Termination Clause: At Any Time

The first decision to consider this issue was the February 2004 review in Dufault v Ignace. The agreement stated that the employer had the right to have “sole discretion” to terminate the plaintiff “at any time”.

This was the third argument advanced by the plaintiff to set aside the employment contract. The agreement also failed to distinguish between the statutory degree of just cause and that of common law. The termination provision also referred to the termination sum due as a formula of base salary and did not include vacation pay

The significant aspect of the decision was that it denied the employer the right to terminate in its “sole discretion” “at any time”, as the ESA, in the examples given in the reasons, prohibits the employer from terminating on the conclusion of an employee’s leave or in termination in reprisal for attempting to exercise a statutory right.

Hence, the decision denied the contract for all three reasons.

The case went to the Court of Appeal, which upheld the trial judge. The appellate court, did not, however, consider the “at any time” clause and decided the case solely on the “just cause” distinction. The employer’s leave application was dismissed.

The decision of Sproat, J. followed in February of 2025. The contract in issue contained the same words allowing the employer to terminate “at any time”.  This court found itself bound by the Dufault reasons and also noted that a saving provision requiring compliance with the statute could not salvage the offensive wording.

It seemed to be the law of the land, at least the law of Ontario, that the words “at any time” would lead to the contract being unenforceable. This conclusion is in doubt as a further Ontario decision released in July of 2025 has stated otherwise. ¹ The agreement in this case again purported to allow the employer the right to terminate “at any time” and for “any reason”. The Court found the two prior decisions cited above as distinguishable.

This decision noted that the Dufault decision also found that the agreement had violated the “just cause” provisions of the ESA. Propelled by this logic, the Court in Li observed that the termination clauses must be read “as a whole”.

The fact that the agreement in Li correctly set out the differences in the statutory and common law definitions of just cause, the Court reasoned, somehow gave it impetus to distinguish Dufault:

Plaintiff’s counsel submitted the termination clauses in this contract were similar to that reviewed in Dufault v. The Corporation of the Township of Ignace, supra.  I disagree.  While the termination clause in Dufault v. The Corporation of the Township of Ignace, supra contained the phrase “anytime”, its definition of cause did not refer to the ESA or the definitions cited above.  With regard to “without cause” dismissal, the wording failed to provide for all types of wages such as vacation pay or sick days.

The Court thus concluded:

My review of the appellate authorities provide for employment contracts, when read as a whole, so long as they comply with the terms and provisions of employment legislation are permitted and can be enforceable.

A further decision applying Dufault followed in August of 2025. The Li reasons were not cited.

The law on this subject is clearly important and requires certainty. This is now lacking. The Court of Appeal is set to review this issue in two cases to be heard together in early 2026.

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David Harris — Canadian Employment Law

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1. Li v Wayfair, Dow J.