Termination Clauses: At “Any Time” and for “Any Reason”?
Do the words “at any time” in an employment contract’s termination provision violate the Employment Standards Act (“ESA”)? How should courts interpret termination clauses where contractual language is capable of more than one meaning? The Ontario Court of Appeal set out a framework to clarify these questions in the 2026 combined appeal of Baker v. Van Dolder’s Home Team Inc. and Li v. Wayfair Canada ULC[i].
Context
The plaintiffs in both cases were employees terminated without cause who sued for wrongful dismissal, arguing that their employment contracts did not comply with the minimum requirements of the ESA. Despite similar wording in their “without cause” termination provisions, the lower courts reached opposite conclusions on whether those provisions were enforceable[ii]. On appeal, the Court considered the validity of both employees’ “without cause” provisions, as well as Baker’s “with cause” provision, which defined “just cause” more broadly than the ESA’s stricter standard of “wilful misconduct.”[iii]
These were specific issues discussed on appeal:
- Did the words “at any time” or “for any reason” make either termination provision unenforceable?
- Can a “with cause” provision use a broader definition of “just cause” than the ESA’s “wilful misconduct” standard?
—
Ultimately, the Court ruled in favour of both employers, finding all of the termination provisions at issue enforceable.
Key Takeaways for Employers
Ambiguity favours employees, but the ambiguity must be reasonable
In its analysis of both appeals, the Court first affirmed that where a termination provision is reasonably capable of more than one interpretation, courts should prefer the interpretation providing the greater benefit to the employee[iv].
However, the Court also clarified that a contractual provision is not ambiguous simply because a party can identify multiple possible interpretations of its wording. There must be two or more reasonable interpretations when the provision is considered in the context of the agreement as a whole. Courts should not search for ambiguity where none reasonably exists[v].
“At any time” or “for any reason” will not automatically invalidate a termination clause.
The Court also held that employment contracts should be interpreted using a “practical, common-sense approach”, reading the entire contract and considering the surrounding circumstances known to the parties when the agreement was made[vi]. The Court rejected the idea of ‘magic words’ which, when read in isolation, determine whether a termination provision is enforceable[vii].
Courts will therefore consider these words in context, rather than treating particular words or phrases as automatically fatal.
Employers should expressly preserve employees’ minimum ESA entitlements in their termination provisions.
The employers’ repeated commitments to ESA compliance in both contracts were important to the Court’s conclusion that the clauses were enforceable. Baker’s contract expressly stated that Van Dolder’s Home Team (“Van Dolder”) would “at all times” comply with the ESA[viii], while Li’s contract repeatedly guaranteed that he would receive his minimum ESA entitlements[ix]. The Court found it unreasonable to interpret these same contracts as simultaneously giving the employers the right to violate the ESA[x].
Applying this contextual approach, the Court found that “at any time” simply meant that an employer could terminate an employee without cause whenever it was otherwise lawful to do so[xi]. Similarly, “for any reason” meant that an employer did not need to establish a reason for a without-cause termination[xii].
A “just cause” provision does not have to mirror the ESA’s definition of wilful misconduct. However, if the contractual definition is broader, the provision must clearly preserve the employee’s minimum ESA entitlements.
A contract may define “just cause” more broadly than the ESA standard, but employees must still receive their minimum ESA entitlements unless their conduct meets the stricter statutory standard of “wilful misconduct.” In other words, conduct may be serious enough to justify dismissal without common law notice, while still leaving the employee entitled to minimum notice, benefits continuation, and, where applicable, severance pay under the ESA.
This was the case in Baker. His “with cause” termination provision listed several forms of conduct that could amount to just cause, but expressly provided that he would still receive any “minimum compensation or entitlements” required by the ESA[xiii]. The Court found that this language preserved Baker’s statutory rights: even if he were terminated for ”just cause” under common law, Baker would remain entitled to his minimum ESA entitlements unless his conduct also met the higher standard of wilful misconduct[xiv]. The provision was therefore enforceable.
The court also refused to reconsider Wakdsale, another seminal decision regarding employment law.
—
The Court of Appeal stated that it is far from obvious that a search for ambiguity in employment contracts will actually benefit employees in the long run. The Court decried what it may view as the current practice of employees scrutinizing employment contracts for technical interpretations of contractual language to void a reasonable termination provision. For employers, the decision provides greater flexibility in drafting termination provisions, but it does not diminish the importance of clear ESA-compliance language. Rather than focusing on individual words in isolation, courts will consider whether the employment agreement, read as a whole, preserves an employee’s minimum statutory entitlements.
How Our Team Can Assist You
Walker Law can assist you with a variety of legal matters, including disputes involving Employment Litigation Law, Civil Litigation Law, Commercial Litigation Law, and Contract Disputes.
[i] Baker v Van Dolder’s Home Team Inc; Li v Wayfair Canada ULC, 2026 ONCA 568
[ii] Ibid at para 2.
[iii] Ibid at paras 20-25.
[iv] Ibid at para 29.
[v] Ibid at para 32.
[vi] Ibid at para 30.
[vii] Ibid at para 31.
[viii] Ibid at para 45.
[ix] Ibid at para 54.
[x] Ibid at paras 41 and 55.
[xi] Ibid at para 46.
[xii] Ibid at para 60.
[xiii] Ibid at para 73.
[xiv] Ibid.