Executive Summary: Key Legal and Evidentiary Issues

• Court evaluated if both “with cause” and “without cause” termination provisions complied with the Employment Standards Act (ESA).

• The phrase “at any time” in the “without cause” clause was held to misstate ESA protections, rendering it unenforceable.

• “With cause” provision was also unenforceable for failing to meet the ESA’s “wilful misconduct” threshold and potentially misleading employees.

• The Waksdale principle applied: unenforceability of one part of the termination provision invalidates the entire termination scheme.

• Judge rejected the employer’s argument that wording differences made their contract materially distinct from those struck down in prior cases.

• Summary judgment was denied; matter to proceed to a one-hour virtual hearing to determine damages.\

Background and facts

Frederick Baker, the plaintiff, brought a wrongful dismissal claim against Van Dolder’s Home Team Inc., the defendant, after being terminated “without cause” on May 24, 2023. The parties agreed that the matter would be decided by way of a summary judgment motion brought by the defendant. Judge Sproat heard oral submissions on February 7, 2025.

The plaintiff’s employment contract contained detailed provisions regarding resignation, termination without cause, and termination with cause. The primary legal question was whether the termination provisions in the contract were enforceable under Ontario’s Employment Standards Act, 2000 (ESA).

Employment contract provisions at issue

The contract included:

1. Termination without cause: The employer could terminate the employee “at any time, without just cause,” by providing only ESA minimum notice, or payment in lieu, and severance if applicable. It included a commitment to comply with ESA minimums if they applied.

2. Termination with cause: The clause allowed dismissal without notice or compensation for conduct such as poor performance, dishonesty, or harassment. It included language stating this applied “except any minimum compensation or entitlements prescribed by the Employment Standards Act”.

Legal analysis and policy terms

Citing Dufault v. The Corporation of the Township of Ignace, the court found the “without cause” provision unenforceable because it incorrectly suggested the employer had an unrestricted right to terminate “at any time,” which is inconsistent with ESA provisions that prohibit termination in certain contexts, such as after statutory leaves or in reprisal scenarios.

Turning to the “with cause” provision, the court referred to Perretta v. Rand A Technology Corporation, finding that the contract’s definition of just cause did not align with the ESA’s narrower standard of “wilful misconduct.” While the defendant argued that its clause was more comprehensive by mentioning ESA entitlements, the court determined that the distinction was immaterial. It emphasized that many employees are unlikely to grasp the legal nuance between contractual and statutory standards without explicit explanation.

Judge Sproat referenced Waksdale v. Swegon North America to affirm that an unenforceable “with cause” provision would invalidate the entire termination provision. He concluded that both the “with cause” and “without cause” clauses were unenforceable under existing precedent.

Court’s decision

The Ontario Superior Court of Justice dismissed the defendant’s motion for summary judgment. As agreed by the parties, a one-hour virtual hearing will be scheduled to determine damages. Judge Sproat noted there was no issue with the defendant’s intent or good faith but acknowledged that employment contract drafting must meet a stringent standard under the ESA that even capable counsel may fail to achieve despite best efforts.