As we wrap up 2025, employment lawyers have circled January 16, 2026 on their calendars. This is the date when the Ontario Court of Appeal (the “ONCA”) will hear the appeals in:
- the Baker v Van Dolder’s Home Team Inc. (“Baker”), and
- in Li v Wayfair Canada ULC (“Li”) decisions,
two of 2025’s notable termination clause decisions.
The hope is that the ONCA will finally determine whether the wording “at any time” is fatal, closing the loop on 2024’s most controversial employment law decision: Dufault v. The Corporation of the Township of Ignace (“Dufault”).
The Story so Far
In 2024, the court in Dufault ruled that the wording “at any time” and “sole discretion”, in the termination clause at issue, breached the Employment Standards Act (the “ESA”) because employers do not have absolute discretion to dismiss – for example, the ESA prevents employers from dismissing employees as an act of unlawful reprisal, or for taking a protected leave.
That said, the ESA does not prohibit dismissals based on timing, so the court’s decision was met with skepticism by the employment law bar, many of whom believe that the wording “at any time” should not be fatal.
Nonetheless, the ONCA declined to comment on the wording, and in February 2025, the court in Baker followed Dufault and struck the termination clause at issue for containing “at any time” language. It seemed that Dufault was here to stay; employment agreements with similar language were at risk.
However, in the summer of 2025, the decisions in Li and Jones v Strides Toronto (“Jones”) departed from Dufault, with the court determining that the wording “at any time”, on its own, was not a breach of the ESA. This seemed like a common sense course correction, but just a short time later, the decision in Chan v NYX Capital Corp (“Chan”) was issued. In Chan, the court again followed Dufault, striking the termination clause for containing the wording “at any time”.
The Upshot
These decisions have created much uncertainty, as it is not clear if termination clauses containing the “at any time” wording are enforceable.
For employees, if the only issue in their termination clause is Dufault language, then it becomes very risky to take the position that the clause is not enforceable, let alone file a wrongful dismissal claim.
Similarly, for employers, it is difficult to take an aggressive stance with respect to a claim for wrongful dismissal, as a court may end up finding that the clause is not enforceable.
Thus, although we are wrapping up 2025 with unsettled and conflicting caselaw, the ONCA will hopefully be providing much needed guidance in early 2026. Stay tuned, as we will continue to monitor developments and provide updates on our blog.
In the meantime, we can assist both employers and employees by providing strategic advice.
If you’re an employee, we can assess the termination clause in your employment agreement, advise you as to your entitlements, and provide you with our recommended approach.
If you’re an employer, we can review your employment agreements, provide you with our opinion on the enforceability of your termination clause, and advise with respect to any planned dismissals or wrongful dismissal claims. We can also update your agreements and termination clauses to ensure that they remain enforceable.
As the Dufault saga shows, the law is not always clear – if you think you need an employment lawyer, you probably do!
For further background, see these related posts.
Further Update on Termination Clauses: Baker v. Van Dolder’s Home Team Inc.
Over the last few years we have seen a pattern in Ontario of courts highly scrutinizing termination clauses.
Ontario Courts Continue to Strike Down Improperly Drafted Termination Clauses
For some time now, it has been clear that Ontario courts are taking a no-nonsense approach to the interpretation of termination clauses.
Your Termination Clause May Be Invalidated “At Any Time”
A recent unpublished decision of the Ontario Superior Court of Justice determined that simply saying that the employer can implement a without cause dismissal at its “sole discretion” and “at any time” is sufficient.
