A recent decision from the Ontario Superior Court, Baker v. Van Dolder’s Home Team Inc., 2025 ONSC 952 (Baker) provides helpful guidance for employers with respect to termination clauses in their employment contracts. Specifically, the case addresses the common use of “any time” language in termination provisions. Employers often include this phrase to reserve the right to end employment when needed, but if this clause is not carefully drafted, it can create a legal risk.
The Baker case, at this point in time, has been appealed to the Court of Appeal. Specifically, the Court of Appeal will be reviewing whether the words “any time” impact a termination clause as previously indicated in Dufault, and the lower Court decision in Baker. We expect that a decision from the Court of Appeal will be released in 2026.
In Baker, the employee was terminated without cause and challenged the termination clause in their contract. The clause stated that the employer could terminate the employee “at any time” without cause, as long as they provided minimum entitlements required by the Employment Standards Act, 2000 (ESA) (Baker at paras 4, 10). The employee argued that the wording violated the ESA and therefore was unenforceable. The court agreed (Baker at para 20). Relying on recent cases like Dufault v. Ignace and building on the principles from Waksdale v. Swegon, the court found that stating the employer can terminate “at any time” suggests an unobstructed right to dismiss an employee (Baker at paras 5, 9). The court found that the “at any time” language could be interpreted to allow termination in situations where the ESA prohibits it and therefore is contrary to the legislation, for example if someone is on a protected leave, the ESA would protect them from being terminated, subject to specific exemptions under the statute and case law (Baker at para 10). As a result, the clause was deemed unenforceable, and the employee was entitled to common law notice.
The employer’s “with cause” clause was also struck down. It defined “with cause” using language that captured a broader range of conduct than what the ESA permits for denying minimum entitlements, such as poor performance after written warnings.[1] Under the ESA, an employee is only disentitled to termination pay in cases of “wilful misconduct, disobedience, or wilful neglect of duty,” a much narrower standard.[2] The court found that by failing to align the clause with the higher threshold of the ESA language, the employer exposed that “with cause” clause to invalidation.
For employers, Baker is a reminder that termination clauses must be drafted with precision and strict compliance with the ESA. Overly broad or vague language can render the clause unenforceable. Importantly, the court reiterated that even general saving language stating that the contract complies with the ESA is not enough to save a clause that substantively conflicts with the statute. If your termination provisions are void, you may be exposed to paying common law notice, a far costlier outcome than ESA entitlements. Employers should also be aware that courts are consistently rejecting clauses that seek to provide less protection than the ESA, even unintentionally. The safest course is to have employment agreements proactively reviewed and updated to reflect current legal standards.
There are several key takeaways for employers:
- Avoid using phrases like “at any time” or “sole discretion” in termination clauses. Courts are reading this kind of language as inconsistent with ESA protections and finding them void.
- Make sure that your “just cause” clauses reflect the ESA’s high threshold of “wilful misconduct,” rather than broader common law or performance-based concepts.
- Recognize that general compliance or “saving” clauses do not protect you from poorly drafted provisions. Courts focus on the substance of the clause and not just its intentions.
- If one part of a termination provision is invalid, the entire clause may be struck down, leaving the employer exposed to common law notice.
- Employment contracts should be reviewed regularly. What was once considered standard language is increasingly being rejected by Ontario courts. Employers should work with counsel to ensure that their agreements reflect the most up-to-date legal standards.
The Baker decision underscores that drafting employment contracts is not a check-the-box exercise. The law around termination clauses continues to evolve, and courts are taking a strict approach to any language that might limit employee rights under the ESA, whether intentional or not. A proactive review of your employment agreements, particularly for key employees or roles where termination risk is higher, can help ensure your business remains compliant and protected from unexpected liability. The risk of using outdated or overly broad contract language is now simply too high.
Should you have any questions about your current employment contract, please contact Mann Lawyers to have one of our lawyers review your contract and determine if any changes are necessary.
This blog post was written by Tiffany Mayhew, Articling Student, and Travis Ujjainwalla, Practice Lead of our Employment Law team. Travis can be reached at 613-566-2060 or at travis.ujjainwalla@mannlawyers.com.
