What’s the Issue?
On August 6, 2026, the Ontario Court of Appeal released its much anticipated decision in Baker v. Van Dolder’s Home Team, 2026 ONCA 568. At issue was whether contractual termination provisions which permit an employee to be terminated without cause “at any time” and/or “for any reason” are in breach of the ESA. The Court of Appeal applied a common sensical approach, holding that the entire context of the termination provision matters and merely using the words “at any time” or “for any reason”, do not, on their own, invalidate a termination provision. This decision overturns the lower court’s decision in Baker v. Van Dolder’s Home Team, 2025 ONSC 952 (“Baker“), which we wrote about in February, 2025.
The Case
The Appeal dealt with two lower-court decisions, Baker and Li v. Wayfair Canada ULC, 2025 ONSC 2959 (“Li“) that reached opposite conclusions. In Baker, the lower court held that use of the phrase “at any time” in a termination provision was in breach of the ESA and held that the entire termination provision in that case was void and unenforceable. Conversely, in Li, the lower court upheld a termination provision which permitted a without cause termination “at any time and for any reason” to be valid and enforceable. The Court of Appeal overturned Baker and upheld the decision in Li.
In its decision, the Court of Appeal stressed that a practical and sensical approach is required in interpreting employment termination provisions, rather than a technical and legalistic formulation. The contract, as a whole, needs to be considered, rather than interpreting words in isolation. In particular, the Court of Appeal, gave credence to contractual wording which stipulated that the intention of the employer was at all times to be in compliant with the ESA. Furthermore, the Court of Appeal held that courts should not strive to find an ambiguity where none reasonably exists.
Takeaways for Employers
The Court of Appeal has reaffirmed that employers can indeed limit liability at termination by using clear termination provisions which ensure that the employee will never receive less than their entitlements under the ESA.
Having a termination provision which permits an employer to terminate an employee “at any time” will not, on its own, be interpreted to mean that the employer can terminate an employee at times which are not permitted by the ESA. Similarly, a termination provision which permits an employer to terminate employee “for any reason“, on its own, will not be interpreted to mean that an employer could terminate an employee for an unlawful reason, contrary to the ESA.
In light of this significant decision, employers must review their termination provisions with their employment counsel and in many cases, employers will want to reconsider their strategic approaches at termination and in wrongful dismissal litigation.
This publication is intended for general information purposes only and should not be relied upon as legal advice.
