Employment contracts have suddenly become enforceable

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomeWorkEmployment contracts have suddenly become enforceableHoward Levitt and Puneet Tiwari: Workers are protected by enforcing the law, not by pretending words have meanings that neither party intended You can save this article by registering for free here. Or sign-in if you have an account.The real point of contention is not whether an employer can terminate, but how much it must pay. Photo by Adobe StockFor years, Ontario employment lawyers have played an expensive game of “gotcha” with termination clauses.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountAn 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.“At any time” became one such trap.FP Work touches on HR strategy, labour economics, office culture, technology and more.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Work will soon be in your inbox.We encountered an issue signing you up. Please try againAccording 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.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.A phrase was removed from context, placed under a judicial microscope and transformed into a lottery ticket for common-law notice.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.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.The Ontario Court of Appeal has now applied the brakes.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.The Appeal Court upheld both clauses. The contracts were deemed enforceable.The message was straightforward: contracts must be read like contracts, not crossword puzzles.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.But judges are not required to manufacture ambiguity.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.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.Similarly, “for any reason” did not mean “for an illegal reason.” It meant that an employer need not prove a business reason to dismiss someone without cause. It must provide the compensation required by the contract and legislation.That distinction matters across Canada.Many Canadians assume permanent employment means they cannot be fired unless they did something wrong. That is incorrect. Outside of unionized workplaces and statutory regimes, employers may terminate employment without cause. The price is notice or pay in lieu.The real point of contention is not whether an employer can terminate, but how much it must pay. Common law notice dramatically exceeds statutory minimums. A valid contract can reduce that liability. An invalid one can turn weeks of termination pay into many months or even years.The court also upheld a termination-for-cause provision allowing for no payment if there was cause for dismissal, even though its definition of cause was broader than the statutory standard of willful misconduct. That is because the provision still guaranteed that the statutory minimums would be paid. The employer did not need to reproduce an employment-law textbook inside the contract. It was enough to preserve what the statute required.This does not give employers permission to draft carelessly. Clauses that deny minimum statutory rights remain unenforceable. The controversial Waksdale rule — under which one unlawful termination provision may invalidate the entire scheme — remains intact.But the easy money from imaginary illegality should now be ending.Some employee lawyers will call the decision anti-worker. It is not. Workers are protected by enforcing the law, not by pretending words have meanings that neither party intended.For employers, this restores predictability. For employees, it provides clarity before litigation consumes years and money. For courts, it offers an escape from semantic absurdity.The termination-clause gravy train just reached the end of the line.Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers with offices in Ontario, Alberta and British Columbia. He practises employment law in all provinces and is the author of six books, including the Law of Dismissal in Canada. Puneet Tiwari is a partner at Levitt LLP.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.