EMPLOYMENT CONTRACT COMPLIANCE: IMPLICATIONS OF BAKER v. VAN DOLDERS FOR ONTARIO’S EMPLOYERS

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Ontario employers should take note of the recent decision in Baker v. Van Dolders Home Team Inc., 2025 ONSC 952, which underscores the importance of carefully drafting termination clauses in employment contracts. This ruling from the Ontario Superior Court of Justice, released on February 11, 2025, highlights the high legal standards to which employers are held and the risks of non-compliance with Ontario’s Employment Standards Act (ESA).

The case arose from a wrongful dismissal claim brought by the plaintiff, Frederick Baker, after his employment was terminated by Van Dolders Home Team Inc. on May 24, 2023. The matter was decided on summary judgment based on affidavit evidence and written submissions, with supplemental oral arguments requested by the Court.

At issue were both the “without cause” and “with cause” termination provisions in the employment contract—both of which the Court ultimately found to be unenforceable. The contract’s “without cause” clause sought to limit termination entitlements to ESA minimums, while the “with cause” clause permitted termination without notice or compensation for reasons including poor performance and dishonesty.

The Court’s analysis was guided by the Ontario Court of Appeal’s decision in Waksdale v. Swegon North America (2020), which established that if any part of a termination provision is unenforceable, the entire provision must be struck down. In this case, the “with cause” clause was found to contravene the ESA, as it allowed termination without compensation for conduct, such as poor performance and dishonesty, that does not meet the statutory threshold of “wilful misconduct” under ESA Regulation 288/01. The Court noted that an employee could reasonably believe they had no statutory rights if terminated under such a clause, rendering it invalid.

The “without cause” clause was also challenged based on language granting the employer the right to terminate “at any time,” which the plaintiff argued misrepresents the ESA. The Court agreed, referencing the 2024 decision in Dufault v. The Corporation of the Township of Ignace, and further held that even general statements of ESA compliance cannot save a clause that fundamentally misstates statutory protections.

Consequently, both termination provisions were struck down, and the employer’s summary judgment motion was dismissed. The Court ordered a further hearing to assess damages based on common law notice—potentially a much higher liability than the ESA minimums.

Key Takeaways for Employers

This decision serves as a crucial reminder for Ontario employers to ensure their employment contracts are fully compliant with the ESA and recent case law. Employers should avoid:

  • Language suggesting the right to terminate “at any time”;
  • “With cause” clauses that list grounds for termination without aligning them with the ESA’s statutory thresholds.
  • Reliance on general ESA compliance statements to cure otherwise unenforceable clauses.

Failure to address these issues can expose employers to significant financial risk. It is strongly recommended that employers engage legal counsel to review and update employment agreements proactively.  As Baker makes clear, a single flawed provision can nullify termination protections entirely and result in costly damages at common law.