Baker v. Van Dolder’s Home Team Inc., 2026 ONCA 568
The Ontario Court of Appeal has clarified how courts should determine whether termination provisions in employment agreements comply with Ontario’s Employment Standards Act, 2000 (the “ESA”).
Although Baker interprets Ontario legislation and is not binding in Manitoba, it remains relevant to Manitoba employers and HR professionals. Manitoba’s Employment Standards Code similarly establishes minimum termination requirements and does not permit an employment agreement to impose terms that are contrary to, or less beneficial than, the Code. The Ontario Court of Appeal’s broader interpretive guidance, particularly its direction to read an employment agreement as a whole and not manufacture ambiguity from isolated words, may therefore be persuasive when similar termination language is considered in Manitoba.
In Baker v. Van Dolder’s Home Team Inc., the Court heard two appeals together. The employment agreements contained similar without-cause termination language, but the Superior Court had reached opposite conclusions about enforceability. The Court of Appeal held that the termination provisions in both agreements were valid and enforceable.
The disputed language
The agreement in Baker permitted the employer to terminate employment “at any time, without just cause,” while providing the employee with the minimum notice, termination pay and, if applicable, severance pay required by the ESA.
The agreement in Li v. Wayfair Canada ULC permitted termination “at any time and for any reason,” while repeatedly confirming that the employee would receive no less than the minimum entitlements required by the ESA.
The employees argued that this wording was inconsistent with legislation that prohibits dismissal at certain times or for certain reasons, including dismissal connected to a protected leave or as a reprisal for exercising a statutory right.
The Court’s interpretive approach
The Court rejected an interpretation based on reading the disputed words literally and in isolation.
Employment agreements must be interpreted with regard to the remedial purpose of employment standards legislation, the vulnerability of employees and the inequality of bargaining power in the employment relationship. A termination clause must also clearly displace the employee’s common-law entitlement to reasonable notice and cannot contract out of minimum ESA standards.
At the same time, the interpretation of an employment agreement remains an exercise in contractual interpretation. The agreement must be read as a whole, using a practical and common-sense approach, to determine what the parties objectively intended.
The Court emphasized that a provision is not ambiguous merely because a hypothetical alternative interpretation can be identified. There must be two or more reasonable interpretations when the provision is considered in the context of the entire agreement. Courts should not strain to find ambiguity where none reasonably exists.
“At any time” was not inconsistent with the ESA
The Court held that the words “at any time” did not mean that the employer could disregard statutory restrictions on termination.
Read in context, the words meant that a without-cause termination would be contractually effective regardless of when it occurred, subject to the ESA and other applicable legislation. The employer’s contractual right to terminate employment remained limited by statutory protections.
The Court concluded that the parties could not reasonably have intended the phrase to authorize conduct expressly prohibited by the ESA or another statute. That interpretation would also have defeated the purpose of the termination clause, which was intended to limit the employee’s entitlement to the ESA minimums rather than common-law reasonable notice.
The Baker agreement also contained a clause stating that the employer would comply with the ESA “at all times” and that the ESA would prevail over any inconsistent contractual term. The Court found that this language reinforced the conclusion that the termination provision was intended to operate consistently with the statute.
“For any reason” was also enforceable
The Court reached the same conclusion regarding Wayfair’s right to terminate employment “for any reason.”
In context, that language meant that the employer did not need to establish cause or provide a reason for a without-cause termination. It did not mean that the employer could terminate employment for a reason prohibited by legislation.
The Wayfair provision repeatedly confirmed that the employee would receive the minimum notice, termination pay, severance pay, benefits continuation and other entitlements required by the ESA. The Court found it implausible to interpret the words “for any reason” as expressing an intention to disregard the same legislation.
The with-cause provision in Baker
The Court also considered Baker’s with-cause termination provision.
The agreement defined “just cause” broadly but stated that an employee terminated for cause would still receive any minimum compensation or entitlements prescribed by the ESA.
This was important because common-law just cause and the ESA standard of wilful misconduct are not the same. Conduct may justify dismissal without common-law notice while falling short of the higher statutory standard required to eliminate the employee’s ESA termination entitlements.
The Court held that Baker’s cause provision complied with the ESA because it preserved the employee’s minimum statutory entitlements. Even if the employer established cause under the contract or at common law, the employee would continue to receive ESA notice, benefits continuation and severance pay unless the conduct also met the statutory standard for disentitlement.
The employer was not required to explain within the agreement the legal distinction between common-law just cause and statutory wilful misconduct. The Court confirmed that an agreement may validly incorporate ESA entitlements by reference.
Waksdale was not reconsidered
The employer in Baker asked the Court to reconsider Waksdale v. Swegon North America Inc., which holds that an ESA violation in one termination provision may render the employment agreement’s other termination provisions unenforceable.
The Court declined to do so because it found that both the without-cause and with-cause provisions before it complied with the ESA. Waksdale was therefore not overruled or reconsidered in this decision.
Practical implications for HR professionals
The decision confirms that the phrases “at any time” and “for any reason” do not, by themselves, make a termination provision unenforceable.
The agreement must still be read as a whole. Its termination provisions should clearly preserve all minimum statutory entitlements and should not actually authorize the employer to provide less than the ESA requires.
Employers should review:
- without-cause termination language;
- cause provisions;
- notice, severance and benefits-continuation language;
- minimum-standards or ESA-compliance clauses; and
- whether the provisions operate consistently when read together.
Conclusion
Baker rejects an approach under which isolated words are treated as automatically invalidating an otherwise compliant termination provision. The central question is what the parties objectively intended, based on the wording of the agreement as a whole and the relevant surrounding circumstances.
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Peter Mueller
Partnerpmueller@tmlawyers.com
Peter Mueller is a litigation lawyer who helps businesses, not-for-profits, and employers resolve disputes before courts, arbitration panels, and government tribunals. Licensed in Manitoba and Nunavut, Peter’s practice is designed around dispute resolution and advocacy, providing clear, strategic advice that supports practical business decisions and minimizes risk.