Law will continue to favour employee protection when termination clauses in question
The Ontario Court of Appeal has recently affirmed the growing body of case law emphasizing that termination clauses must comply strictly with the province’s Employment Standards Act, 2000 (ESA), and any ambiguity will be interpreted in favour of employees.
In De Castro v. Arista Homes Limited, 2025 ONCA 260, the court confirmed that a termination clause in the employee’s contract was illegal and unenforceable.
The termination provision in question stated: “If you are terminated for cause or you have been guilty of wilful misconduct, disobedience, breach of Employment Agreement or wilful neglect of duty that is not trivial and has not been condoned by ARISTA, then ARISTA will be under no further obligation to provide you with pay in lieu of reasonable notice or severance pay whether under statute or common law. For the purposes of this Agreement ‘Cause’ shall include your involvement in any act or omission which would in law permit ARISTA to, without notice or payment in lieu of notice, terminate your employment.”
At trial, the court found this provision breached the ESA and was unenforceable. Despite the employer’s argument that the clause could be read consistently with the ESA, the court rejected this position. The Court of Appeal upheld the lower court's decision, reinforcing the protections afforded to employees.
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