Clarity on Termination Clauses?

At the end of 2024 and beginning of 2025, the Courts ruled on two cases which provide (some) clarity into Termination Clauses. Back in 2023, my colleague Myca and I wrote a Blog article titled “Termination Tango” on the case Dufault v. The Corporation of the Township of Ignace, in which the Superior Court ruled that the termination provisions within Ms. Dufault’s contract were null and void. One of the areas of the ruling which had many Employment Lawyers interested was that the Court held that the words “AT ANY TIME” and “SOLE DISCRETION” were problematic as this could violate the statutory leave and/or the reprisal provisions provided in the Employment Standards Act.

The Township of Ignace appealed the decision to the Court of Appeal. In December 2024, the Court of Appeal dismissed the appeal as it was determined that the “for cause” termination clauses were unenforceable in accordance with the Waksdale decision (please see Blog titled “Termination Provision: Warning for Employers regarding the validity of the Employment Agreements”). The Court found it unnecessary to consider the Township’s Arguments that the “without cause” clauses were enforceable. Unfortunately, it is unclear whether the Court of Appeal would find these clauses enforceable. That being said, the Superior Court’s decision remains.

In February 2025, the Superior Court made another ruling on a “without cause” termination provisions in the case of Baker v. Van Dolder’s Home Team Inc. The Court held that the words “AT ANY TIME” alone are sufficient to make the termination clause unenforceable. The Court also commented on the “cause” termination provisions finding that the standard was lower than the standard in the Employment Standards Act which is that termination without notice must be based on willful misconduct, disobedience, and willful neglect.

Based on these cases, many Employer’s termination provisions can be found to be unenforceable resulting in higher payouts to employees upon termination. Employers should be regularly reviewing their employment contracts and updating them to ensure that the clauses conform to the ever-changing Employment Law legislation and jurisprudence. Please contact the Employment Law Team to discuss your Employment Contracts.