Canada Labour Code & Contract Term

Case: Ghazvini et al. v. Canadian Imperial Bank of Commerce, 2025 ONSC 5218 (Justice Merritt)

Issue: Whether a “for cause” termination clause is enforceable when it defines “Cause” more broadly than the just cause standard under the Canada Labour Code (CLC).

The Clause the Court Considered

By CIBC for Cause – CIBC may terminate your employment at any time without advance notice, or pay in lieu of notice, for Cause. Cause includes, but is not limited to, dishonesty, fraud, breach of trust, failure to perform your duties in a satisfactory manner, a breach of [CIBC’s Code of Conduct], failure to obtain or maintain any required [Training Licenses and Accreditations], failure to complete the pre-employment screening process to the satisfaction of CIBC, providing false, misleading or inaccurate information during the hiring process, a breach of any other term or condition of your employment, and any act or omission recognized as Cause under applicable law. If your employment is terminated for Cause, you will have no entitlement to any notice of termination, payment in lieu of notice of termination, severance or any other damages whatsoever.

Holding

The Court held that the clause was unenforceable as it effectively contracted out of the CLC’s just cause requirement under section 229.1. By listing a broad set of examples, many of which might not meet the statutory just cause threshold, the clause allowed termination without notice in circumstances where the statute requires it.

Key Passages

[56] The For Cause Provision here does not comply with the minimum statutory requirements. It violates the CLC because it is not clear that it only includes events that would be just cause under the CLC. Rather, it contains items that may not be just cause and is therefore broader than the concept of just cause under the CLC. The For Cause Provision does not specify that the acts which constitute Cause must be serious.

[58] Where an employment contract defines cause more broadly than the statute, and therefore permits termination without notice in circumstances where the statute prohibits it, the contract breaches the statute: De Castro, at para. 7.

Because the cause termination provision was illegal, the entire termination clause was void. The plaintiffs were therefore entitled to reasonable notice instead of the contractual formula under the “By CIBC Without Cause” clause, which had provided two weeks per year of service.

The judge also noted that the inclusion of the phrase “CIBC may terminate your employment at any time without Cause” likely made the clause illegal as well, citing Dufault and subsequent cases. However, it was unnecessary to decide that point, since the clause was already invalid for the reasons above.

Why This Matters

It was once thought that the reasoning in Waksdale might apply only in Ontario, given Ontario’s unique “wilful misconduct” standard. This case shows that similar principles apply across Canada wherever the statute uses a “just cause” standard.

When legislation uses the term “just cause,” it is for the courts, not the parties, to define what conduct meets that threshold. Any contractual clause that attempts to define just cause by listing examples risks being found to contract out of minimum employment standards and therefore unenforceable.

This case could have a nationwide effect, potentially invalidating many termination provisions under the federal Canada Labour Code just as Waksdale did for employment agreements in Ontario.

Practical Takeaways

Do not attempt to define “just cause” in employment contracts except by reference to the statutory and common law standards.
Avoid broad or catch-all language such as “failure to perform duties in a satisfactory manner” unless limited to serious misconduct that meets the statutory test.
Be cautious with wording like “may terminate employment at any time without cause,” which has been found to invalidate clauses in recent case law.
Employers subject to the Canada Labour Code should review template agreements to ensure alignment with section 229.1 and current jurisprudence.

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David Harris — Canadian Employment Law

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