Notable Win for Employers – Ontario Court of Appeal Upholds Enforceability of Unambiguous Termination Clause

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Bertsch v. Datastealth Inc., 2025 ONCA 379, is a welcomed decision that stands out amid a long trend of increased judicial scrutiny of employment contracts. The Ontario Court of Appeal has confirmed the enforceability of a termination clause that limits an employee’s entitlements to the minimum standards under the Employment Standards Act, 2000 (“ESA”). The Bertsch decision is a significant development for employers navigating Ontario’s increasingly restrictive termination clause jurisprudence.

The clause at issue provided that, whether the employee was terminated “with or without cause,” they would receive only the minimum amounts required under the ESA. These included wages, vacation pay, termination pay, severance (if applicable), and benefit continuation, but only to the extent required by the ESA. Importantly, the contract explicitly disclaimed any entitlement to common law notice or damages beyond ESA standards, and confirmed the provision applied throughout the employment relationship.

The plaintiff employee, Mr. Bertsch, challenged the provision as ambiguous and therefore unenforceable. Specifically, Mr. Bertsch asserted that, while a person trained in the law might find the clause unambiguous, an ordinary person might understand, incorrectly, that they could be terminated from their employment without notice for conduct such as carelessness or negligence, rather than “wilful misconduct, disobedience or wilful neglect of duty”.

Under the ESA, employers are generally required to provide employees with notice of termination or pay in lieu of notice. However, there are specific exemptions where this requirement does not apply. One such exception (under O. Reg. 288/01) is for employees who have “been guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer”. The standard for “wilful misconduct, disobedience or wilful neglect of duty” is high, and requires more than mere carelessness or negligence. It necessitates a deliberate and intentional act with knowledge that the conduct is wrong, or a reckless disregard for the consequence.

Relying on this legal distinction between careless and intentional acts, Mr. Bertsch alleged that the termination provision in his employment contract would permit the employer to terminate an employee for cause short of “wilful misconduct, disobedience or wilful neglect”, without payment.

Both the judge of first instance and the Court of Appeal disagreed. In upholding the termination clause, the Court emphasized:

  1. Clarity of Language: The wording used in the termination clause was clear and unambiguous. In dismissing Mr. Bertsch’s assertions that an ordinary person may incorrectly interpret the clause, the Court clarified that the issue is not whether an ordinary person might arrive at an incorrect interpretation of the termination provisions of the employment agreement, but how the agreement can be reasonably interpreted;

 

  1. “With or Without Cause” Phrasing: This language did not improperly broaden the employer’s right to withhold ESA entitlements in just cause situations. Instead, it reflected the employer’s intention to pay ESA minimums even if the employer was terminated for cause (wilful misconduct, disobedience or wilful neglect of duty); and

 

  • Effect of the “Failsafe”: The termination clause included a “failsafe” that expressly provided for an employee to receive their minimum entitlements under the ESA on termination. While helpful, the failsafe was not essential to the provision’s enforceability. The clause was already compliant.

Ontario courts have historically approached termination clauses with a high degree of scrutiny. Even minor technical flaws have rendered otherwise reasonable provisions void. Against this backdrop, Bertsch offers a welcome counterbalance.

Key Takeaways for Employers:

  1. This decision offers a key opportunity for employers to revisit their employment contracts;

 

  1. Use clear, unambiguous language;

 

  • A “failsafe” clause may be helpful in adding protection, but it won’t rescue a fundamentally flawed provision;

 

  1. Avoid definitions of “cause” that conflict with or undercut ESA protections; and

 

  1. Consider updating existing contracts if their termination provisions are unenforceable. For current employees, new termination provisions must be supported by fresh consideration, such as a signing bonus, to be enforceable.