While an Ontario judge said he had “no doubt” that an employer, advised by capable counsel, intended to comply with employment standards legislation with the language it used in its employment contract, he still found the termination clauses to be unenforceable.
“While I take no issue with the law and logic of cases such as Wood and Rossman, they set an exacting standard that many employers and knowledgeable counsel have failed to attain despite their good faith and best efforts,” wrote Justice Sproat of the Ontario Superior Court of Justice in dismissing the employer’s motion for summary judgment in a wrongful dismissal case.
The decision underscores the ongoing scrutiny of termination clauses that conflict with the Employment Standards Act, 2000 (ESA), and the potential implications for employers relying on similar provisions.
Background
The plaintiff, F.B., was employed by Van Dolder’s Home Team Inc. and was terminated without cause on May 24, 2023. His employment contract contained provisions for resignation, termination without cause, and termination with cause.
The key issue before the court was the enforceability of the termination provisions, particularly whether the “with cause” provision was lawful. The parties agreed to resolve the matter through a summary judgment motion brought by the employer.
Enforceability of the ‘without cause’ termination provision
The employment contract permitted termination “at any time” upon providing only the minimum ESA entitlements. The plaintiff argued that this wording contravened the ESA by suggesting an unrestricted right to terminate employment, regardless of statutory protections.
Citing Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029, the court agreed with the plaintiff’s submission that such wording was impermissible. The ESA prohibits terminations in specific circumstances, such as reprisals or terminations following statutory leaves. The court found that the employer’s contract improperly suggested an absolute right to dismiss employees, rendering the provision unenforceable.
The court emphasized that an incorrect statement of ESA entitlements is not salvaged by a general provision stating that the employer will comply with the ESA. It cited Campbell-Givons v. Humber River Hospital, (2021) 74 C.C.E.L. (4th) 279 (Ont. S.C.J.), in support of this reasoning.
The employer attempted to rely on Bertsch v. Datastealth Inc., 2024 ONSC 5593, where a “without cause” termination provision was upheld. However, the court found that case distinguishable because it did not contain a conflicting “with cause” provision.
Enforceability of the ‘with cause’ termination provision
The plaintiff also challenged the enforceability of the “with cause” termination provision, arguing that it contravened the ESA by applying a lesser standard than the statutory “wilful misconduct” threshold.
The court examined Perretta v. Rand A Technology Corporation, 2021 ONSC 2111, which found that just cause termination provisions failing to meet the “wilful misconduct” standard were unenforceable. In Perretta, the employer defined just cause broadly, including poor performance and unacceptable standards, without reference to the ESA’s more stringent threshold.
Similarly, in the present case, the employer’s contract permitted dismissal for various forms of misconduct that did not necessarily meet the ESA’s standard of “wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.” While the contract stated that ESA minimum entitlements would still be provided, the court found that this did not cure the ambiguity or the potential for misinterpretation by employees.
Citing Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158, and Rossman v. Canadian Solar Inc., 2019 ONCA 992, the court reiterated that employment contracts must provide employees with certainty regarding their entitlements.
Because the contract did not explicitly outline the ESA’s requirements in a manner accessible to employees, the court ruled the “with cause” provision unenforceable.
Conclusion
As a result of these findings, the employer’s motion for summary judgment was dismissed. Since the termination provisions were unenforceable, the case will proceed to a one-hour virtual hearing to determine damages.
The court acknowledged that the employer likely acted in good faith and intended to comply with the ESA. However, it noted that the jurisprudence places an exacting standard on employment contracts, which many employers and their counsel fail to meet despite their best efforts.
For more information, see Baker v. Van Dolder’s Home Team Inc., 2025 ONSC 952 (CanLII).
