When properly drafted, such clauses prevent costly common law notice claims
In a significant decision for Ontario employers, the province’s Court of Appeal has reaffirmed that clear and unambiguous termination clauses that comply with the Employment Standards Act, 2000 (ESA) will be enforceable, even if they eliminate an employee’s entitlement to common law notice.
The case, Bertsch v. Datastealth Inc., 2025 ONCA 379, confirms that employers can rely on well-drafted ESA-based termination provisions to limit liability on termination without cause, provided the language used meets statutory minimums and avoids ambiguity.
The appellant in the case, Gavin Bertsch, was employed by Datastealth as a Vice-President, earning $300,000 per year. After just under nine months of service, his employment was terminated without cause. He received four weeks’ pay in lieu of notice under the ESA and brought a claim for common law wrongful dismissal damages.
Wrongful dismissal claim
The employer moved to dismiss the action on the basis that the termination clause in the employment agreement limited Bertsch’s entitlement to ESA minimums only, expressly excluding any common law notice. The Ontario Superior Court granted the motion, and the Ontario Court of Appeal upheld the decision on appeal.
The agreement stated that on termination “with or without cause,” the employee would receive only the minimum entitlements under the ESA, nothing more. It also included a “failsafe” clause ensuring that if any part of the agreement conflicted with the ESA, the employee would still receive the minimum required by law.
Bertsch argued that:
-
The termination clause was ambiguous, particularly for employees not trained in the law.
-
The language could be misinterpreted to allow for termination without any pay for misconduct not meeting the ESA’s standard of “wilful misconduct.”
-
As a result, the clause should be void, and he should be entitled to common law notice.
The Court of Appeal rejected these arguments, emphasizing:
-
Ambiguity requires more than competing interpretations; there must be genuine uncertainty in meaning.
-
The clause clearly stated that termination “with or without cause” would trigger ESA minimums, and explicitly waived any entitlement to common law notice.
-
The inclusion of a failsafe provision further protected the employee’s statutory entitlements, reinforcing the clause’s compliance with the ESA.
As such, the clause was not void, and Bertsch’s common law notice claim was barred.
Enforceability of termination clauses
This case reinforces several important principles for employers drafting and relying on termination clauses:
-
Clarity is critical: Termination clauses that limit notice to ESA minimums while acknowledging “with or without cause” scenarios can be enforceable.
-
Failsafe language helps: Including a clause that defers to the ESA if a term is ever found to fall below the statutory minimum strengthens enforceability.
-
Legal interpretation matters: The test is not whether a layperson might misinterpret a contract; it’s whether the contract can be reasonably read in a way that violates the ESA.
-
Common law exclusion must be express: To displace common law entitlements, an agreement must unambiguously waive them in favour of ESA minimums.
Bertsch v. Datastealth Inc. provides helpful guidance for employers seeking to limit termination entitlements to ESA minimums. When properly drafted, such clauses can prevent costly common law notice claims. However, employers must ensure that these provisions are drafted by employment law counsel familiar with the most recent case law, and that these provisions are reviewed regularly to reflect the latest legal developments.
Ronald S. Minken is a senior lawyer and mediator at Minken Employment Lawyers, an employment law boutique in the Greater Toronto Area. Tejpreet (Tanya) Sambi is a lawyer at Minken Employment Lawyers.
