The termination provision in an employment agreement is intended to provide clarity to both employee and employer regarding what the employee will receive in the event the employment relationship is terminated.
Unfortunately, while courts across Canada have been consistent that termination provisions must be clear and unambiguous, they have been inconsistent in their interpretation of whether certain language causes the termination provision to be offside of legislative requirements, and therefore unenforceable.
For example, until recently it was common for termination provisions in Canada to state that an employee’s employment relationship could be terminated “at any time” or “for any reason” so long as the employer provided the employee with the minimum legislative entitlements applicable in their jurisdiction of work.
Recent employment-related litigation in Canada has called into question whether the inclusion of the “at any time” language is consistent with applicable employment standards legislation.
The argument from employees is that the ability for the employer to terminate employment “at any time” theoretically creates a scenario in which an employee could be illegally terminated during a job during protected leave of absence (for example a parental leave). The argument from employers is that the termination provision should be interpreted in the context of the employment agreement as a whole, which typically guarantees that under no circumstance will an employee receive less than their minimum legislative entitlements.
This issue is of practical importance to both employees and employers. If you have spoken to an e2r® Advisor about your organization’s employment agreements, you know that when a termination clause is deemed unenforceable, the employer’s obligations at termination could shift from a clearly defined legislative requirement to potential liability for months of common law notice pay.
What Have the Courts Said?
The answer to whether the inclusion of the “at any time” language in a termination provision is enforceable has been inconsistent across Canadian courts. There have been several cases where a court has struck down the termination provision and awarded the employee common law notice, and several others where the provision has been deemed enforceable.
Thankfully, this inconsistency is set to be resolved. The Ontario Court of Appeal is scheduled to hear appeals of two Ontario employment law decisions (Li v. Wayfair Canada ULC and Baker v. Van Dolder, both of which focus on the inclusion of the “at any time” language in a termination provision. The appeals were originally scheduled to be heard together on January 16, 2026, but have since been adjourned to March 26, 2026.
While a decision from an Ontario court will not necessarily result in the same conclusion being reached by courts in other provincial jurisdictions, it is common for employment law precedents from Ontario to influence contractual interpretation across Canada. As such, regardless of your jurisdiction of operation, all employers should be mindful of the result of these appeals.
Conclusion
Our team will continue to monitor the situation and keep you up to date on how the Ontario Court of Appeal (hopefully) finally provides clarity to Canadian employers and employees alike.
If you have questions regarding the current termination provision in your employment agreement templates, reach out to speak with an e2r® Advisor to discuss how best to protect your company from unnecessary risk and potential liability.