Employment contracts have suddenly become enforceable

The real point of contention is not whether an employer can terminate, but how much it must pay. Photo by Adobe Stock

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For years, Ontario employment lawyers have played an expensive game of “gotcha” with termination clauses.

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An employer could draft a contract promising every minimum entitlement required by law, terminate an employee without cause, pay those entitlements in full and still face a wrongful dismissal lawsuit because three words supposedly poisoned the agreement.

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“At any time” became one such trap.

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According to a growing line of cases, those words might suggest that an employer could fire someone during a protected leave, in retaliation for asserting workplace rights or for another reason prohibited by statute. The hypothetical possibility was enough.

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Plaintiff-side employment lawyers pushed this narrative for years, generally where there was little else to grasp onto. When the facts were weak, the wording became the case.

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A phrase was removed from context, placed under a judicial microscope and transformed into a lottery ticket for common-law notice.

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After the original Baker v. Van Dolder’s Home Team Inc. decision in 2025, employers saw a surge of demands alleging that termination language was unlawful. Claims that once might have settled quickly became disputes over commas, qualifiers and imagined statutory violations. Every dismissed employee could be told that the contract was probably void and that months of compensation were waiting.

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At the same time, a wave of fly-by-night plaintiff-side employment boutiques emerged. Many seemed to have little more than a website, a demand-letter template and a business model built around attacking termination clauses. To employers, it felt as though a new firm was opening every day to board and ride the Baker gravy train.

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The Ontario Court of Appeal has now applied the brakes.

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In its decision on Baker, released Aug. 6, the Court considered two contracts from separate but similar cases it heard together. One permitted termination “at any time;” the other said “at any time and for any reason.” Lower courts had reached opposite conclusions about similar language.

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The Appeal Court upheld both clauses. The contracts were deemed enforceable.

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The message was straightforward: contracts must be read like contracts, not crossword puzzles.

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Employees have less bargaining power and are vulnerable when dismissed. Employers cannot contract out of minimum standards governing notice, severance, benefits or other statutory rights. Where language has two reasonable meanings, the interpretation favouring the employee should prevail.

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But judges are not required to manufacture ambiguity.

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No reasonable person reading either contract would believe that “at any time” authorized the employer to violate human rights legislation, punish an employee for taking parental leave or retaliate against someone for raising a safety concern. The words merely confirmed that employment could be ended without proving cause, provided the employer complied with the contract and the law.