The Court of Appeal has held that 'at any time' and 'for any reason' termination language does not breach the ESA. It is the most consequential Ontario employment decision of the year — and the relief is narrower than the headlines suggest.
For more than a year, Ontario employers have been living with an absurdity. Two motion judges looked at nearly identical contract language — an employer's right to terminate "at any time" without cause — and reached opposite conclusions. One held the words made the clause void, exposing the employer to common law reasonable notice. The other held the clause was fine.
Same province. Same statute. Same three words. Different answers.
On August 6, 2026, the Court of Appeal for Ontario ended it. In Baker v. Van Dolder's Home Team Inc.; Li v. Wayfair Canada ULC, 2026 ONCA 568, a unanimous panel held that "at any time" and "at any time and for any reason" language does not, on its own, breach the Employment Standards Act, 2000. Both clauses were upheld.
It is among the most consequential Ontario employment decisions of the year. It also, read carefully, does considerably less for most employers than the headlines suggest.
The two appeals were heard together because they turned on the same question.
In Baker, the contract allowed termination "at any time, without just cause" on ESA minimum notice or pay in lieu, and separately allowed termination "at any time for just cause" with entitlements limited to ESA minimums. The motion judge struck both — holding that "at any time" conflicted with ESA provisions restricting termination in specific circumstances, such as at the end of a statutory leave or in reprisal for exercising an ESA right, and that the with cause clause was unfair because it did not explain how contractual cause differed from the ESA's wilful misconduct standard.
In Li, the contract allowed termination "at any time and for any reason" on ESA minimums, with repeated assurances throughout the document that the employee would never receive less than his statutory entitlements. A different motion judge upheld it.
The Court of Appeal upheld both. Writing for a unanimous panel, Justice Monahan set out the framework (per Hicks Morley's August 6 analysis):
Read the contract as a whole. Employment contracts are interpreted using the modern, objective approach, while remaining alive to the remedial purpose of the ESA and to the vulnerability of employees at termination.
Ambiguity has to be real. A termination clause is only ambiguous — and therefore construed in the employee's favour — where there are genuinely two or more reasonable interpretations after the contract is read in full context.
No magic words. Courts should not read isolated phrases literally, and should not strain to manufacture an ambiguity where the parties' objective intentions are clear.
Applying that, the Court held "at any time" simply confirms that a without cause termination is valid whenever it occurs. It does not signal an intention to terminate in circumstances the ESA prohibits. The Court found it implausible that an employer would intend to expose itself to reinstatement orders, make-whole remedies and prosecution merely by using standard wording. "For any reason" was treated the same way: it means the employer need not give a reason, not that it may act for a prohibited one.
The with cause provision in Baker also survived, because it expressly preserved the employee's minimum ESA compensation. The Court confirmed employers can incorporate ESA entitlements by reference without reproducing statutory language or explaining the legal distinction between contractual cause, common law just cause and statutory wilful misconduct.
The appeal in Baker was allowed; the appeal in Li was dismissed.
Here is the sentence executives should sit with: this decision closes one attack, not the category.
For several years the most productive strategy in Ontario wrongful dismissal litigation has been to find any defect in the termination provision, void it, and unlock common law reasonable notice — which in a case like Wilsher v. Olympic Wholesale ran to 19 months before conduct damages. That strategy is not over. It has lost one of its arguments.
Everything else remains live. With cause language that purports to deny all compensation for conduct falling short of wilful misconduct still fails. Provisions that cut off benefit continuation during the statutory notice period still fail. Clauses that contradict other parts of the same agreement still fail, because the Court has now made explicit that the contract is read as a whole — a principle that cuts both directions. A tidy termination clause sitting inside a document that undermines it elsewhere is not saved by Baker.
And the Court's reasoning in Li is instructive about why that contract won. It was not the words "for any reason." It was that the agreement repeatedly and clearly tied entitlements to the ESA, so that read in full, the objective intention to comply was unmistakable. Employers with a bare clause and none of that scaffolding are relying on a weaker version of the same argument.
Hicks Morley has also flagged that it is monitoring whether leave to appeal to the Supreme Court of Canada is sought. Treat this as settled Ontario law today, and as a position worth watching.
1. Stop rewriting your contracts in a panic — and stop assuming they are fine. Both reactions are wrong. The correct response is a review against the current framework, not a rewrite driven by a headline.
2. Belt-and-braces ESA language is now demonstrably valuable. The clause that won most cleanly was the one that said, repeatedly and in several places, that the employee would never receive less than ESA minimums. That drafting habit used to look redundant. The Court of Appeal has now shown it is what makes the difference when a clause is challenged.
3. Your risk has shifted from the contract to the conduct. With one avenue of contractual attack narrowed, the exposure that remains sits in how terminations are executed — the process, the documentation, the investigation, the record of employment. That is the lesson running through Ontario's 2026 employment decisions, and it is operational rather than legal.
4. If you are entering the Canadian market, this is your drafting baseline. Foreign parents routinely localize commercial agreements carefully and copy employment templates over untouched. Ontario has just told you exactly what its courts will look for in a termination provision. Build to it from day one rather than discovering it at an exit.
5. Old contracts are the real exposure. Most Ontario employers are carrying agreements signed across five or ten years, in several template generations, with no inventory of which employee is on which version. The decision does nothing for a 2018 contract with a defective with cause clause.
Inventory your employment agreements by template generation. Not a sample — all of them. Which employees signed which version, and when. Most organizations cannot answer this in under a week, and that alone is the finding.
Have employment counsel review the with cause clause specifically. This is where the remaining exposure concentrates. The Court preserved with cause provisions that expressly protect ESA minimums; it did not rescue those that do not. Ontario's own guide to the Employment Standards Act sets out the statutory floor your clause has to respect.
Add explicit ESA-compliance language throughout, not just once. The Li contract won because compliance was stated repeatedly and consistently. Redundancy is protection.
Re-paper on a real trigger, with consideration. Fresh consideration is required to amend an existing employment contract in Ontario. Promotions, role changes and compensation adjustments are the natural moments. Handing an existing employee a new contract with nothing in return is how a good clause becomes an unenforceable one.
Fix the process risk while you are in there. The contract governs what you owe. Conduct governs what gets added to it. If your termination and workplace investigation processes are informal, the contract review only addresses half the problem.
Get legal advice on your specific template. Firms including Blakes and Gowling WLG have published analyses of the decision that your counsel will find useful as a starting point. What we do is the operational layer — inventory, rollout, manager training, and making sure the documents in the drawer match the practice on the floor.
The Court of Appeal did something Ontario employers have needed for two years: it told lower courts to stop hunting for ambiguity in order to void otherwise clear agreements. That is real relief, and it is worth acknowledging plainly.
But relief on one argument is not the same as safety. The employers who benefit most from Baker and Li are the ones whose contracts already said, clearly and more than once, that the ESA floor would always be honoured. If yours does not say that — or if you do not know what yours says, because it was drafted in 2019 by someone who has since left — the decision has not helped you yet.
It has just told you exactly what to go and check.
Not sure which contract generation your people are on? Employment agreement inventory, template rollout and manager training sit inside our HR services work. Book a 30-minute call or contact us to discuss scope.
Dealing with a termination that may become contentious? Review our Ontario employer-side workplace investigation fit and acceptance process, or start with the investigation fit assessment.
1205 Consulting provides HR and workplace investigation services. This article is general information, not legal advice. Court decisions are summarized from public sources and published legal commentary; read the primary decision and consult employment counsel before acting on any specific situation.
In Baker v. Van Dolder's Home Team Inc.; Li v. Wayfair Canada ULC, 2026 ONCA 568, released August 6, 2026, the Court of Appeal for Ontario held that the words "at any time" and "at any time and for any reason" in a without cause termination provision are not, by that language alone, inconsistent with the Employment Standards Act, 2000. Both clauses were upheld as enforceable. The appeal in Baker was allowed and the appeal in Li was dismissed. This is a summary of public reporting; read the decision and consult employment counsel.
No. The decision removes one specific attack — that "at any time" or "for any reason" wording alone offends the ESA. Every other ground on which Ontario courts have struck termination provisions remains available, including with cause language that strips ESA minimums, provisions that cut off benefit continuation during the statutory notice period, and clauses that fail when the contract is read as a whole. Have counsel review your specific template.
According to reporting on the decision, no. The Court rejected the motion judge's view that a with cause clause was unenforceable because it did not explain how contractually-defined cause differs from the ESA's wilful misconduct standard. Employers may incorporate ESA entitlements by reference without reproducing statutory sections or educating employees on the underlying legal distinctions, provided the clause clearly preserves minimum ESA compensation.
Not necessarily. Commentators including Hicks Morley have noted they will monitor whether leave to appeal to the Supreme Court of Canada is sought, given the significance of the decision. Employers should treat the current position as authoritative in Ontario while remaining aware that it could be revisited.
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