Is Your Ontario Termination Clause Actually Enforceable?
Short answer: often not. A termination clause only saves you money if it is airtight. Ontario courts read the termination provisions as a whole, and under Waksdale v Swegon North America Inc. (2020 ONCA 391), if any part, even a "for cause" clause you never relied on, dips below the Employment Standards Act (ESA), the entire clause can be void. The result: the employee reverts to far more expensive common-law reasonable notice.
Why a termination clause matters
Without a valid clause, a dismissed employee is presumptively owed common-law reasonable notice, often many months of pay, well beyond the ESA minimum. A clear, enforceable termination clause is what limits that entitlement to the ESA floor. That single clause is usually an employer's largest severance-cost lever, which is exactly why employees' counsel attack it first.
When is a termination clause unenforceable?
1. It tries to contract out of the ESA
The ESA sets minimum standards you cannot waive or reduce by contract. Section 5(1) is explicit: no employer or employee "shall contract out of or waive an employment standard and any such contracting out or waiver is void." A clause that could pay less than the statutory notice, termination pay, or severance in any scenario is vulnerable. You may always give more: a greater benefit prevails under s. 5(2).
2. The "for cause" provision fails, and takes the rest with it
This is the Waksdale trap. Many contracts have a "we owe you nothing if terminated for cause" provision. But the ESA only disentitles an employee to notice for wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned (O. Reg. 288/01), a higher bar than common-law "just cause." If the for-cause wording lets the employer off the hook more broadly than the ESA allows, it violates the ESA. In Waksdale the Court of Appeal held this voids the whole termination scheme, including the separate "without cause" clause you actually wanted to rely on.
3. A severability clause won't save it
Employers often assume a boilerplate "if any part is invalid, the rest survives" clause rescues a flawed termination provision. Waksdale is clear that it does not: the termination provisions fall together regardless of a severability clause.
4. Ambiguity is read against the employer
If the language is unclear or could be read to fall below the ESA, courts resolve the ambiguity against the drafter, meaning the employer. "Close enough" drafting loses.
5. Risky discretionary language
In Dufault v The Corporation of the Township of Ignace (2024 ONSC 1029), the court found a clause letting the employer terminate "at its sole discretion" and "at any time" unlawful, because the ESA bars termination during a protected leave or in reprisal, so the employer does not truly have sole discretion. On appeal, the Court of Appeal (2024 ONCA 915) upheld the clause's invalidity on a different ground, that its "cause" definition was broader than the ESA's wilful-misconduct standard, and expressly declined to revisit the "sole discretion / any time" reasoning. Treat that wording as a live risk, not a safe harbour. Older template clauses frequently contain exactly this language.
What to do
- Have every termination clause reviewed against current ESA case law, not when you are firing someone, but now.
- Refresh the clause on any material change such as a promotion, comp change, or new role. A stale clause signed years ago may no longer bind.
- Fix the "for cause" language first. It is the most common single point of failure under Waksdale.
- Don't rely on severability as a safety net.
- When exposure is real, get a verified read before you terminate.
Bottom line
In Ontario, a termination clause is either enforceable or it isn't, with little middle ground. One non-compliant sentence, even in a part you never invoke, can erase the protection you thought you had and expose you to full common-law notice. If your contracts haven't been reviewed against Waksdale and the cases after it, assume they're at risk.
FAQ
Can a termination clause limit an employee to the ESA minimum?
Yes, if it is clearly drafted and never dips below the ESA in any scenario. The moment it could pay less than the statutory minimum, it risks being void.
Why would a "for cause" clause I never used matter?
Because Ontario courts read the termination provisions as a whole. Under Waksdale, if the for-cause wording violates the ESA it can void the entire clause, including the without-cause part.
Does a severability clause protect a flawed termination clause?
Generally no. In Waksdale the termination provisions were held void regardless of a severability clause.
We signed the contract years ago. Is it still valid?
Maybe not. A clause can become unenforceable as the law evolves, or after a material change in role or compensation. Older templates are the highest risk.
Not sure if your clause holds up? OptiMaxWork AI runs a 7-stage verification against official sources and current case law, and won't guess. Ask your question.
Informational only; not legal advice, and no lawyer-client relationship is created. Verified against the ESA (s. 5), O. Reg. 288/01, and Ontario case law (Waksdale, 2020 ONCA 391; Dufault, 2024 ONSC 1029 / 2024 ONCA 915) as of August 2026. Confirm against current sources before acting.