Ontario Court of Appeal Answers Questions About Enforceability of Termination Clauses that Include the Wording “At Any Time”

5 minute read
September 9, 2026
Employment & Labour Law, Termination

Jennifer Zeilikman

It is arguable that the most important clause in every employment contract in Ontario is the contract’s termination clause. Whether or not an employment contract has a valid termination clause is one of the most contentious questions in employment law and the basis of a copious amount of litigation involving claims for wrongful dismissal in Ontario.

This blog provides a very important update related to recent jurisprudence. First, we review the issue of termination clauses in employment contracts and why the language of “at any time” used in termination clauses has caused concerns related to a termination clause’s enforceability. We move on to discuss the lower courts’ decisions related to this topic and review the recent Ontario Court of Appeal decision that tries to find a path through to a resolution. Finally, we examine if the Ontario Court of Appeal was successful in its endeavor or whether further questions remain.

For our recent blogs discussing the Ontario’s superior court decisions related to this topic, please refer to our blogs entitled Questions around enforceability of termination clauses with the phrase “at any time” and Learn Why Termination Clauses in Employment Contracts Are So Important Upon Termination.

Let Us Review the Issue of Termination Clauses and “At Any Time” Language in Ontario

A termination clause in an employment contract or employment agreement sets out how an employee will be terminated or fired and what entitlements to notice of termination or termination pay that employee is entitled to upon termination. Employers often attempt to limit an employee’s notice of termination entitlement to the notice entitlements found in Ontario’s Employment Standards Act, 2000 (“ESA”) via the language contained in the termination clause. If that clause is found to be unenforceable, the employee would be entitled to both the notice entitlement found in the ESA and in the common law.

There came a series of Superior Court of Justice decisions in Ontario that involved language contained in the termination clause that referred an employer’s ability to terminate an employee “at any time” or at the employer’s “sole discretion.” The question then arose as to whether that language ran contrary to Ontario’s ESA rendering termination clauses with that or similar wording unenforceable.

Lower Court Decisions

The first two cases set out that the words “at any time” may cause a termination clause to be held to be unenforceable. These cases are Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029 and Baker v. Van Dolder’s Home Team Inc., 2025 ONSC 952.

In Dufault, the court held that if a termination clause set out that the employer was entitled to terminate at the employee “at any time” and at the employer’s “sole discretion” then the employer would run afoul of the ESA, and as such, that clause was held to be unenforceable. However, in Baker, the termination clause did not also include the wording that referenced the employer’s “sole discretion.” However, the court in Baker still went on to hold that the termination was unenforceable.

The second set of cases is Li v. Wayfair Canada ULC., 2025 ONSC 2959 and Jones v. Strides Toronto, 2025 ONSC 2482. Li and Jones are not congruent with the first two cases. Specifically, in Li, the Ontario court held that even though the termination clause contained the phrase “at any time and for any reason” the clause remained enforceable. The courts did not provide much guidance as to why Li and Jones were distinguishable from Baker and Dufault.

The Decision of Ontario’s Court of Appeal

The Ontario Court of Appeal heard two appeals at the same time (Baker and Li) and released one decision incorporating both. The Court decided to use an interpretative framework by which the Court recognized the long-standing principle that employment contracts should be interpreted differently than other commercial agreements given the interests of vulnerable employees. However, the Court set out that determining employment contracts is still an exercise in contractual interpretation, with the goal being to understand the “objective intentions” of the parties as expressed in the wording of the contract as a hole, understood in the light of the relevant surrounding circumstances. The Court goes on to hold that given the wording of the termination provisions and each contract as a whole, that there was an objective intention by the parties to comply with the minimum standards of the ESA. As such, the appeal in Baker was allowed and in Li, the appeal was dismissed.

The Court highlighted that contracts must be interpreted by looking at the words of the contract in isolation but by also using the relevant set of circumstances at hand. Also, Ontario courts should avoid using a legalistic “magic words” approach “whereby certain words are considered in isolation will necessarily determine the legal effect of a contractual provision.” And that a contractual provision is not ambiguous merely because it is possible to identify multiple potential interpretations. The Court specifically notes that the “search for ambiguity” will not necessarily benefit employees in the longer term. As formulistic or technical interpretations of contractual language without regard to the intentions of the parties can lead to “indeterminacy and inconsistent results.”

Specifically, when it comes to the wording of “at any time” in a without cause termination clause, the Ontario Court of Appeal set out that the motion judge in Baker focussed on what was possible to interpret using the wording “at any time” rather than what was reasonable. In paragraph 40 of the decision, the Court agrees when read literally and in isolation, it is possible to find that there is inconsistency between the wording “at any time” and the ESA. But since, according to the Court, contractual wording must be viewed in context, it is “evident that the parties could not have intended” for the wording be contrary to ESA. The Ontario Court of Appeal applied a similar reason with respect to Li and the wording “for any reason.”

Further, the Court goes on to argue that the employer in Baker could not have reasonably intended that the wording “at any time” would give rise to a contradiction of the ESA because such an interpretation would defeat the purpose of the without cause termination provision itself which was to limit the employee to the minimum requirement of notice under the ESA. The meaning of the words “at any time” when looked at in context reflects the intention that a without cause termination will be valid and legally effective regardless of when it occurs.

The Court moved on beginning in paragraph 64 of the decision, to discuss the with cause termination clause in Baker. In Baker, even if the cause provision stated that if the plaintiff was terminated for “cause” that he would still be entitled to “minimum compensation or entitlements” prescribed by the ESA. The court held that there was no ambiguity with the wording in the for cause termination provision as employers may referentially incorporate ESA entitlements in an employment contract and such provisions are valid.

What Does This Mean for Termination Clauses in Employment Contracts in Ontario?

Here are some key takeaways from the Ontario’s Court of Appeal decision:

The language of “at any time” and “for any reason” will not necessarily breach the ESA and invalidate a without cause termination clause.
This is a move away from a formulistic approach to employment contract interpretation.
A contract is not in breach of the ESA because it is possible that the wording in a termination clause is in breach of the ESA.
The contract should be read as a whole and in context, and the intention of the parties must be assessed in order to determine the appropriate meaning of the wording contained in a termination clause.

How Can Zeilikman Law Help!

It is very important that an employee or employer approach an employment lawyer if they have any questions about whether a termination clause in an employment contract is legally enforceable. Failing to do so may result in the employee accepting far less than what they are entitled to upon termination of their employment. Similarly, failing to do so may result in an employer increasing their risk of litigation in a wrongful termination claim.

For more information about termination clauses, please review our blogs:

Employers and employees can contact our office at (905) 417-2227 or online here to schedule their own confidential consultation with Zeilikman Law.

The above article is for general information purposes only, does not constitute legal advice or create a solicitor-client relationship. Because each case is unique and factually driven, if you have concerns with regard to the foregoing issues, please make an appointment with one of our lawyers or a qualified legal practitioner elsewhere. We represent clients in the Greater Toronto Area including Toronto, North York, Markham, Vaughan, Thornhill, Newmarket, Aurora, Brampton, Mississauga, Barrie, Ajax, Whitby, Pickering and Oshawa.