Frederick Baker was 71 when Van Dolder’s Home Team dismissed him without cause in March 2023. He had been the company’s controller for about two and a half years at $95,000 a year, which under the Employment Standards Act bought him two weeks’ notice. Van Dolder offered four if he signed a release. Baker declined, sued for common law notice and won on summary judgment, because his contract said the company could fire him “at any time.”
On Aug. 6 the Court of Appeal for Ontario took it all back. His action is dismissed. He owes $2,500 in costs.
The same decision disposes of Song Li, a senior product manager at Wayfair Canada earning $221,546, terminated in October 2023 after less than a year and paid his one statutory week. Li’s clause said “at any time and for any reason.” He lost on his own summary judgment motion, appealed, and lost again. Two nearly identical phrases, two Superior Court judges, two opposite answers. That contradiction is why the appeals were heard together.
Justice Patrick Monahan opened by quoting his own court’s 2018 concession in Amberber that the termination-clause cases cannot all be easily reconciled, then a blunter assessment from employment lawyer Stephen Moreau, who wrote that counsel can do little more than guess whether a clause will survive. Moreau’s complaint was that the case law splits on pedantic grounds, and that the failure to insert, or not insert, a word has often been fatal.
Unglamorous, overdue fix
The court’s fix is unglamorous and overdue: read the contract, in context, for what the parties objectively meant. “At any time” means a without-cause termination is legally effective whenever it happens. It does not purport to license firing someone in reprisal for asserting a statutory right, or at the end of a protected leave, because nobody signing an employment agreement intended anything of the sort.
The strongest passage in the ruling is the one that follows the employees’ argument to its destination. To read the words as Baker and Li urged is to conclude that employers bargained for the right to breach ss. 53 and 74 of the ESA, exposing themselves to reinstatement orders, make-whole remedies, prosecution, a fine of up to $100,000 and up to 12 months in jail. It would also void the clause, defeating the entire reason for drafting it. Monahan called that reading self-defeating and contrary to common sense. He is right, and it took a panel of the Court of Appeal to say so out loud.
Baker’s contract helpfully supplied its own answer. A separate clause promised the employer would comply with the ESA “at all times.” That commitment, the court held, must include “at any time” the company exercises its right to terminate.
With-cause analysis
The with-cause analysis matters at least as much. Baker’s contract defined just cause broadly, listing six categories of misconduct, which under Dufault, De Castro and Rahman is usually fatal. It survived because it carved out any minimum compensation or entitlements prescribed by the ESA. That proviso does the work: fire him for contractual cause and he still collects statutory notice and severance unless his conduct rises to wilful misconduct.
The motion judge had accepted that reading and struck the clause anyway, on the theory that ordinary employees would not understand the gap between contractual cause and the statutory standard, and that the employer should have explained it. The Court of Appeal was unimpressed. The clause told Baker in plain terms that his statutory entitlements survived a for-cause dismissal, which is the opposite of what the judge assumed he would conclude. And drafting a plain-language treatise on the interaction between common law just cause and wilful misconduct would enlighten no one. Referential incorporation of ESA minimums remains valid, as it has been since Machtinger.
Buried in the motion judge’s reasons is the sentence that explains why this appeal existed at all. He had no doubt Van Dolder, advised by capable counsel, intended only to comply with the statute, and observed that the standard set by Wood and Rossman is one many employers and knowledgeable counsel have failed to meet despite good faith and best efforts. He then held the clause unenforceable. A rule that defeats people who are sincerely trying to follow it is not a rule about compliance. It is a lottery.
A matter for the legislature, not the courts
Two limits are worth marking before anyone redrafts anything.
Waksdale is untouched. Under that 2020 Ontario Court of Appealing ruling, if one termination clause in a contract breaches the ESA, it voids the whole termination scheme — even a clause the employer never actually relied on. Van Dolder asked for a five-judge panel to reconsider it, the associate chief justice refused, and the court declined to reach the argument because both clauses here passed. And this binds Ontario. Leave to the Supreme Court is available to whoever wants to spend the money.
Monahan anticipated the objection that this is hard on employees, and answered it without sentiment. The ESA itself treats reasonable notice as a common law presumption that express terms can displace. If statutory minimums are inadequate substitutes, “that is a matter for the legislature rather than the courts.” The judicial task is to determine what the parties reasonably understood their words to mean, “rather than straining to find ambiguity where none exists, on the assumption that such an approach will somehow benefit employees.”
Then the line that should end the argument. It is far from obvious, he wrote, that the search for ambiguity helps employees at all, because formalistic interpretation produces indeterminacy and inconsistent results, and “very few employees possess the resources required to undertake litigation to resolve such ambiguity.”
Baker had those resources. He spent three years and got two weeks and a costs award. The next argument about whether two weeks is enough will have to be made at Queen’s Park.
