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| Inna Koldorf |
1. Termination clauses
Uncertainty around termination clauses in employment contracts continued in 2025. The top termination clause decisions of 2025 could be divided into three buckets. In the first bucket are decisions that continued to support the trend that the phrases “at any time” and “at [the employer’s] sole discretion,” when found in a termination clause, render the clause unenforceable.
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In Baker v. Van Dolder’s Home Team Inc., 2025 ONSC 952, the Superior Court found that the “without cause” termination clause was unenforceable because it reserved the employer’s right to terminate employment “at any time” upon providing the employee only with their entitlements under the ESA.
In the second bucket of 2025 termination clause decisions are decisions that concluded that the phrase “at any time” did not, on its own, necessarily lead to the unenforceability of the termination clause. In Jones v. Strides Toronto Support Services, 2025 ONSC 2482, the Superior Court held that the mere presence of the phrase “at any time” in a termination clause, without the accompanying phrase referring to the sole discretion of the employer, would not automatically render the clause unenforceable.
Similarly, in Li v. Wayfair Canada ULC, 2025 ONSC 2959, the “without cause” termination clause provided that employment may be terminated “at any time” and “for any reason” so long as ESA statutory minimums were paid. The “with cause” termination clause also provided that employment may be terminated “at any time” without pay, unless expressly required by the ESA. The court found that both termination clauses were enforceable, and distinguished Dufault on the basis that both clauses in Li clearly indicated that statutory payments would be made to the employee upon termination of employment.
In the third bucket of 2025 termination clause decisions are decisions that specifically addressed the enforceability of “with cause” termination clauses. In De Castro v. Arista Homes Limited, 2025 ONCA 260, the “just cause” termination clause defined “cause” more broadly than the ESA does by stating that the employee would not be provided with pay if their employment was terminated for cause or for wilful misconduct, disobedience or wilful neglect of duty. Despite the fact that in De Castro the employee was terminated without cause, the court found that the “with cause” provision was unenforceable, rendering the entire termination scheme in the contract unenforceable.
On appeal, the Ontario Court of Appeal (Court of Appeal) upheld the motion judge’s decision and agreed that the contract defined “cause” more broadly than the ESA does, rendering all termination clauses in the contract unenforceable.
Last year we gave an honourable mention to Bertsch v. Datastealth Inc., 2024 ONSC 5593, where a termination clause that limited the employee’s entitlement upon termination of employment, with or without cause, to the statutory minimums prescribed by the ESA, was upheld by the Superior Court. That decision was appealed. In Bertsch v. Datastealth Inc., 2025 ONCA 379, the Court of Appeal agreed with the Superior Court that the clause was clear, unambiguous and could only be interpreted to mean that ESA minimums would be paid in all cases, where applicable. The Superior Court’s decision was upheld.
Baker and Li were granted leave to appeal to the Court of Appeal, with arguments being heard in January 2026. It may be that by next year’s rundown of top employment law cases, the uncertainty over the enforceability of termination clauses containing the controversial phrase “at any time” may finally be settled.
2. The duty to mitigate
In an unusual win for employers, the Superior Court discounted a reasonable notice period for an employee’s failure to produce a document to show mitigation earnings. In Boyle v. Salesforce.com, 2025 ONSC 2580, the employee’s employment was terminated after eight years of service. The court awarded the employee 11 months of reasonable notice. The employer argued that the reasonable notice period should be reduced by three months due to the employee’s failure to mitigate his damages during the notice period since he only submitted 18 job applications over a period of three months and then paused his job search to pursue new certifications. The employer also took issue with the fact that the employee failed to produce his Notice of Assessment (NOA) during the mitigation period.
The Superior Court noted that the burden to show that an employee’s mitigation efforts were unreasonable rests with the employer, who has to demonstrate that the employee failed to take reasonable steps to mitigate damages and that, had reasonable steps been taken, the employee would have been expected to secure comparable employment. The court found that the employer’s evidence was insufficient to demonstrate that the employee’s mitigation efforts were unreasonable and that he would have found work more quickly had he not pursued new certifications. However, the court agreed with the employer that the employee’s refusal to produce his NOA was unacceptable given that the employee’s income during the notice period was an issue in dispute. The court drew an adverse inference against the employee, and reduced the notice period by three months as a result.
This is part one of a two-part series.
Inna Koldorf is a partner in Miller Thomson LLP’s labour and employment law group, where she advises employers on labour, employment and human rights issues. She would like to thank Keona Lau, articling student, for her assistance in preparing this article.
The opinions expressed are those of the author and do not reflect the views of the author’s firm, its clients, Law360 Canada, LexisNexis Canada, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
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