Ontario Superior Court Upholds Termination Clause Utilizing “sole discretion” and “at any time” Language

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Several recent decisions out of the Ontario courts have sparked controversy surrounding the enforceability of termination clauses that include the wording “sole discretion” and “at any time.”

 

In Dufault v. Ignace (Township), 2024 ONSC 1029 (“Dufault”), the court held that “sole discretion” and “at any time” language in a termination clause breached the Employment Standards Act, 2000 (“ESA”). The court reasoned that an agreement that allows an employer to terminate an employee under its “sole discretion” and “at any time” could include employees on job-protected leave or employees at risk of reprisal after making an ESA complaint.

 

In Baker v. Van Dolder’s Home Team Inc., 2025 ONSC 952 (“Baker”), the court adopted the reasoning in Dufault in finding that the use of “at any time” in a termination clause rendered the entire clause unenforceable.

 

Two more recent cases have strayed away from the approach taken by the court in Dufault and Baker.

 

In Li v. Wayfair Canada Inc., 2025 ONSC 2959 (“Wayfair”), the court rejected the plaintiff’s argument that the use of “at any time” and “for any reason” invalidate the termination clauses. In this matter, the court determined that, when reading the agreement as a whole, the scope of the termination payments were compliant with the ESA despite the inclusion of “at any time” and “for any reason” language.

 

Similarly, in Jones v. Strides Toronto, 2025 ONSC 2482 (“Jones”), the court held that the use of “at any time” without “sole discretion” does not result in a violation of the ESA.

 

These decisions offer conflicting analyses regarding the implication of “at any time” and “sole discretion” on termination clauses. We will have to wait for guidance from the Ontario Court of Appeal, which has declined to weigh in on this apparent incompatibility within the lower court’s jurisprudence.

 

Key Takeaways for Employers: 

  1. The use of phrases “at any time” and/or “sole discretion” may not invalidate termination clauses within an employee’s employment agreement.
  2. Clear language in employment contracts is essential for enforceability.
  3. Regularly review employment agreements to ensure compliance with current Ontario laws.