Toronto, ON – August 10, 2026 – For years, HR professionals and employer‑side counsel have been living in a state of low‑grade dread every time a termination clause crossed their desk. The case law was inconsistent, hyper‑technical, and frankly unpredictable. One stray word or phrase such as “at any time”, “in its sole discretion”, “for any reason”, could tank an otherwise compliant clause and expose employers to months of common law notice.
This week, the Ontario Court of Appeal finally delivered what we’ve been waiting for: a clear, principled, and employer‑friendly framework for interpreting termination clauses.
In Baker v. Van Dolder’s Home Team Inc., 2026 ONCA 568, the Court of Appeal overturned the lower court’s decision and confirmed that termination clauses containing “at any time” language are not automatically void. The companion appeal in Li v. Wayfair involved nearly identical language “at any time and for any reason” was similarly validated. In fact, when read in context, as modern contractual interpretation requires, clauses such as this can be perfectly enforceable.
This is a genuinely significant development. And yes, we can say it: good news for employers (and also yes, my fingers are crossed and, unlike Taylor Swift, I do gotta knock on wood to ward off any further appeals).
Why This Decision Matters
For the past several years, employers have been whipsawed by cases like Dufault, Waksdale, Wood, and Rossman, where courts invalidated termination clauses based on extremely narrow or literal readings. The result was a jurisprudence that even the Court of Appeal politely described as “not easily reconciled.”
The Court went further, quoting Stephen Moreau’s blunt assessment that counsel were left “guessing” whether a clause would be upheld and that “the failure to insert, or not insert, a word has often been fatal.”
Baker changes the trajectory.
The Court of Appeal has now:
- reaffirmed that employment contracts must be interpreted using the modern, contextual approach
- rejected hyper‑literal readings of isolated words
- clarified that “at any time” does not mean “even when the ESA prohibits termination”
- emphasized that the goal is to determine the parties’ objective intention, not to hunt for hypothetical inconsistencies
- confirmed that employers can draft clear, ESA‑compliant clauses without fear that ordinary language will be weaponized against them
This is a long-awaited return to common sense.
The Court’s Key Message: Context Matters
The Court of Appeal was unequivocal: Termination clauses must be read as a whole, in context, and in light of the parties’ objective intentions.
In both Baker and Li, the clauses repeatedly referenced ESA compliance. The Court found that no reasonable employee or employer would interpret “at any time” to mean “even in circumstances where the ESA expressly prohibits termination.”
This is the interpretive reset employers needed.
What the Court Rejected
The Court expressly rejected the lower court’s approach, which treated the mere possibility of a hypothetical ESA breach as fatal.
The Court held:
- Hypothetical interpretations are not enough.
- Ambiguity must be real, not imagined.
- Magic‑words drafting is not required.
- Employees are protected by the ESA regardless of contract wording.
This is a direct pushback against the trend of invalidating clauses based on pedantic readings divorced from context.
A Final Reminder
The Court did not overturn Waksdale, but by clarifying how clauses should be interpreted, it has reduced the risk of cascading invalidation. Continue to ensure that your termination clauses, particularly those that are terminating for cause, address entitlements under the ESA.
If you would like to discuss your employment agreements or to have a drink to celebrate the employer-side win, please do not hesitate to reach out to our team at Protea LLP.
