In B. v. Van Dolder’s Home Team Inc., 2025 ONSC 952, the Ontario Superior Court found that a termination clause was unenforceable because it suggested that the employer could terminate employment “at any time,” even though the Employment Standards Act (ESA) places important limits on when an employee can legally be dismissed.
The decision is another reminder that employment contracts must clearly and accurately reflect an employee’s rights under Ontario law. If they do not, an employee may be entitled to significantly more compensation under the common law rather than being limited to ESA minimums.
Background Facts
The employee worked for a real estate company and was terminated without cause in 2023. The central issue before the court was whether the termination provisions in the employment agreement complied with the ESA. If they did, the employee’s compensation would be limited to the minimum standards set out in the legislation. If they did not, the employee would be entitled to reasonable notice at common law, which is often substantially greater.
Why the Court Found the Termination Clause Unenforceable
The employment agreement stated that the employer could terminate the employee “at any time” without cause, provided that ESA minimum entitlements were paid.
The court found that this language was inconsistent with the ESA because employers do not have an unrestricted right to terminate employment whenever they wish. For example, employees are protected while taking certain leaves of absence and cannot be dismissed for exercising rights under the ESA.
By stating that termination could occur “at any time,” the agreement suggested that the employer had broader rights than the law actually permits.
The court relied on earlier decisions that reached similar conclusions, confirming that employment contracts must accurately describe an employee’s statutory protections.
Problems With the “Just Cause” Provision
The agreement also contained a detailed list of conduct that could amount to just cause for dismissal, including poor performance and repeated lateness.
The court found that several of these examples did not necessarily meet the ESA’s much narrower standard for denying termination pay and severance pay. Under Ontario law, employees generally lose those entitlements only when they engage in wilful misconduct or serious intentional wrongdoing.
Poor performance, mistakes, or attendance issues do not automatically satisfy that standard.
Because the contract suggested otherwise, the court concluded that the provision created uncertainty about the employee’s rights and was therefore unenforceable.
General References to the ESA Are Not Enough
The employer argued that the agreement should still be valid because it stated that ESA minimum entitlements would always be provided.
The court rejected that argument.
Ontario courts have repeatedly held that a general statement promising compliance with the ESA does not fix specific wording that misstates or undermines an employee’s legal rights. Employment contracts must clearly explain an employee’s entitlements rather than requiring employees to determine for themselves whether the contract complies with employment standards legislation.
The court emphasized that most employees cannot reasonably be expected to understand the distinctions between contractual definitions of cause, common law principles, and the ESA’s requirements.
Key Takeaways for Employees
“At Any Time” Language May Be Problematic
If your employment agreement says that your employer may terminate your employment “at any time,” that language may be unenforceable.
Ontario law prohibits employers from terminating employees in certain circumstances, including while employees are taking protected leaves or exercising rights under the ESA. Contract wording that ignores those protections may not be enforceable.
Detailed Cause Provisions Do Not Always Reflect Ontario Law
Many employment contracts include long lists of conduct that supposedly justify dismissal without compensation.
However, the ESA applies a much stricter standard. Employees are generally entitled to termination pay and severance pay unless they have engaged in serious, wilful misconduct.
Performance concerns, ordinary mistakes, or attendance issues may not eliminate those rights.
General ESA Compliance Clauses May Not Save Invalid Language
Courts continue to hold that broad statements promising compliance with the ESA are not enough when other parts of a contract create confusion or provide employees with less protection than the law requires.
Employees are entitled to clear and certain information about their rights at the time they sign an employment agreement.
Invalid Clauses Can Result in Greater Compensation
When termination provisions are found to be unenforceable, employees may become entitled to common law reasonable notice instead of ESA minimum entitlements.
The difference can be substantial. Common law notice periods are often significantly longer than the minimum standards provided under the legislation, resulting in much greater compensation following a dismissal.
Why This Decision Matters
This decision reinforces the principle that employment agreements must be drafted with precision and must fully comply with Ontario’s employment standards legislation.
The court also recognized that even experienced lawyers acting in good faith have struggled to draft enforceable termination provisions under current legal standards. If legal professionals continue to encounter difficulties in this area, employees should not assume that the limitations contained in their own contracts are necessarily valid.
Employees who have been dismissed should have their employment agreements reviewed before accepting that ESA minimums represent the full extent of their entitlements. In many cases, an unenforceable termination clause may result in a much larger common law notice award.
This case serves as another reminder that the wording of an employment contract matters. Even clauses that appear to comply with the ESA may be unenforceable if they create confusion about an employee’s rights or provide broader powers to an employer than the law permits. Employees who have been terminated should seek legal advice before assuming that the terms of their contract limit the compensation they may be entitled to receive.
This case serves as another reminder that the wording of an employment contract matters. Even clauses that appear to comply with the ESA may be unenforceable if they create confusion about an employee’s rights or provide broader powers to an employer than the law permits.
If you have been terminated and your employment agreement contains language stating that your employer may terminate you “at any time” or includes broad definitions of just cause, you may be entitled to more compensation than your employer has offered. Contact Monkhouse Law Employment Lawyers for a free 30 minute phone consultation to understand your rights and determine whether your termination provisions are enforceable.