In two consolidated appeals decided August 6, 2026 Baker v. Van Dolder’s Home Team Inc. and Li v. Wayfair Canada ULC, 2026 ONCA 568, the Ontario’s Court of Appeal has finally provided clarity on one of employment law’s most contentious and confusing issues: whether termination clauses which permit a termination “at any time” (or “at any time and for any reason”) are lawful, and bind a terminated employee’s severance entitlements, to their minimums, under the Employment Standards Act, 2000 (ESA).

Two motion judges reached opposite conclusions on nearly identical termination language:

  • In Baker, the judge found a without-cause provision permitting termination “at any time” was inconsistent with the ESA (which prohibits termination in certain circumstances, like on return from leave) and therefore void.
  • In Li, decided months later by a different judge, a without-cause provision permitting termination “at any time and for any reason” was upheld as enforceable.

This contradiction illustrated the central problem in Ontario employment law: counsel had no reliable guidance on when “at any time” language rendered a termination clause unenforceable. The Court of Appeal consolidated the appeals to resolve the uncertainty.

The Problem: Years of Confusion

Since at least 2018, Ontario courts had struggled with a fundamental contradiction. On one side, courts had long upheld employment contracts permitting termination “at any time” without cause—provided the employer gave reasonable notice or pay in lieu. This principle traced back to Wallace v. United Grain Growers Ltd. (1997), where the Supreme Court of Canada affirmed that employers and employees both have a mutual right to terminate an employment contract “at any time” (subject to notice obligations and statutory protections).

On the other hand, critics have argued that the phrase “at any time” created a literal conflict with provisions in the ESA itself. The ESA explicitly prohibits termination in certain circumstances:

  • Section 53: Employees on pregnancy or parental leave must be reinstated upon return
  • Section 74: Employers cannot terminate in reprisal for exercising ESA rights (like filing a complaint)
  • Various sections of the Occupational Health and Safety Act protect workers from dismissal for reporting safety violations

If a contract truly permitted termination “at any time” without limitation, it would seemingly authorize the employer to circumvent these statutory protections. To some judges and practitioners, this rendered any “at any time” clause facially inconsistent with the ESA and therefore void under section 5 of the ESA (which bars contracting out of minimum standards).

The result, as Justice Monahan noted in the decision, was that “counsel can do little more than guess at the answers” and “virtually identical termination clauses might in one case be found… void, but in another be found valid and enforceable.”

What “At Any Time” Actually Means

The Court concluded that the phrase “at any time” simply reflects the parties’ intent that a without-cause termination will be legally valid regardless of when it occurs, provided the employer complies with all applicable statutory requirements. It does not authorize violations of statutory prohibitions.

This interpretation aligns with common law principle: an employer can terminate without specifying cause or business reason, but only if it satisfies notice and pay obligations and does not breach statutory protections.

The “For Any Reason” Question

A secondary question was whether “for any reason” language created additional problems. Some practitioners worried that if an employer can terminate “for any reason,” it might override statutory restrictions on the reasons for termination (like the prohibition on reprisal terminations under s. 74).

The Court rejected this concern. “For any reason” simply means the employer need not articulate or justify the reason for termination, not that the employer can terminate in violation of law. The phrase has long been enforced in Ontario cases. Coupled with language affirming ESA compliance, it poses no inconsistency.

Strategic Implications for Employers

Key Takeaway: Properly drafted termination clauses with “at any time” language may be enforceable, but they must be read in full context, not in isolation, and clear ESA compliance language strengthens their enforceability.

1. Stop Drafting in Fear of “At Any Time”

For decades, some employers and their counsel have deleted or avoided “at any time” language, fearing it would trigger judicial scrutiny and potential unenforceability. The Court has now confirmed this fear was unfounded. The phrase “at any time” is not a landmine; it is a standard term that courts have enforced repeatedly.

However, the Court’s decision imposes a reciprocal obligation: draft contextually, not in isolation. A termination clause buried in a contract with no other indication of ESA intent is weaker than one embedded within a comprehensive framework. Best practices going forward include:

  • Include a standalone “Minimum Standards” clause affirming ESA compliance
  • Tie all payment obligations to ESA minimums (“as required by the ESA,” “minimum statutory entitlements”)
  • Cross-reference the ESA by name and section
  • Do not leave readers guessing whether the employer intends to comply with law

2. Plead Your Compliance Intentions Clearly

The Court treated the presence of ESA-compliance language in the contract as dispositive of the parties’ objective intent. Both judges in the motions were troubled by the “at any time” language, but both courts found that surrounding context resolved the ambiguity in the employer’s favour when the contract explicitly affirmed ESA compliance.

This suggests a drafting hierarchy:

  • Strongest: A standalone Minimum Standards Clause (“If any term is inconsistent with the ESA, the ESA shall prevail”) plus ESA-specific language in the termination provision itself
  • Strong: Repeated references to “minimum statutory entitlements” or “as required by the ESA” throughout termination sections
  • Weaker: Bare “at any time” language with no context or ESA reference

Employers should avoid forcing courts to infer intent from silence. Make the compliance intent explicit and unmistakable. That said, employers should be mindful to ensure that they do not inadvertently contract out of the ESA, as the employment agreement may still be found to be void and unenforceable, even if the aforementioned steps are taken. Courts have been clear that they generally will not enforce an unlawful termination provision, even if it refers back to the ESA.

Strategic Implications for Employees & Executives

Key Takeaway: The Court has now confirmed that “at any time” language may not necessarily strip away your statutory protections, but you should still understand what your specific contract actually guarantees on termination.

1. “At Any Time” Does Not Waive Statutory Protections

This is the headline for employees: the phrase “at any time” in your employment contract does not permit your employer to ignore the ESA or other statutes. Statutory protections are non-waivable and survive any contractual language. Your employer cannot legally terminate you:

  • While you are on statutory leave (pregnancy, parental, bereavement, etc.)
  • In reprisal for exercising ESA rights (like filing a wage complaint)
  • For refusing unsafe work under health and safety legislation
  • On grounds prohibited by human rights law

If your contract says your employer can terminate “at any time,” this language is legally read to mean “at any lawful time, consistent with all applicable statutes.” You can rely on this interpretation even if your contract does not explicitly say so.

2. Understand Your Actual Entitlements Under Your Contract

Despite the Court’s clarification, contractual ambiguity still creates expense and stress. Before signing an employment agreement, know what your employment agreement (including a termination clause actually) specifies:

  • Notice or pay in lieu: Does it reference ESA minimums by tenure, or specify a fixed amount?
  • Severance: Is severance payable, and is it calculated based on a formula or as a lump sum?
  • Benefits: How long are benefits continued after termination?
  • Cause definition: If the contract defines “cause,” how does it compare to ESA wilful misconduct? Are you still entitled to notice and severance if terminated for contractual cause?

3. Ambiguity Favours You, But Plan Accordingly

The Court emphasized it will not “strain to find ambiguity” in a contract. Clear language stating “minimum statutory entitlements apply” may help negate ambiguity. If you believe your contract is ambiguous or your employer has breached it, seek legal advice before accepting a termination offer or signing a release.

4. Consider a Pre-Signature Review for Senior Positions

For management, executive, or professional roles with severance, equity, or complex termination language, investing in a legal review before signing can identify:

  • Gaps or inconsistencies in the termination clause
  • Whether severance is calculated correctly and competitively
  • Non-compete and confidentiality provisions that may be enforceable
  • Whether common law reasonable notice language is preserved (more valuable than ESA minimums)
  • Tax or benefits implications of the compensation structure

Pelsmakher Law provides employment contract reviews for employees and executives navigating complex termination or severance clauses before signing or after receiving a termination notice.

Frequently Asked Questions

Q: Does “at any time” really allow my employer to ignore statutory protections like return-from-leave rights or reprisal protections?

A: No. This was the central debate the Court resolved. The phrase “at any time” cannot be read to authorize violations of ESA provisions like section 53 (reinstatement on return from leave) or section 74 (reprisal protection). The parties cannot reasonably have intended such a self-defeating and legally reckless result. Courts will read “at any time” in context, not isolation, and will presume the employer intends to comply with law.

Q: My contract says termination can occur “at any time and for any reason.” Is that worse than just “at any time”?

A: No. “For any reason” simply means the employer need not justify the termination reason. It does not expand the employer’s power to violate statutes. The Court found both phrases enforceable when accompanied by clear ESA-compliance language in the contract.

Q: Why does it matter whether my contract has ESA-compliance language?

A: Because it influences how courts interpret ambiguous or potentially problematic language. The Court treated explicit ESA-compliance language (like “minimum statutory entitlements will apply”) as decisive evidence of the parties’ intent to comply with law. This makes such language a best practice for employers and a protective signal for employees.

Q: What if my contract is silent on both the “at any time” issue and ESA compliance?

A: A silent contract is weaker for both parties. An employer has not clearly signaled compliance intent; an employee has not clearly documented entitlements. This ambiguity creates litigation risk. Before signing, ask your employer to clarify in writing what notice and pay you will receive on termination without cause, tied to your tenure and ESA minimums.

Q: Does this decision change anything for employees seeking common law wrongful dismissal damages?

A: Not directly. If your termination clause is enforceable (which Baker and Li confirm many “at any time” clauses are), you may be precluded from recovering wrongful dismissal damages at common law, and you may be limited to the terms and conditions of your contract and the ESA. However, if the clause is unenforceable or if the employer breached it, you may still pursue common law damages. The decision also confirms that statutory protections are separate from contract protections. Breaching them can expose employers to orders beyond wrongful dismissal damages (like reinstatement or “make whole” orders).

How Pelsmakher Law Can Help

Employment termination disputes are among the most stressful and consequential events in a working life. The Baker v. Van Dolder decision provides welcome clarity, but each contract and each termination is unique.

If you are an employee or executive facing termination, severance negotiations, or concerns about the enforceability of your termination clause, Pelsmakher Law provides independent legal advice on your rights and options. Review your employment contract with a lawyer before signing, or contact us to discuss a termination or severance situation.

If you are an employer or business owner, well-drafted termination clauses protect both parties by reducing litigation risk and providing certainty at a vulnerable moment. Pelsmakher Law advises employers on compliant termination clause drafting, termination procedures, and dispute resolution.

Explore more case law insights on employment and labour law or reach out to discuss your situation.

Citation: Baker v. Van Dolder’s Home Team Inc., 2026 ONCA 568 (August 6, 2026); Li v. Wayfair Canada ULC, 2026 ONCA 568 (August 6, 2026) [consolidated appeals].

Disclaimer: This post is for educational and informational purposes only and does not constitute legal advice. Every employment situation is fact-specific. If you are facing a legal matter, please consult a lawyer as soon as possible.