Over the past few years, Ontario law with respect to enforceability of termination provisions in employment contracts has evolved significantly.

Over the past few years, Ontario law with respect to enforceability of termination provisions in employment contracts has evolved significantly. Both the Ontario Superior Court and the Court of Appeal have weighed in on, and dissected, the language contained in "for cause" and "without cause" termination provisions.

One of the most hotly contested aspects of termination provisions has been "at any time" language. Since 2020, and significantly in 2024, a few principles began to emerge from the case law regarding termination provisions:

• a "without cause" termination provision that purported to give the employer "sole discretion" to terminate an employee's employment "at any time" may be unenforceable;¹
• an unenforceable "for cause" provision invalidates all termination provisions in an employment agreement, including the "without cause" provision;² and
• language stating that an employer will comply with the ESA does not automatically save a provision that otherwise contravenes the Employment Standards Act, 2000, S.O. 2000, c. 41 (the ESA).³

These decisions marked a significant shift in employment law and, arguably, ran contrary to prior decisions that upheld similar termination language. However, in Li v. Wayfair Canada Inc.,⁴ the Ontario Superior Court has recently upheld a termination provision with "at any time" language.

In Li...

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