An Ontario court has ruled that an employer’s termination provisions in an employment contract were unenforceable, rejecting a motion for summary judgment in a wrongful dismissal case. The decision reinforces the principle that any unenforceable portion of a termination clause can render the entire provision invalid.
The case involved F.B., who was terminated without cause by Van Dolder’s Home Team Inc. — a custom exteriors firm that installs windows, doors and siding — on May 24, 2023. The dispute centred on whether the employment contract’s termination provisions complied with the Ontario Employment Standards Act, 2000 (ESA).
Specifically, the court examined the enforceability of both the “with cause” and “without cause” termination provisions.
‘Without cause’ provision deemed unenforceable
The employment contract allowed the employer to terminate F.B. “at any time” without cause by providing only the minimum entitlements required by the ESA. The court found that this language was inconsistent with the ESA, citing the recent decision in Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029.
In that case, the court ruled that a provision allowing an employer to terminate employment “at any time” was invalid, as it failed to account for ESA prohibitions on termination in certain circumstances, such as in reprisal for exercising statutory rights.
The judge held that the employer’s general statement that it would comply with the ESA did not save the provision. Citing Campbell-Givons v. Humber River Hospital (2021), the court reaffirmed that an incorrect statement of ESA entitlements within a contract renders the provision unenforceable, even if the employer includes language committing to ESA compliance.
‘With cause’ provision also struck down
The court further ruled that the contract’s “with cause” termination provision was unenforceable because it failed to meet the higher ESA standard of “wilful misconduct.” Under the ESA, an employer may only terminate an employee without notice or compensation for “wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned.” The contract, however, defined “just cause” more broadly, including “poor performance,” “unacceptable performance standards,” and “repeated, unwarranted lateness.”
Relying on Perretta v. Rand A Technology Corporation, 2021 ONSC 2111, the court found that the contract’s definition of just cause fell short of the ESA threshold. The judge noted that many employees may not appreciate the difference between the contractual just cause standard, the common law definition, and the ESA’s “wilful misconduct” requirement. The court held that without explicit reference to the correct ESA standard, the provision was invalid.
Application of the Waksdale principle
As a result of these findings, the court applied the reasoning from Waksdale v. Swegon North America, 2020 ONCA 391, which established that if any portion of a termination clause is unenforceable, the entire termination provision is void. Since both the “with cause” and “without cause” provisions were deemed invalid, the court ruled that the employer’s termination provisions could not stand.
Employer’s motion for summary judgment dismissed
Given the unenforceability of the termination provisions, the employer’s motion for summary judgment was dismissed. The case will proceed to a one-hour virtual hearing to determine damages, as agreed by the parties.
The judge acknowledged that the employer likely intended to comply with the ESA but emphasized that Ontario courts hold employers to a high standard when drafting termination clauses. Despite their best efforts, many employers continue to draft provisions that do not withstand judicial scrutiny.
For more information, see Baker v. Van Dolder’s Home Team Inc., 2025 ONSC 952 (CanLII).
