When the Township of Ignace in northern Ontario terminated an employee 15 months into what was supposed to be a 38-month contract, its termination clause was thought to limit the payout to two weeks’ pay and continuation of benefits for a two-week period, in accordance with the Ontario Employment Standards Act (ESA).
Instead, in early 2024, an Ontario court ruled it unenforceable, ordering the township to pay the remaining 23 months of the contract. The final bill: over $150,000 more than the employer expected, plus interest and legal costs.
But this wasn’t an isolated case. Other organizations have been hit with similar surprises, explains Karin Pagé, a partner at Perley-Robertson, Hill & McDougall LLP with expertise in employment law.
How the words ‘at any time’ caused so much havoc
Pagé says a contract of employment differs from an ordinary commercial contract, given the importance of employment to self-worth, the power imbalance between employer and employee, and the remedial purpose of the ESA, all of which means that ambiguity in an employment agreement will be decided in favour of the employee.
According to Pagé, the law surrounding termination clauses had been relatively stable, “but the world got turned on its head around 2020, when the Ontario Court of Appeal (ONCA) upheld the Waksdale decision, which found that language which purports to allow a termination without notice for just cause is in breach of the minimum standards set in the ESA.”
In that case, the court also confirmed that if any part of an employment contract’s termination provision violates employment standards legislation, regardless of whether that part is being relied on, the entire termination clause is void. Consequently, the employee is entitled to common-law reasonable notice.
That’s a big deal for employers, because while the maximum ESA entitlement is a combined 34 weeks after 26 years of service, common-law notice can be several months, even exceeding 24 months in exceptional circumstances.
Because of this large gap, employers use contractual termination clauses to limit their exposure to these potentially higher payouts.
Following Waksdale, most employers updated their agreements to remove “for cause” language from their employment agreements. However, in Dufault v Ignace (Township), the court decided a termination provision was unenforceable both because of the presence of “for cause” language and because it purported to give the employer sole discretion to terminate the employee without cause “at any time” – which was held to be contrary to the ESA, which prevents an employer from terminating an employee following a protected leave or for exercising a right under the statute.
After Dufault, many courts similarly found the words “at any time” overreached by suggesting that an employer has the right to fire someone whenever it wants, making a termination clause null and void. But not all courts agreed:
- One group of rulings (including the case referenced at the top of this article) said using “at any time” – when especially paired with language giving the employer sole discretion – oversteps what the law allows.
- Another group said the phrase itself isn’t automatically fatal, and that it depends on how the rest of the contract is written and whether it still lines up with legal minimums overall.
Uncertainty resolved by Court of Appeal
Following a hearing this past March, on Aug. 6, 2026, ONCA released its decision on two conflicting lower court decisions, providing much-needed clarity to employers and employees alike.
In Baker v Van Dolder’s Home Team Inc. (and companion decision of Li v Wayfair), ONCA found the words “at any time” and “for any reason” will not automatically invalidate a termination clause where all indicators suggest the employer always intended to comply with the ESA.
Words must not be read in isolation, and courts must not strain to find ambiguity where none exists or is based on a potential or hypothetical interpretation only. ONCA found it was not reasonably intended or understood by the parties that by inserting the words “at any time” or “for any reason” into the contract, the employers would be entitled to terminate the employees’ employment in circumstances that are expressly prohibited by statute.
What employers should do now
By resolving the uncertainty, there should be less litigation regarding the enforceability of termination clauses in otherwise valid employment agreements. While this decision is welcome news to employers, especially those who have the seemingly innocuous “at any time and for any reason” words in their termination clauses, Pagé recommends they remain vigilant and ensure they have valid employment agreements in place.
“Employment agreements are definitely worth having in place” for both current and new employees, she explains. “But they should be reviewed to determine what their exposure might be.”
Here’s a checklist for employers:
- Audit existing contracts for “just cause” or other invalid terms
- Ensure termination provisions align with ESA minimums
- Review both “with cause” and “without cause” provisions together, since an ESA violation in one can invalidate the entire termination provision
- Revisit contracts regularly, since this area of law is shifting quickly
After all, the cost of getting it wrong could be the difference between a severance of a week or two against a couple of years.
This article does not constitute legal advice. Readers should contact Perley-Robertson, Hill & McDougall for advice regarding specific employment law matters.
