Due to conflicting new decisions from the Ontario Superior Court of Justice (“ONSC”), there is now substantial legal uncertainty as to whether termination clauses in employment contracts that allow for employees to be dismissed “at any time” are legally enforceable. The ONSC previously found such termination clauses to be unenforceable for violating the Employment Standards Act, 2000 (the “ESA”) in two earlier decisions. However, the ONSC has subsequently found termination clauses permitting dismissal “at any time” to be legally enforceable in two more recent decisions in April and July 2025, before reaching the opposite conclusion even more recently in a third decision in August 2025.
Thus, Ontario courts have invalidated these clauses permitting dismissal “at any time” in three out of five recent cases, but they have upheld these clauses in two out of the three most recent decisions, creating substantial legal uncertainty.
Background
In February 2024, the ONSC found a termination clause in an employment contract to be legally unenforceable for permitting an employee to be dismissed without cause “at any time” by the employer “at its sole discretion” in Dufault v. the Corporation of the Township of Ignace [Dufault]. This was because the court found that this violated: (i) s. 53 of the ESA, which prohibits employers from dismissing an employee at the conclusion of a job-protected leave; and (ii) s. 74 of the ESA, which prohibits employers from dismissing employees in reprisal for attempting to exercise their rights under the ESA. This was the first time that an Ontario court had ever invalidated a termination clause for this reason (for more details, read our blog on Dufault here). Although Dufault was appealed, the Ontario Court of Appeal dismissed the appeal on other grounds, without ruling on whether a termination clause permitting dismissal “at any time” violates the ESA.
The ONSC subsequently followed and expanded upon the controversial principle from Dufault in its February 2025 decision in Baker v. Van Dolder’s Home Team Inc. [Baker], by invaliding a termination clause simply because it stated that the employee could be dismissed “at any time” (without any language about this being at the employer’s “sole discretion”).
New Conflicting Decisions on the Enforceability of Termination Clauses Permitting Dismissal “At Any Time”
The ONSC has subsequently ruled that termination clauses permitting dismissal “at any time” did not violate the ESA in Jones v Strides Toronto [Jones] and Li v. Wayfair Canada ULC [Li] in April and July 2025, respectively. Conversely, the ONSC reached the opposite conclusion even more recently in its August 2025 decision in Chan v. NYX Capital Corporation [Chan].
The Jones Decision
In Jones, Ms. Jones sought summary judgement against her former employer, seeking damages for wrongful dismissal. Ms. Jones’ contract contained termination clauses providing that she could be dismissed without cause “at any time” upon being provided with her minimum entitlements under the ESA, plus an addition week of advance notice or termination pay for each year of completed service.
Ultimately, the court ruled that the termination clauses were legally enforceable because they did not violate the ESA, despite Ms. Jones citing the Dufault decision and arguing that the “at any time” language violated sections 53 and 74 of the ESA. The court dismissed this argument, ruling “I find that the Dufault decision does not stand for the proposition that the words ‘at any time’ divorced from ‘sole discretion’ are improper in an employment contract”, and that the clause permitting dismissal “at any time” did not violate the ESA. As a result, Ms. Jones’ wrongful dismissal claim was dismissed.
The Li Decision
In Li, Mr. Li also sought summary judgement against his former employer, including damages for wrongful dismissal. Mr. Li’s employment contract contained a without cause termination clause which stated that he could be dismissed “at any time and for any reason” upon him being provided with his minimum entitlements under the ESA.
Like in Jones, Mr. Li argued that this termination clause violated sections 53 and 74 of the ESA, relying on Dufault. Nonetheless, the court ruled that the clause did not violate the ESA when read as a whole, due to other differences in how the termination clauses in Mr. Li’s contract were written compared to the termination clauses in Dufault. In particular, the termination clauses in Dufault also violated the ESA in multiple other ways, whereas the termination clauses in Mr. Li’s contract otherwise complied with the ESA. Similarly, the court found that the wording of the termination clauses in Mr. Li’s contract was different than the clauses in Baker, such that a different conclusion was required (notably, the clauses in Baker also violated the ESA in multiple ways too). As a result, the court dismissed Mr. Li’s wrongful dismissal claim.
The Chan Decision
In Chan, Mr. Chan sued his former employer for wrongful dismissal after he was dismissed during a three-month probationary period. Mr. Chan’s contract contained a probationary period clause stating that the company could dismiss him “at any time and for any reason at its discretion” within the first 3 months of his employment. Further, the contract also included termination clauses providing that Mr. Chan could be dismissed “at any time” without cause upon being provided with his minimum entitlements under the ESA, or “at any time” for cause without any notice or pay in lieu of notice.
Ultimately, the court ruled that these termination clauses violated the ESA in multiple respects, including by providing that: (i) Mr. Chan could be dismissed by the company “at any time and for any reason in its discretion” during the probationary period; and (ii) Mr. Chan could be dismissed without cause “at any time” after the probationary period. In reaching this decision, the court cited Dufault and Baker for the proposition that this type of language violates sections 53 and 74 of the ESA. Additionally, like in Dufault, the court found that the for-cause termination clause also violated the ESA by allowing Mr. Chan to be dismissed for cause without notice or pay in lieu of notice (rather than for “willful misconduct”, where dismissal without notice/termination pay is permitted by the ESA). As a result, Mr. Chan’s wrongful dismissal claim was successful.
The Bottom Line
Although the different results in these five cases can be reconciled to some extent, there is a lack of consistency in the courts’ explanation for the different results in each case. For example, Jones suggests that a termination clause permitting dismissal “at any time” does not violate the ESA if there is no language about this being in the employer’s “sole discretion”, whereas Li still found a termination clause to be enforceable despite it permitting dismissal “at any time” and “for any reason”.
Ultimately, the conflicting case law creates substantial legal uncertainty as to whether termination clauses permitting dismissal “at any time” are unenforceable for violating the ESA, exposing some employers to potential wrongful dismissal liability. Although an appellate court will likely clarify this point of law in the future, there is no telling when that may occur.
While employers would obviously be well advised to err on the side of caution by ensuring that their termination clauses do not include language about dismissal being permitted “at any time” going forward, this does not assist employers already facing potential liability in relation to former employees whose contracts included such language. Employers currently facing threatened or actual wrongful dismissal claims in such circumstances should ensure that they retain expert employment counsel who are on top of the evolving case law, to assist them with effectively navigating litigation and settlement negotiations.
If you require assistance with minimizing your business’ potential liability when ending employment relationships, please do not hesitate to contact us for expert legal advice and guidance.
