Termination Clauses Continue to Face Close Scrutiny
For human resources professionals, termination clauses are often drafted with the goal of creating certainty. Employers want language that clearly defines what happens if employment ends without cause, and they want that language to be enforceable. Recent Ontario decisions, however, continue to show that wording matters a great deal.
In particular, Ontario courts have signalled that clauses giving an employer broad termination rights may fail if they are drafted in a way that conflicts with the Employment Standards Act, 2000 (the “ESA”). The recent decisions in Chan v. NYX Capital Corp., Baker v. Van Dolder’s Home Team Inc., and Dufault v. The Corporation of the Township of Ignace are a reminder that phrases such as “at any time” and “at the employer’s sole discretion” can create real enforceability problems.
Chan v. NYX Capital Corp.: “At Any Time and for Any Reason” Was Too Broad
In Chan v. NYX Capital Corp., 2025 ONSC 4561, the Ontario Superior Court of Justice found that the employment contract’s “without cause” termination clause was unenforceable because it allowed termination “at any time and for any reason.”
The court relied on its earlier decision in Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029, to conclude that this wording attempted to contract out of the ESA. Because the clause was inconsistent with the statutory framework, it was invalid.
For employers, the practical point is straightforward: language that appears to give the employer unfettered discretion may go beyond what the ESA permits. Even where the clause also refers to ESA entitlements, the overall wording still matters. If the clause is drafted in a way that suggests termination can happen on terms broader than the ESA allows, a court may refuse to enforce it.
Baker v. Van Dolder’s Home Team Inc.: “At Any Time” Remained a Problem
The same concern appeared in Baker v. Van Dolder’s Home Team Inc., 2025 ONSC 952. There, the Superior Court found the “without cause” termination clause unenforceable because it reserved the employer’s right to terminate employment “at any time” while limiting the employee to their entitlements under the ESA.
This decision reinforces an important drafting lesson. A clause does not become safe simply because it references ESA minimum entitlements. If the clause also contains language that is overly broad or inconsistent with the ESA, the court may still find it unenforceable.
For HR teams, this means that termination clauses should be reviewed as a whole. The issue is not only whether the clause mentions the ESA, but whether the language used elsewhere in the clause undermines compliance with the statute.
Dufault: The Foundation for the Current Trend
The court in Chan relied on Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029, in concluding that the clause at issue attempted to contract out of the ESA. That decision remains an important reference point in the recent line of cases addressing termination language.
While the specific wording in each case may differ, the broader theme is consistent: Ontario courts are closely examining whether termination clauses preserve only what the ESA allows, or whether they go further. Where the wording suggests the employer may terminate “at any time,” “for any reason,” or at the employer’s “sole discretion,” the clause may be vulnerable.
Why This Matters for Human Resources Professionals
Termination clauses are often used to manage risk, support consistency, and provide predictability in employment relationships. But recent Ontario case law shows that poorly chosen words can defeat those goals.
For HR professionals, the practical implications are significant:
-
Termination clauses should be reviewed carefully before they are used in new contracts.
-
Existing template language should be checked for phrases that may be inconsistent with the ESA.
-
Broad wording that appears to give the employer unrestricted discretion should be treated with caution.
-
Clauses should be assessed as a whole, not just for isolated references to ESA minimum entitlements.
These decisions also highlight the importance of regular contract review. Language that may once have seemed standard can become problematic as the courts continue to refine how termination clauses are interpreted.
Practical Drafting Takeaways
Although each contract must be assessed on its own wording, the recent cases suggest several practical points for employers and HR teams:
-
Avoid language that suggests termination can occur “at any time” without qualification.
-
Be cautious with wording that gives the employer “sole discretion” to terminate if that discretion is not clearly tied to lawful limits.
-
Ensure the clause does not appear to permit termination in a manner that conflicts with the ESA.
-
Review termination language alongside the rest of the employment agreement to confirm internal consistency.
In short, the drafting objective should be clarity within the boundaries of the ESA, not maximum flexibility at the expense of enforceability.
Conclusion
Ontario courts continue to signal that termination clauses must be drafted with care. The recent decisions in Chan v. NYX Capital Corp., Baker v. Van Dolder’s Home Team Inc., and Dufault v. The Corporation of the Township of Ignace support the trend that the phrases “at any time” and “at the employer’s sole discretion,” when used in a termination clause, can render the clause unenforceable.
For HR professionals, the message is clear: termination language should be reviewed regularly and drafted with close attention to the ESA. Small wording choices can have major consequences if the clause is later challenged.