Today, June 17th, 2025 marks the five-year anniversary of the release of the decision of the Ontario Court of Appeal in Waksdale v. Swegon North America (2020 ONCA 291 (CanLll)). While employment contracts have faced repeated and diverse attacks on enforceability over the years, since the release of the Waksdale decision, employers have had a very tough time enforcing employment agreements, particularly those which provide for the right to terminate employment without cause upon provision of only Employment Standards Act, 2000 (“ESA”) minimums.
It was estimated that the Waksdale decision had rendered as many as 95% of employment agreements unenforceable at the time. The court in the Waksdale case held that if a for cause termination provision provided for the right to terminate without payment (which could violate the ESA as there are instances in which the ESA would still require payment even if there was cause for termination at common law), the without cause termination provision was also unenforceable.
Things for employers have gone downhill from there since then.
One month after the decision in Waksdale was released, a trial level decision in Rutledge v. Canaan Construction Inc. (2020 ONSC 4246 CanLII) was released in which the court refused to enforce a termination clause in a contract permitting the employee, who was a construction employee, to be terminated without notice, because while the provision was in keeping with the ESA, it was “possible” that the construction employee would have been something other than a construction employee when terminated, in which case notice was required, and the contract would be in violation of the ESA.
Employers started adding “failsafe” provisions to contracts to assure employees and the courts that in no case would they not comply with the ESA. History over the past 5 years has shown that these are of limited, if any, assistance in enhancing enforcement.
To fast-forward past all the litigation involving the fall-out from Waksdale to Dufault v. Ignace (Township), (2024 ONCA 915 CanLII) in which the finding by the original judge was that a contract was not enforceable on the principles of Waksdale but also that the inclusion of the words in the without cause termination provision that the employee could be terminated “at any time, for any reason” also would also render that provision unenforceable as it implied termination could happen even when not legally permissible under the ESA. The Court of Appeal declined to comment on this aspect of the decision on the appeal. Leave was sought to appeal to the Supreme Court of Canada and remains pending.
In the interim, another trial decision picked up on the Dufault case in Baker v. Van Dolder’s Home Team Inc. (2025 ONSC 952 (CanLII)) in which the without cause termination provision included the words “at any time” (but not “for any reason”). The decision held that it was required to follow the decision in Dufault and find the termination provision to be unenforceable. We can criticize this decision as to its arguably incorrect interpretation of stare decisis, the variation in the same language which was not the same as in Dufault, and the correctness of such a conclusion; however, at the same time, no employer wants to face a decision like this or the cost of an appeal.
So, are termination clauses all unenforceable or is there hope?
I am happy to report there is hope. The Ontario Court of Appeal in Bertsch v. Datastealth Inc. (2025 ONCA 379 (CanLII)) upheld a termination provision in favor of the employer. The provision in question did not contain any Waksdale enforcement issues; it had a failsafe, and it did not have the words “at any time” or “for any reason” but it was a minimum ESA termination provision. The Court of Appeal held:
“The issue is not whether an ordinary person might arrive at an incorrect interpretation of the termination provisions of the employment agreement, but how the agreement can be reasonably interpreted. The termination provision specifically states that an employee who is terminated “with or without cause” will receive the minimum payments and entitlements under the ESA and its regulations. We see no error in the motion judge’s conclusion that the termination provision in the employment agreement is unambiguous, and that, when reasonably interpreted, it does not depart from the minimum standards guaranteed by the ESA. As such, the termination provision is enforceable and precludes the appellant’s claim for common law damages for “wrongful dismissal.”
What should employers do?
- Assume your contract templates need updating or at the very least a review.
- All new hires should sign the new contract which should form the job offer and must be signed before they start work.
- Existing employees should sign an updated contract in connection with any promotions or salary increases which are granted, as a condition of the promotion and/or increase, as the case may be (a modification to the new hire template clearly acknowledging service dates and reflecting status as a current employee).
- The law is constantly changing, update templates with your legal counsel regularly and attempt to anticipate the next big legal challenge which will be faced by employment contracts.