Ontario employers received important guidance on termination clauses this month. In Baker v. Van Dolder’s Home Team Inc. and Li v. Wayfair Canada ULC, 2026 ONCA 568, the Ontario Court of Appeal addressed conflicting decisions about whether an employment agreement can validly state that an employee may be terminated “at any time” or “at any time and for any reason.”
The Court confirmed that those words, on their own, do not make a termination clause unenforceable. While the decision interprets Ontario legislation and is not binding law in British Columbia, the issues it raises around termination language and minimum employment standards are relevant to employers and employees beyond Ontario.
Why the “At Any Time” Language Was Being Challenged
The dispute arose because the Employment Standards Act, 2000 (ESA) places limits on an employer’s ability to terminate employment in certain circumstances. For example, the ESA contains protections relating to statutory leaves and prohibits reprisals against employees for exercising rights under the legislation.
This led to an argument that a contract permitting termination “at any time” was broader than the employer’s actual legal right to terminate and therefore conflicted with the ESA. Put simply, an employment contract cannot remove minimum protections that the legislation gives employees. Ontario courts had reached different conclusions. In Baker v. Van Dolder’s Home Team Inc., 2025 ONSC 952, the termination provision was found unenforceable. In Li v. Wayfair Canada ULC, 2025 ONSC 2959, similar wording allowing termination “at any time and for any reason” was upheld. The Court of Appeal heard the cases together to resolve that inconsistency.
The Court Rejected an Isolated Reading of the Clause
The Court of Appeal concluded that the disputed words could not be interpreted in isolation from the rest of the employment agreement.
Read in context, “at any time” did not give the employers a contractual right to terminate employees in circumstances prohibited by law. Similarly, “for any reason” did not authorize termination for an unlawful reason. Instead, the wording reflected the general principle that an employer may terminate employment without cause, provided it complies with the employment agreement and applicable statutory requirements.
Importantly, the agreements contained language showing an intention to comply with the ESA. The Court emphasized that employment contracts should be read as a whole rather than having individual words pulled out and interpreted on their own.
This Does Not Make Termination Clauses Bulletproof
For employers, the decision provides welcome clarity about one commonly used phrase. It does not mean termination provisions are now less vulnerable to challenge generally.
The Court declined to reconsider its earlier decision in Waksdale v. Swegon North America Inc. That case remains important because a problem in one part of a termination provision can affect the enforceability of other parts of the same termination framework.
Employers therefore still need to review the entire clause carefully, including without-cause entitlements, cause provisions, benefits continuation, severance where applicable, and compliance with ESA minimum standards. Fixing one phrase will not save an agreement that has problems elsewhere.
What Employees Should Take from the Decision
For employees, seeing “at any time” in an employment contract does not mean statutory protections disappear. An employer still cannot contract out of minimum employment standards or rely on contractual language to justify a termination that is otherwise prohibited by law.
The decision may, however, make it more difficult to challenge an otherwise compliant termination clause solely because it contains this wording. That can matter significantly because an enforceable termination clause may limit an employee to the minimum amounts required by the ESA, rather than the potentially greater notice or pay that may otherwise be available at common law.
A Good Reason to Revisit Employment Agreements
The Court of Appeal resolves one question, but they also reinforce how much depends on the wording and structure of the entire employment agreement. Employers relying on older templates should consider whether their termination provisions still reflect current law, rather than assuming this decision validates every clause containing similar language.
For BC employers and employees, the Ontario decision does not change the law here, but it is a useful reminder that termination clauses need to be considered against BC’s own Employment Standards Act and the law that applies in this province.
For employees reviewing a new contract or a termination package, a few familiar words do not determine enforceability on their own. At Kent Employment Law, these are exactly the details we look at when reviewing employment agreements and termination entitlements, because what the contract says as a whole can ultimately determine what happens when the employment relationship ends.
