Ontario termination clause case law can change “at any time”

Two recent decisions in Ontario cast doubt on earlier rulings that the words “at any time” will void an employment agreement termination clause.  

In February 2025 we published an update (More termination clause drama in Ontario) that highlighted a troubling trend in Ontario termination clause case law – that the words “at any time” might render a clause unenforceable:

• In Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029 the court held that a termination clause that reserved the employer’s right to terminate “at any time” and at its “sole discretion” was unlawful for breach of the Employment Standards Act, 2000 (ESA). The court reasoned that these words might allow an employer to terminate employees when they are on a job-protected ESA leave or after they have made an ESA complaint about their working conditions. The court in Dufault also found the termination clause was unenforceable on two other grounds relating to the definition of “cause” and a failure to provide for all types of compensation in paying ESA termination entitlements.
• In Baker v. Van Dolder’s Home Team Inc., 2025 ONSC 952 the court held it was bound to follow Dufault and found that the inclusion of the words “at any time” in a termination clause were enough to void the clause. In Baker, the impugned clause did not refer to the employer’s “sole discretion.”

In our February update we stated that any prediction of widespread unenforceability of termination clauses following Baker was “premature at best.” We had reason to doubt that Dufault and Baker would be followed in the long run. 

Now we have two new decisions supporting that doubt:

• In Li v. Wayfair Canada Inc., 2025 ONSC 2959, the court held that a termination clause was enforceable despite allowing for the employer to terminate employment “at any time” and “for any reason.” It distinguished Dufault on the basis that in the clause before it there were no flaws related to the definition of cause or the scope of termination payments. The court did not provide any reasoning for distinguishing Dufault in relation to the “at any time” language.
• In Jones v. Strides Toronto, 2025 ONSC 2482, the court held that the presence of the words “at any time” in a termination clause, in the absence of the words “sole discretion,” do not contract out of the ESA. However, the court held the termination clause in issue was unenforceable on an alternative argument.

The Li and Jones decisions are incompatible with the Dufault and Baker decisions. Either the words “at any time” are problematic or they are not. Either the words “sole discretion” are necessary to follow the reasoning in Dufault or they are not. These are contradictions that the Court of Appeal for Ontario should address.

Unfortunately, the Court of Appeal has already passed over one opportunity to avoid this confusion. It dismissed an appeal in the Dufault case without addressing the “at any time” and “sole discretion” language, finding that the termination clause in issue was void for other reasons¹. We will have to wait for another decision – perhaps Li or Jones – to be appealed. 

In the meantime, the Norton Rose Fulbright Canada team will continue to assist clients in drafting enforceable employment agreements and in advocating for a common-sense approach to contractual interpretation.