By Emily Slessor
This general legal information (not legal advice) is subject to change, and there may be exceptions based on your specific circumstances. You should obtain independent legal advice before taking any action which may impact your legal rights. If you are an employee or an employer and need legal advice regarding discipline or termination of employment surrounding time theft, an OA lawyer will be pleased to assist you with your situation.
Recent decisions from the Ontario Court of Appeal serve as an important reminder that even minor variations in the wording of employment contracts can have significant legal and financial consequences. Wrongful dismissal cases demonstrate that outdated or poorly drafted termination clauses may lead to substantial damages awards against employers. As such, the best way for employers to protect themselves is to have clearly drafted employment contracts that comply with the Ontario Employment Standards Act, 2000.
Key Areas of Risk in Termination Clauses
Employment law in Ontario is constantly evolving as new legislation and judicial decisions reshape the legal landscape. As a result, employment contracts that were once considered enforceable may no longer meet legal standards. Clauses that were previously uncontroversial are now being challenged in court, sometimes with surprising outcomes. This means that employers who have not reviewed their employment agreements in several years may be relying on provisions that courts would now consider unenforceable.
- “Termination at Any Time” Clauses
In Dufault v. Ignace (Township), 2024 ONCA 915, the Court of Appeal invalidated a termination clause purporting to allow an employer to terminate the employee “at any time” on terms that did not meet minimum standards under the Employment Standards Act, 2000. The consequence was severe: the court awarded the employee over $150,000 in damages, despite the employer believing only two weeks’ pay was owed. Under Ontario law, employment agreements are interpreted as a whole, meaning that one unenforceable clause can render an entire termination provision void, exposing employers to liabilities far beyond what they anticipated.
- Termination “For Cause” – Is It Properly Defined?
In Ontario, employers may terminate employees “without cause”, provided they give proper notice or pay in lieu of notice. In contrast, termination “for cause” such as in cases of serious misconduct typically does not require notice or pay in lieu of notice. However, even in cases of termination “for cause,’ employers must provide employees with their minimum entitlements under the Employment Standards Act, 2000 unless the employee engaged in willful misconduct. If a termination clause defines “cause” in vague or overly broad terms, it may be found unenforceable. Conversely, clear and legally compliant language can protect the employer. In Li v. Wayfair Canada ULC, 2025 ONSC 2959, the court upheld a termination clause because it clearly distinguished termination for cause from unlawful provisions and complied with the Employment Standards Act, 2000.
- Saving Clauses: Helpful When Carefully Drafted
A saving clause is a provision stating that if any part of the contract conflicts with the ESA, the legislation will override the contract. These clauses can provide a safety net, but only if carefully and clearly drafted. For instance, in Wilds v. 1959612 Ontario Inc., 2024 ONSC 3452, the Court cited an enforceable saving clause that stated:
“In the event that your entitlements pursuant to the Act exceed these contractual provisions, those statutory provisions shall replace these contractual provisions.”
Similarly, in Bertsch v. Datastealth Inc., 2025 ONCA 379, the Ontario Court of Appeal upheld a saving clause that was unambiguous and did not attempt to contract below Employment Standards Act minimums. Nonetheless, courts have consistently rejected vague or overly broad saving clauses.
Proactive Contract Reviews Can Prevent Costly Disputes
Reviewing and updating your employment contracts early can help your organization avoid costly disputes, legal uncertainty, and unexpected liability. At O’Neill Associates LLP, we regularly assist employers in:
- Reviewing existing employment agreements for enforceability,
- Updating outdated or risky language to reflect current law,
- Drafting new employment contracts that align with best practices and legal requirements.
If your employment contracts have not been reviewed recently, or if you are unsure whether they comply with current legislation, we encourage you to get in touch. Our team can provide a tailored review and help you implement clear, enforceable agreements that protect your business and meet your legal obligations.