"At Any Time, For Any Reason": Ontario Court Clarifies Interpretation of Termination Clauses

In recent years, Ontario employers might have felt that the courts were reading termination clauses as literally as possible. On that approach, a word in an employment contract meant whatever its most literal reading could support, regardless of what the parties had intended. The consequences have been considerable. A single phrase, most notoriously, the words "at any time", has been enough to void an otherwise carefully drafted termination clause and expose the employer to liability for common law reasonable notice.

A measure of clarity has now arrived. In Baker v Van Dolder's Home Team Inc (“Baker”), a unanimous Court of Appeal for Ontario heard two appeals together, Baker and Li v Wayfair Canada ULC (“Li v Wayfair”), in which identical termination language had produced opposite results at first instance. The Court held that the words “at any time” and “for any reason”, read in the context of the contract as a whole, do not make a without cause termination provision inconsistent with the Employment Standards Act, 2000, SO 2000, c 41 (the “ESA”). It also upheld a with cause provision that defined cause more broadly than the wilful misconduct standard under the ESA, because the provision expressly preserved the employee's statutory minimum entitlements.

Background

Frederick Baker (“Baker”) joined Van Dolder's Home Team Inc. (“Van Dolder”) in November 2020 as the Controller, Head of Finance. His contract allowed Van Dolder to terminate his employment without cause “at any time, … upon providing you with only the minimum notice, or payment in lieu of notice and, if applicable, severance pay, required by the Employment Standards Act”. The contract's with cause provision defined just cause broadly but preserved “any minimum compensation or entitlements prescribed by the Employment Standards Act”. A separate clause promised that Van Dolder would, “at all times, comply with the Employment Standards Act”. Van Dolder terminated Baker's employment without cause in March 2023. Baker declined an offer of four weeks' pay in exchange for a release and sued for common law reasonable notice. Van Dolder paid him only his two-week statutory minimum.

Song Li (“Li”) joined Wayfair Canada ULC (“Wayfair”) in January 2023 as a Senior Product Manager. His contract allowed Wayfair to terminate his employment without cause “at any time and for any reason” on payment of his ESA minimums and stated: “In no event will you receive less than your statutory minimum entitlements under the ESA”. Wayfair terminated Li's employment without cause in October 2023 and paid him his one-week statutory minimum. He also sued for common law reasonable notice.

Lower Court Decisions

The two motion judges reached opposite conclusions. In Baker (2025 ONSC 952), the motion judge found both of Baker's termination provisions unenforceable. In his view, the words “at any time” conflicted with the ESA's prohibitions on terminating an employee on the conclusion of a statutory leave (s 53) or as a reprisal for attempting to exercise a right under the ESA (s 74). He found the with cause provision potentially unfair to “regular employees” because it did not explain the difference between the ESA's wilful misconduct standard and the contractual just cause standard. The motion judge nonetheless candidly observed that he had “no doubt that [Van Dolder], advised by capable counsel, intended only to comply with the ESA”.

In Li v Wayfair (2025 ONSC 2959), the motion judge reached the opposite result and enforced the without cause provision, finding that the contract, read as a whole, sought only to limit Li to his ESA minimums. Van Dolder and Li both appealed.

The Court of Appeal's Decision

The Court allowed Van Dolder's appeal and dismissed Li's. It reaffirmed that a termination clause must be clearly worded, and that where a clause can reasonably be read in more than one way, courts prefer the interpretation that benefits the employee. However, it stressed that interpreting an employment contract “is still an exercise in contractual interpretation.” That exercise follows the modern approach, which has moved away from technical and legalistic formulations toward a “practical, common-sense approach” focused on the parties' objective intentions, in light of the words used and the surrounding circumstances. A provision is not ambiguous merely because multiple hypothetical interpretations can be identified, and courts “should not strive to find an ambiguity where none reasonably exists”.

The question, then, was whether the parties “could reasonably have intended that Van Dolder was entitled to terminate Baker's employment in circumstances that are expressly prohibited, either in the ESA or other statutes”. They could not. Baker would have had no reason to give up his statutory protections. Conversely, Van Dolder could not have intended an interpretation that would invalidate its own termination clause and expose itself to reinstatement orders and prosecution under the ESA. Finally, Van Dolder's contractual commitment to comply with the ESA “at all times” must also include “at any time” when it terminates an employee without cause. The Court explained what the words “at any time” mean when read in context:

…this wording simply reflects a mutual intention that a without cause termination will be valid and legally effective regardless of when it occurs. But the use of this wording is not intended to render legally effective a termination that is expressly prohibited by the ESA. (at para 47)

The motion judge had therefore erred in principle by “reading the words literally and in isolation without regard to the parties' objective mutual intentions”.

The same reasoning applied to the words “at any time” in Li's contract. The additional words “for any reason” did not change the result. Li's without cause provision repeatedly affirmed his entitlement to his ESA minimums, and “[g]iven this scrupulous intention to comply with the ESA, it is illogical to read the inclusion of the words 'for any reason' as somehow expressing a contrary intention”. The words “for any reason” simply mean that the employer need not give a reason for a termination without cause.

Turning to Baker's with cause provision, the Court acknowledged that its definition of cause was broader than the ESA's wilful misconduct standard. The Court of Appeal has previously struck down with cause provisions that denied the employee all compensation for misconduct falling short of that standard, including in Dufault v The Corporation of the Township of Ignace, 2024 ONCA 915. However, unlike those clauses, Baker's provision expressly preserved his statutory minimums, and “[t]he legal effect of this proviso is to bring the With Cause Provision into alignment with the ESA”. In other words, even if Baker were dismissed for cause as the contract defined it, he would still receive his statutory notice, benefits continuation and severance pay unless his conduct amounted to wilful misconduct under the ESA. In addition, the motion judge's fairness concern did not hold up. He was worried that employees unfamiliar with the ESA would assume they were entitled to nothing if they were dismissed for breaching the contract's definition of just cause. The contract, however, expressly told Baker that he would receive his ESA entitlements. While an employee may not know exactly what those entitlements are, that “is quite a different matter from the employee leaping to the conclusion that the entitlements are nonexistent”.

Because every provision complied with the ESA, the Court declined Van Dolder's invitation to reconsider Waksdale v Swegon North America Inc., which holds that if one termination provision in an employment contract breaches the ESA, all of the contract's termination provisions are unenforceable. The Court closed with a pointed observation:

If the minimum entitlements under the ESA are for any reason deemed to be insufficient or inadequate substitutes for common law reasonable notice, that is a matter for the legislature rather than the courts. (at para 84)

In light of these findings, the Court allowed the appeal in Baker and set aside the motion judge's order. Since both of Baker's termination provisions complied with the ESA, and Van Dolder had paid him his full statutory entitlements, his wrongful dismissal action was dismissed. He was ordered to pay Van Dolder $2,500 in costs, as the parties had agreed. The Court dismissed the appeal in Li v Wayfair, upholding the motion judge's decision, and ordered Li to pay Wayfair $10,000 in costs.

Takeaways

Baker clarifies how Ontario courts will assess termination clauses. Enforceability is determined by what the parties objectively intended, read in the context of the whole contract. It does not turn on whether an isolated phrase can be read to create a hypothetical conflict with the ESA.

For Alberta courts, Baker is persuasive rather than binding. Alberta's Employment Standards Code, RSA 2000, c E-9 (the “Code”), frames the exception to termination notice around “just cause” rather than wilful misconduct, so the with cause problem is largely an Ontario one. The “at any time” argument, however, could be applied here, since the Code also protects employees on job-protected leave and against reprisal, and Baker provides a well-reasoned answer. The Alberta Court of Appeal has held that clear and unequivocal language is required to displace reasonable notice (Holm v AGAT Laboratories Ltd), so careful drafting matters here too.

Employers should review their employment agreements carefully to ensure that termination provisions are clearly drafted, comply with applicable employment standards legislation, and reflect the parties’ objective intentions. Employers should also consider seeking legal advice before relying on or revising these provisions. Contact Kelly Nicholson or Janika Sumaylo in Calgary, Joël Michaud in Edmonton, or any member of Field Law’s Labour + Employment Group for assistance reviewing or drafting enforceable termination provisions.

Link to decision: Baker v Van Dolder's Home Team Inc., 2026 ONCA 568