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Ontario Superior Court Upholds Termination Clause Limiting Employee to ESA Minimums in Li v. Wayfair Canada Inc.
Date: July 17, 2025
In the first decision post Dufault v. the Corporation of the Township of Ignace (Dufault), the Ontario Superior Court upheld a termination provision with ‘at any time’ language. The Court ruled the provision was enforceable, distinguishing Dufault and highlighting such language does not automatically render a termination provision non-compliant with the Employment Standards Act, 2000 (ESA), as amended, thereby limiting the employee to their minimum statutory entitlements.
Background
The plaintiff was employed by Wayfair Canada Inc (“Wayfair”) for less than nine months when his employment was terminated on a without cause basis. At the time his employment ended, he was provided one week’s pay in lieu of notice and benefit continuation in full satisfaction of his minimum ESA entitlements.
The plaintiff initiated legal proceedings seeking five months of common law reasonable notice for wrongful dismissal damages.
The matter proceeded by way of a Summary Judgment Motion where the primary question before the Court was: Is the termination provision enforceable? The Court found it was and dismissed the plaintiff’s claim as he was not entitled to more than his minimum entitlements under the ESA.
The Termination Provision
The Employment Agreement contained the following termination provision:
The Company may terminate your employment at any time for Cause without notice, pay in lieu of notice, severance, benefits continuance or other compensation or damages of any kind, unless expressly required by the ESA in which case only the minimum statutory entitlements will be provided.
After your probationary period concludes, in the absence of Cause, the Company may terminate your employment at any time and for any reasons by providing you with only the minimum statutory amount of written notice required by the ESA or by paying you the minimal amount of statutory termination pay in lieu of notice required by the ESA, or a combination of both, as well as paying statutory severance pay required by the ESA, providing benefits continuance for the requisite minimum statutory period under the ESA and all other outstanding entitlements, if any, owing under the ESA.
The Employment Agreement defined “Cause” as “any willful misconduct, disobedience, or willful neglect of duty that is not trivial and has not been condoned by the company that constitutes ‘Cause’ under the ESA.”
The Court Distinguishes from Dufault
The Court rejected the plaintiff’s argument that the “For Cause” provision violated the ESA by failing to meet the standard of wilful misconduct under the ESA. The Court reverted to the core principles in employment contract interpretation, which make it clear that employment contracts must be read as a whole. Hence, the termination provision limits the employer’s obligation to providing only minimum entitlements under the ESA if an employee is terminated with “Cause”, given the clear references to statutory requirements.
The Court went on to reject the plaintiff’s argument that the Ontario Superior Court’s prior decisions in Dufault and Baker should be followed. In doing so, Justice Dow distinguished from the language in Dufault finding that the use of “at any time” does not automatically render a termination provision unenforceable. The Court found that the “Without Cause” termination provision “clearly and repeatedly indicates payments will be made as ‘required by’ or ‘under the ESA.’”
Key Takeaways
This is the first post-Dufault decision to enforce a termination provision with “at any time” language in the provision, highlighting the use of “at any time” does not automatically render a termination provision non-compliant with the ESA.
This case is a helpful reminder that Courts are not to disaggregate the words of a termination provision to find it unenforceable. As long as a termination provision is read as a whole and complies with the terms and provisions of the applicable employment standards legislation, it can disentitle an employee to common law reasonable notice.
Wayfair was successfully represented by Hicks Morley’s Edward O’Dwyer and Kelly Brennan.
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