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Year in Review: Notable Labour and Employment Law Decisions From 2025

· 18 min read By: Lesley A. Campbell, Ryan J. Freeman, Amanda P. Cohen, Rhonda Levy, Owais Hashmi

FTR Now

Year in Review: Notable Labour and Employment Law Decisions From 2025

Date: January 28, 2026

Welcome to our annual review of notable labour and employment decisions from 2025 that we believe will be of interest to employers and human resources professionals. We also identify some decisions to watch out for in 2026.

Labour Relations

Last Chance Agreements

  • United Food and Commercial Workers Union, Local 175 & 633 v Cargill Limited (Dunlop): Arbitrator Martelli upheld the termination of an employee who was subject to a Last Chance Agreement (LCA). The employee was fired after an unauthorized absence for which he failed to provide timely medical documentation, directly violating the LCA’s “zero tolerance” clause. The employee had also been explicitly warned weeks before his termination that he had “no more chances”. The arbitrator found the employee was clearly warned his job was in jeopardy and that he had breached the terms of the LCA. The LCA had explicitly limited the arbitrator to determining, on a balance of probabilities, whether a breach had occurred, not whether the employer had “just cause” for termination. Notably, the arbitrator found that the employee’s conduct amounted to wilful misconduct under the Employment Standards Act, 2000 (ESA). (Read our Case in Point When Last Chance Truly Means Last Chance: Arbitrator Upholds Termination Over Unauthorized Absence.)

Reasonableness of COVID-19 Vaccination Policies

Sexual Harassment

  • Brock University v. Brock University Faculty Association, Re: Dismissal Grievance: Arbitrator Reaume upheld Brock University’s dismissal of a tenured professor for escalating sexual harassment of a graduate student. The professor’s conduct progressed from inappropriate comments about the student’s appearance to unwelcome physical contact such as touching her lower back. Critically, after the student explicitly asked the professor to stop the behaviour, it continued and intensified, and escalated to intrusive comments about her personal relationships. Citing the persistent pattern of sexualized comments, the professor’s prior disciplinary record, his refusal to accept responsibility, and the creation of a poisoned learning environment, the arbitrator found sufficient grounds to justify for-cause termination and dismissed the grievance. (Read our Case in Point Arbitrator Upholds For-Cause Termination of Tenured University Professor for Sexual Harassment of Graduate Student.)

Bill 124 (Reopener)

  • Wilfrid Laurier University v Wilfrid Laurier University Faculty Association, Contract Teaching Faculty: Arbitrator William Kaplan dismissed a grievance filed by the Contract Teaching Faculty (CTF) seeking to reopen compensation negotiations and nullify their collective agreements after Bill 124, which limited compensation increases to 1% in each year of a three-year moderation period, was declared unconstitutional. The Association argued that the University’s refusal to renegotiate wages constituted bad faith bargaining and a violation of Charter rights. The Arbitrator found no jurisdiction to intervene because the CTF, unlike the full-time faculty, failed to negotiate or even propose a “reopener” clause in their agreements. Emphasizing that a rights arbitrator’s authority is derived solely from the collective agreement, the Arbitrator ruled that the absence of a reopener provision meant no breach had occurred, and that claims regarding bad faith bargaining or Charter remedies fall exclusively under the jurisdiction of the Ontario Labour Relations Board or the courts, respectively. (Read our FTR Now Arbitrator Dismisses Faculty Grievance over Bill 124 Wage Dispute: No Arbitral Jurisdiction Without Reopener Provision in Collective Agreement.)

Long-Term Disability (LTD) Benefits At Age 65

  • University Health Network (Toronto Western Hospital And Toronto General Hospital) v Ontario Nurses’ Association: Arbitrator Eli Gedalof dismissed an Association grievance challenging the constitutionality of terminating LTD benefits at age 65. The Association argued that the legislative “carve-out” in the Human Rights Code (Code) and ESA permitting this age-based exclusion violated Section 15 (equality) of the Charter. While the Hospital conceded the breach for the purpose of the hearing, the Arbitrator ruled that the impugned provisions were saved by Section 1 of the Charter as a reasonable limit. Distinguishing the case from Talos, the Arbitrator found that the objective of preserving benefit plan viability was pressing and substantial, and that the age-65 cutoff was minimally impairing given that LTD is uniquely designed to replace employment income rather than retirement income. The decision emphasized that the availability of unreduced pension plan benefits and government entitlements at age 65 significantly mitigated the harm to employees, rendering the legislative balance proportional.

Employment

Enforceable Termination Clauses

  • Li v. Wayfair Canada ULC: The Ontario Superior Court dismissed a wrongful dismissal claim from a Senior Product Manager who sought common law damages and the vesting of Restricted Stock Units that would have occurred during a four-month notice period, finding that the employment agreement’s termination provisions limited the employee to ESA minimums. The court rejected the employee’s argument that the “for cause” and “without cause” clauses were unenforceable for failing to meet ESA standards, distinguishing the contract from Dufault by noting that, when read as a whole, the provisions expressly referred to the entitlements prescribed under the ESA and did not attempt to contract below statutory limits. The employee was only entitled to the one week of statutory pay already provided. This decision has been appealed. (Read our FTR Now Ontario Superior Court Upholds Termination Clause Limiting Employee to ESA Minimums in Li v. Wayfair Canada Inc.)
  • Bertsch v. Datastealth Inc.: The Ontario Court of Appeal upheld a termination clause that limited a dismissed vice-president who earned $300,000 per year to his ESA minimum entitlements. The employee was terminated without cause after eight and a half months of employment and received four weeks’ pay in lieu of notice. He sued seeking 12 months’ common law reasonable notice, arguing that the termination clause was ambiguous and unenforceable. The clause stated that if employment is terminated “with or without cause,” the employee would receive “only the minimum payments and entitlements” owed under the ESA. The Court of Appeal found this provision clear and unambiguous, and rejected the employee’s argument that it could be misinterpreted as denying entitlements in situations not permitted by the ESA. (Read our FTR Now Ontario Court of Appeal Upholds Termination Clause Limiting Employee to ESA Minimums in Bertsch v. Datastealth Inc.)

Unenforceable Termination Clauses

  • Baker v. Van Dolder’s Home Team Inc.: The Ontario Superior Court confirmed that Dufault is a binding authority and held that the “without cause” provision, which permitted termination “at any time,” illegally purported to authorize dismissal in circumstances prohibited by the ESA, such as during statutory leaves or reprisal. Additionally, following Perretta the court found the “with cause” provision void because it defined just cause to include conduct such as poor performance—falling short of the ESA’s stricter “wilful misconduct” standard—and determined that a general “savings” clause referencing ESA minimums was insufficient to cure the ambiguity for the employee. Following Waksdale, the entire termination scheme was found to be void. This decision has been appealed.

Equity Compensation

  • Wigdor v. Facebook Canada Ltd.: The Ontario Superior Court ruled that an employee’s termination clause was unenforceable for violating the ESA, but upheld a separate provision that required the employee to forfeit millions of dollars in unvested Restricted Stock Units (RSUs) upon dismissal. The court found the termination clause illegal because it provided for less than the statutory minimum notice period, and awarded the employee ten months’ notice. However, the court also concluded that RSUs do not constitute “wages” or “benefits” under the ESA, and therefore the clearly drafted forfeiture provisions within the standalone RSU agreements were valid and enforceable. As a result, the employee was not entitled to RSUs that vested during the common law notice period. (Read our FTR Now Facebook Canada’s Equity Forfeiture Provision Receives a “Like” From an Ontario Court.)
  • Liggett v. Veeva Software Systems, Inc. and Veeva Systems Inc.: The Ontario Superior Court awarded a Senior Product Manager six months’ notice and more than $90,000 in equity compensation after finding the employer’s termination clause void for defining “just cause” more broadly than the ESA. Applying Matthews, the court held that the incentive plan’s ambiguous “active service” language failed the requirement that employers clearly remove an employee’s common law right to bonus or equity damages during the notice period, entitling the employee to unvested stock options and RSUs. Notably, the court rejected the employer’s request to value the equity at the termination date, instead calculating damages based on the employee’s historical selling pattern, which valued the shares at significantly higher prices on dates falling after the statutory notice period.

Enforceability of Settlement Agreements

  • Johnstone v. Loblaw: The Ontario Superior Court ruled that a settlement agreement is binding once essential terms are accepted, even if formal documents are unsigned. The employee had accepted a settlement offer from Loblaw that included eight months’ notice and assistance with a letter to secure a mortgage for a new home. After accepting the deal, the employee attempted to introduce new fundamental terms, including making the successful purchase of his house a condition of the settlement. The court rejected this attempt, emphasizing that “buyer’s remorse,” a change of heart, or growing concern about the ability to close a house purchase does not give a party the right to renege on or unilaterally modify a concluded settlement. The wrongful dismissal claim was dismissed. (Read our Case in Point No Takebacks: Ontario Court Rejects Employee’s Attempt to Rewrite Settlement Terms in Johnstone v. Loblaw.)

Repudiation of Employment Agreements

  • Timmins v. Artisan Cells: The Ontario Superior Court awarded an employee nine months’ notice after finding that his employer had repudiated the employment agreement. The employee, a Chief Development Officer, was entitled to three months’ notice under his employment contract but was offered only one week’s pay, contingent on signing an overly broad release that included non-disclosure and non-disparagement provisions. The court found this conditional offer demonstrated an intent not to be bound by the agreement, voiding the termination clause. In considering the employee’s senior role and specialized field, age, and service of three and a half years, the court was satisfied that the compensatory award of $456,908.02 provided sufficient deterrence, being three times the contractual notice period. (Read our Case in Point Court Awards Terminated Executive Over $456,000 After Finding Employer’s Conditional Severance Offer Constituted Repudiation of the Employment Agreement.)

“For Cause” Terminations

  • Vestergaard v. Destiny Media Technologies Inc.: The Supreme Court of British Columbia dismissed a former President and CEO’s claims for wrongful dismissal, civil conspiracy, and defamation, finding that the employer had established just cause for termination. The court concluded that the executive breached his fiduciary duties and employment obligations by persistently failing to provide requested business plans, prioritizing his private business interests over company duties, and condoning a subordinate’s performance of personal work during company hours. Furthermore, the court held that the executive’s refusal to participate in an independent workplace investigation constituted wilful disobedience and insubordination, creating an untenable employment relationship that justified summary dismissal without notice.
  • Driol v. NOV Canada ULC: The Alberta Court of Justice upheld the summary dismissal of an Assembly Supervisor who failed to ensure critical safety components were installed on a 40,000-pound van body, causing it to detach from a truck chassis during operation. Although the employee attempted to minimize his supervisory role and shift blame to procedural failures, the court found his role as the “last line of defence” meant his negligence constituted serious misconduct that fundamentally fractured the employment relationship. In applying the principle of proportionality, the court concluded that the severity of the safety breach, which caused significant reputational and financial harm to the employer, justified termination for cause without notice.

Employee’s Duty to Mitigate

  • Richardson v. New West Freightliner Inc (New West Truck Centres): The Alberta Court of Justice addressed an employee’s duty to mitigate damages by accepting a reasonable re-employment offer. A 73-year-old mechanic with 19 years of service was terminated and subsequently offered his exact same job back with identical pay and conditions, plus back pay for his time off. The employee rejected the offer, assuming he would need to repurchase tools he had sold and that the company would eventually find another reason to fire him. However, he never raised these concerns with the employer. Applying the test established in the Supreme Court of Canada decision of Evans v Teamsters Local Union No. 31, the court found it was objectively unreasonable for the employee to refuse the offer, as there was no hostility or change in working conditions. The court found that he failed to mitigate his losses and dismissed his claim in its entirety.

Constructive Dismissal

  • Parolin v. Cressey Construction Corporation: The British Columbia Supreme Court found that an employee had been constructively dismissed after her employer unilaterally changed essential terms of her employment. The employee had begun working for the employer in 2005 as a Development Manager and was promoted to Director of Marketing in 2018. The court found that after ten years of accommodating flexible hours and three years of supporting remote work, these arrangements had become implied terms of her employment contract that could “only be changed with reasonable discussion and/or notice.” Additionally, after her promotion, her salary increase of $1,400 was based on comparables for the Marketing Manager role instead of the Director position. The court concluded this constituted a demotion, and awarded the employee compensation based on 19 months’ reasonable notice.

“Exceptional Circumstances” Notice Award

  • Panchbhaya v. Vulsay Industries Ltd.: The Ontario Superior Court awarded 26 months’ notice to a 65-year-old manager with 40 years of service, exceeding the traditional 24-month cap based on “exceptional circumstances.” Justice Koehnen identified these circumstances as the employee’s age, long tenure, and specialized experience, noting he was “in the twilight if not at the end of his working years” and that his four decades with one employer would likely lead potential new employers to view him as “rather set in his ways and not as adaptable to change.” The court found the employee’s job search reasonable (103 applications in 15 months) and emphasized that damages should support employees during their transition to a new position.

Wrongful Termination and Procedural Delay

  • Shynkarova v. 2554318 Ontario Ltd. O/a Tax Mechanic: The Ontario Superior Court of Justice awarded a wrongfully dismissed employee four months’ notice after finding that the employer’s termination timing—nine days before her one-year anniversary—was a calculated effort to avoid statutory severance obligations that warranted extending the notice period beyond the base assessment. The court denied the unrepresented employer’s adjournment request due to its prolonged history of delay and non-compliance with court orders, and awarded total damages of $26,967 including four months’ lost wages, withheld compensation, and damages for lost benefits at 15% in the absence of evidence to the contrary. The court also granted substantial indemnity costs of $32,445 finding that the employer’s pattern of requesting procedural accommodations without following through had unnecessarily prolonged the proceedings and increased the employee’s legal expenses.

Reprisal & Whistleblower Protections under the Securities Act

  • McPherson v. Global Growth Assets Inc.: In the first judicial interpretation of whistleblower protections under the Securities Act, the Ontario Superior Court of Justice found that the company had unlawfully terminated their CEO and Ultimate Designated Person (UDP) after he raised concerns that the board’s interference with his role compromised his regulatory compliance obligations. The court ruled that a reprisal is illegal if the employee’s protected activity was “any part of the motivation” for the termination and awarded the employee $5.38 million in statutory damages under the Securities Act, an amount equal to twice his lost remuneration with no deduction for mitigation. Due to this substantial award, the court dismissed the employee’s separate claims for wrongful dismissal, aggravated, and punitive damages, reasoning that the statutory remedy provided sufficient compensation and punishment.

Human Rights

Discrimination Based on Pregnancy and Place of Origin

  • Lam v. Data Scientific Inc.: The Human Rights Tribunal of Ontario awarded a graphic designer $25,000 for injury to dignity, feelings, and self-respect after finding she was subjected to harassment and terminated by her employer due to her pregnancy and place of origin. The Tribunal found that shortly after disclosing her pregnancy, the employee was excluded from training and subjected to vulgar comments by the owner regarding her pregnancy and her previous work experience in Hong Kong. The employee was terminated one day after inquiring about prenatal benefits, which the Tribunal concluded was significantly influenced by her pregnancy. In addition to general damages, the Tribunal awarded $4,620 for lost wages and $1,500 for out-of-pocket medical expenses, and ordered the employer to create and disseminate an internal human rights policy.

Foreign Credential Verification Requirements

  • Amin v. Peel (Police Services Board): The Human Rights Tribunal of Ontario dismissed an application alleging discrimination based on place of origin and ethnic origin after an employer ceased considering a job candidate when delays arose in verifying his foreign education credentials. The candidate, who obtained his degrees in Bangladesh, argued the employer’s policy requiring credential assessment disproportionately impacted individuals educated outside Canada and that alternative verification methods should have been explored. The Tribunal found the candidate failed to establish a factual basis connecting the employer’s consistently applied credential evaluation policy to his protected grounds, noting that while the education assessment delays by the background check agencies may be unfair, delays alone do not demonstrate discrimination under the Code. The Tribunal emphasized that requiring education credential evaluation is not inherently discriminatory when applied equally to all candidates with foreign credentials. Due to the applicant’s failure to plead a factual basis for discrimination under the Code, the Tribunal dismissed the application for lack of jurisdiction.

Workplace Health & Safety

Investigation of Off-Duty Conduct

  • Metrolinx v. Amalgamated Transit Union, Local 1587: The Ontario Court of Appeal affirmed that employers have a statutory duty to investigate workplace harassment and can discipline employees for off-duty conduct when it negatively impacts the workplace. The case involved five Metrolinx employees who were terminated for making derogatory and sexist comments about a female colleague in a private WhatsApp chat. An arbitrator initially ordered the employees reinstated, but this award was quashed on judicial review. The Court of Appeal upheld the quashing, finding the arbitrator’s decision unreasonable because it failed to consider Metrolinx’s legal obligation under the Occupational Health and Safety Act (OHSA) to investigate harassment incidents even without a formal complaint, relied on outdated stereotypes about how harassment victims react, and incorrectly concluded the private chat had no workplace impact despite evidence to the contrary. (Read our FTR Now Employers Have a Statutory Duty to Investigate Claims of Harassment and Authority to Discipline Off-Duty Conduct When It Manifests in the Workplace.)

Criminal Negligence Causing Death

  • R. v. Urgiles: The Ontario Superior Court sentenced a supervisor to five years’ imprisonment for criminal negligence causing death after an employee he supervised died in a fatal collision while driving a company truck with severely bald tires and faulty steering. The worker had warned the supervisor of steering issues the night before, but the supervisor only checked the steering with the engine off and failed to take the truck to a mechanic, instead confirming the next day’s work schedule. The court found the supervisor’s failure to act showed wanton and reckless disregard for safety and that his conduct was part of an ongoing course of negligent behaviour, as the tire wear developed over time and would have been plainly visible. The court emphasized that incarceration was necessary to denounce the unlawful conduct and deter others in positions of authority from breaching their legal duty under the Criminal Code to prevent bodily harm to workers. (Read our Case in Point Supervisor Found Criminally Negligent and Sentenced to Five Years in Prison Following a Vehicle Collision Resulting in Driver’s Death.)

Case to Watch in 2026

On March 26, 2026, the Ontario Court of Appeal will hear the appeals of Li v. Wayfair Canada ULC and Baker v. Van Dolder’s Home Team Inc.—two cases that reached opposite conclusions on whether “at any time” language renders termination clauses unenforceable under the ESA. The upcoming decision will provide crucial guidance on the enforceability of termination provisions and significantly impact how termination provisions are drafted and enforced across Ontario. Given the prevalence of such language in employment contracts, this decision has the potential to affect thousands of existing agreements.

The article in this client update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©