The Ontario Superior Court decision in G. et al. v. Canadian Imperial Bank of Commerce, 2025 ONSC 5218 is an important reminder for employees working in federally regulated workplaces—such as banks, telecommunications companies, and interprovincial transportation businesses—that an unlawful termination clause can dramatically increase the compensation you are owed after dismissal.
In this case, employees successfully challenged their employer’s termination provisions. Since part of the clause violated the Canada Labour Code, the entire termination clause was unenforceable. As a result, the employees were entitled to significantly more compensation than the statutory minimum amounts they were initially paid.
The Background: Termination Following a Restructuring
The employees worked as mobile investment consultants for a federally regulated bank. Their employment relationship was governed by the Canada Labour Code, not provincial employment standards legislation.
In 2022, following a restructuring, the employees were terminated without cause after approximately 5.5 and 6.5 years of service. The employer paid only the minimum termination entitlements required under the Canada Labour Code.
The key issue before the Court was whether the termination clause in the employees’ contracts was enforceable. If it was not, the employees would be entitled to common law reasonable notice, rather than just minimum statutory pay.
The Problem: A “For Cause” Clause That Went Too Far
The termination provision in the contracts had three main components:
- Without-cause provision: setting notice based on years of service, with a minimum of three weeks and a maximum of 18 months
- Saving provision: stating the employer would comply with applicable employment standards legislation
- For-cause provision: allowing termination without notice for certain reasons, including “failure to perform your duties in a satisfactory manner”
The Court found the for-cause provision to be the fatal flaw.
Under the Canada Labour Code, termination without notice is permitted only where there is true just cause, which generally requires serious misconduct or persistent misconduct following progressive discipline. Poor performance alone does not necessarily meet that threshold.
By allowing termination without minimum statutory entitlements for reasons that fall short of the Canada Labour Code’s just-cause standard, the clause violated the Code.
Why One Illegal Term Can Void the Entire Clause
The employer relied on an earlier Small Claims Court decision that had upheld a similar clause. The Court rejected that argument, noting that the law has since changed.
The Court applied the Ontario Court of Appeal’s decision in Waksdale v. Swegon North America Inc., which established that termination provisions must be assessed as a whole. If any part of a termination clause is unlawful, the entire clause is unenforceable—even if the employer relies only on the “without cause” portion.
Because the for-cause provision breached the Canada Labour Code, it tainted the entire termination clause. The saving provision could not fix that defect.
The Result: Common Law Notice Applies
Once the termination clause was found to be unenforceable, the employees were entitled to common law reasonable notice.
After considering factors such as age, length of service, and role, the Court awarded:
| Employee | Length of Service | Age | Notice Awarded |
|---|---|---|---|
| Employee X | ~5.5 years | 38 | 7 months |
| Employee Y | ~6.5 years | 54 | 12 months |
The compensation included base salary, commissions, benefits, and the full annual bonus for the notice period—far exceeding the minimum amounts originally paid under the Canada Labour Code.
Key Takeaways for Employees
- Illegal termination clauses can dramatically increase what you are owed. Even a single unlawful term—especially in a “for cause” provision—can void the entire clause.
- Federally regulated employees are protected by the Canada Labour Code, which differs in important ways from provincial employment standards legislation.
- Accepting minimum statutory pay too quickly can be costly. Employers often rely on termination clauses that do not fully comply with the law.
- If you are terminated without cause, your employer cannot rely on an unlawful “for cause” clause to limit what you are owed.
If you work for a federally regulated employer and have been terminated, it is critical to have your employment contract reviewed by an employment lawyer before accepting any offer.