with-cause provisions do not improperly deny ESA minimum entitlements in circumstances where those entitlements are still required.
Waksdale still matters.
An unenforceable with-cause provision may still place the entire termination scheme at risk.
Regular contract reviews are essential.
Employment contract law continues to change. Employers should review their templates regularly rather than relying on older agreements.

Final Thoughts

The Ontario Court of Appeal’s decision in Baker v. Van Dolder’s Home Team Inc. and Li v. Wayfair Canada ULC is a surprising and important development for Ontario employers.

The decision may signal a more practical approach to interpreting employment agreements, particularly where the contract, read as a whole, shows an intention to comply with the ESA.

However, employers should not treat this decision as a green light to rely on outdated or loosely drafted termination clauses. The law remains complex, and the consequences of an unenforceable termination provision can be significant.

For employers, the safest approach is proactive review.

How Minken Employment Lawyers (Est. 1990) Can Help

Minken Employment Lawyers (Est. 1990) regularly advises employers on employment contracts, termination clauses, ESA compliance, workplace policies, wrongful dismissal risk, and employment law strategy. If your employment agreements have not been reviewed recently, now is the time to act.

If you are an employer or an executive employee, we can help.

Contact Minken Employment Lawyers (Est. 1990) today for a confidential consultation at 905 477-7011 or contact@minken.com to connect with our team.

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Please note that this article is for informational purposes only and does not constitute legal advice or opinion.