The start of a new year is the perfect time to look back on the year past, examine key developments, and reflect on lessons learned.  As we kick off 2026, the Rodney Employment Law team has rounded up the top HR and employment law updates from 2025, to help you stay ahead in 2026!

Setting Aside Termination Clauses “At Any Time”

Termination clauses purporting to allow employers to terminate an employee “at any time” were among the most controversial employment law issues before Ontario courts in 2025. During the year, courts reached conflicting conclusions, upholding some termination clauses containing this language, while striking down others as contravening Ontario’s Employment Standards Act, 2000 (ESA), despite the language of termination clauses being very similar.

The controversy stems from a 2024 decision, Dufault v The Corporation of the Township of Ignace 2024 ONSC 1029 (“Dufault”) which created a novel argument that language which allowed an employer to terminate an employee “at any time” and at its “sole discretion” violated Ontario’s Employment Standards Act, 2000 (“ESA”) and therefore rendered that entire termination clause unenforceable.

Since then, the courts have struggled to consistently apply Dufault, leading to uncertainty for both employers and employees alike.

In the first notable decision since Dufault, Baker v. Van Dolder’s Home Team 2025 ONSC 952, the Court held that it was bound by the ruling in Dufault and therefore found that a termination provision giving the company the right to dismiss an employee “at any time” was a violation of the ESA. Following a well-established principle, the court also held that the “savings” language stating the employer would comply with the ESA could not cure the ESA-breaching “at any time” language.

Then, in Li v. Wayfair 2025 ONSC 2959, the court reversed its approach and actually upheld a termination clause despite it containing the “at any time” language. The Court reasoned that, when the employment agreement was read as a whole, the termination provision contained clear and repeated references to compliance with the ESA and its minimum entitlements and therefore could not reasonably be interpreted as an attempt to contract out of the ESA. The Court held that the clause was distinguishable from the termination provision in Baker, although it did not explain the basis for that distinction, despite the clauses being very similar. 

Thereafter, in Jones v. Strides Toronto, 2025 ONSC 2482, the Court took no issue with the “at any time” language contained in the termination clause, reasoning that the clause in Dufault was unenforceable because it stated that the company could terminate the employee “in its sole discretion” and “at any time”.  Since the clause in Jones contained “at any time” language but not “sole discretion” language, the court found that this clause was distinguishable. Nevertheless, the “with cause” portion of the termination clause contained more conventional deficiencies, and the termination clause in its entirety was set aside on more established grounds.

Finally, in August 2025 came the decision in Chan v. Nyx Capital Corporation 2025 ONSC 4561, which followed Dufault and held that a termination clause stating that the employee could be terminated “at any time and for any reason at its discretion” was a breach of the ESA.  The Court explicitly cited Dufault when stating that “this court has held that under the ESA, an employer does not have an absolute right to dismiss an employee”.

As of the date of this article, the Ontario Court of Appeal is set to hear both Li and Baker in March 2026, and we look forward to the court clarifying its stance on this controversial language shortly. Until then, it appears that termination clauses can be upheld or set aside “at any time”, in the Court’s “sole discretion”. 

Bertsch v Datastealth, 2025 ONCA 379: Finally, A Termination Clause Win for Employers

In a rare win for employers, the Ontario Court of Appeal upheld a termination clause that allowed the employer to terminate both with or without cause by paying only the minimum statutory requirements of ESA.

Too often, termination clauses fail because overly technical legal jargon creates ambiguity for the lay employee, or, in efforts to be precise and detailed to comply with employment standards legislation, clauses inadvertently run afoul of the same legislation.

In this case, a relatively straightforward termination clause which clearly confirmed the employer’s commitment to comply in every case with the ESA, whether the termination was with or without cause, and provide nothing further, was found by the court to be clear and unambiguous in limiting the employee to just their minimum entitlements under the ESA. This reasoning was upheld on appeal.

As a result, a vice-president terminated after 8.5 months who sought 12 months of pay following his termination, was limited to the 4 weeks‘ pay provided to him at the time of his termination (the employee was paid out 4 weeks at the time of his termination, despite his entitlement under the ESA being just 1 week of notice or pay in lieu).

The court‘s valuable guidance in this decision, that using simple, clear language which clearly expresses a commitment to comply with employment standards legislation is sufficient in rebutting an employee’s presumptive entitlement to common law reasonable notice, will likely be reflected in other successfully defended termination clauses moving forward.

Miller v. Alaya Care Inc., 2025 ONSC 1028: Induced an Employee? Be Prepared to Pay

In employment law, inducement is the idea that a new employer lured an employee away from their gainful, secure employment to join the new employer.  If proven, inducement can be costly for an employer upon termination.

In Miller v. Alaya Care Inc., 2025 ONSC 1028, Miller, a 62-year old VP earning over $250,000 was terminated by Alaya Care Inc. after only 7 months of employment.  The employee claimed that she had been induced by Alaya Care to leave her previous employment of 12 years, which should result in an increased notice period.

While employees often claim “inducement” in wrongful dismissal cases, they are rarely successful.  In this case, the court examined the following factors in determining whether inducement occurred:  

1. The reasonable expectations of both parties;
2. Whether the employee sought out work with the prospective employer;
3. Whether there were assurances of long-term employment;
4. Whether the employee did due diligence before accepting the position by conducting their own inquiry into the company;
5. Whether the discussions between the employer and prospective employee amounted to more than the persuasion or the normal “courtship” that occurs between an employer and a prospective employee;
6. The length of time the employee remained in the new position, the element of inducement tending to lessen with the longevity of the employment; and
7. The age of the employee at termination and the length of employment with the previous employer.

The Court found that Alaya Care had induced Miller, and considered the following:

1. Alaya Care had reached out to Miller first.
2. There were representations made by Alaya Care that Miller’s experience would assist in “growing” the company. 
3. Inquiries were made by Alaya Care as to the extent of Miller’s renumeration with her previous employer, so that they could “lure” her with a better compensation package. 
4. Alaya Care had hired a number of people in 2021 as part of an “aggressive growth strategy”. 
5. Alaya Care was prepared to go as far as indemnifying the employee in the event that her previous employer commenced litigation against her for leaving them to join the Company.

In its decision, the Court found that Miller had been wrongfully dismissed, and that Alaya Care had induced her to join the Company only to terminate her after 7 months. Given that the termination clause in Miller’s employment agreement was not enforceable, the Court awarded the employee 14 months of notice, based on her total compensation.

This case is a good reminder for employers to tread very carefully when courting new  employees – whether directly or via a recruiter. While employers want to put their best foot forward and attract top talent, overly aggressive or dishonest recruiting tactics that lure employees from secure employment can be a costly mistake.  It is also a critical reminder, again, about the importance of solid employment agreements that, if enforceable, can greatly limit an employee’s entitlement upon termination.

Panchbhaya v. Vulsay Industries Ltd., 2025 ONSC 5370: The Court Awards an Employee 26 Months’ Notice, Above the Generally Accepted Cap of 24

In Panchbhaya v. Vulsay Industries Ltd. 2025 ONSC 5370, the Court dealt with the wrongful dismissal claim of a 65 year-old Lab Manager with 40 years of service, following the closure of one of Vulsay’s facilities.

Vulsay issued only the minimum statutory entitlements required by the ESA.

The employee, in this case, faced serious barriers to re-employment at the age of 65. Also, the court observed that employees in their mid-sixties are “in the twilight if not at the end of [their] working years,” and often face “extremely stiff competition” from younger applicants in the job market.

In employment law, there is a presumptive 24-month cap on reasonable notice for terminated employees, which can be exceeded only in “exceptional circumstances”.

In its decision, the court considered the fact that this was the only job that the Plaintiff ever had in Canada and he had no practical experience outside of this job. His employment was also in a specialized industry and position and the court noted that a 65-year-old is “nearing the end of their career”.

The court considering the plaintiff’s age and length of service here as “exceptional circumstances”, resulting in an award of 26 months’ notice period, along with the value of lost benefits and pension contributions for the duration of the notice period.

This case highlights a notable evolution in the law of assessing reasonable notice. By grounding an award above 24 months on this basis, the Court has pushed the boundary on what can constitute “exceptional circumstances”.

Panchbhaya is yet another case that highlights the importance of enforceable employment agreements and careful consideration of severance packages for longer service employees.

Carroll v Oracle Canada ULC, 2025 ONSC 4889: 3 Month Employee Gets 12 Months Notice Plus Damages  

In Carroll v. Oracle Canada ULC, the Ontario Superior Court of Justice found that an employee with only 3.5 months of service was entitled to 12 months’ notice plus almost $58k in punitive damages.

In this case, the plaintiff was a 61-year old, employed in a specialized sales role, holding the title of Global Strategic Client Executive. In his position, the plaintiff earned a base salary of $180k plus significant commissions, resulting in gross annual income of over $700k.

The employer terminated the plaintiff without cause as part of a restructuring and only provided him with 4 weeks of working notice, including the required 3 weeks minimum under the ESA. Also, the employer failed to provide commission payment owed during the three-week statutory notice period.

The court held that the appropriate period of reasonable notice for the plaintiff was 12 months, based on the plaintiff’s base salary and commissions. Although the plaintiff had found comparable new employment eight months after his termination, the court recognized that it would take some time to establish new relationships, so the reasonable notice period was not reduced to reflect the plaintiff’s mitigation.

The Court also awarded almost $58,000 in punitive damages due to the employer’s delay in paying commissions owed during the statutory notice period.

The Court’s reasons in this case serve as a useful caution to employers of the risks that can accompany the termination of even a short service employee and, in particular, when ESA entitlements, like commissions, are at issue.

Gent v. Askanda Business Services Ltd., 2025 BCSC 1278: An Employee Openly Seeking to Retire was Not Entitled to Much Notice

In a noteworthy decision from the Supreme Court of British Columbia, the court awarded only 6 months’ pay in lieu of notice to a 64-year-old employee with 30 years of service, largely because the employee intended to retire in the near term.

While it is unusual for a long service employee nearing retirement and being in a specialized role to receive such a modest notice award, the decision highlights an important takeaway for employers: an employee’s stated intention to retire can meaningfully limit an employer’s common-law notice obligations.

While an employee’s open intention to retire may significantly limit the employer’s liability as was the case here, employers must still tread very carefully.  In order for a resignation to be effective, it must be clear and unequivocal. Vague or ambiguous statements about retirement are insufficient, and in such circumstances employers should, at a minimum, make further inquiries to clearly confirm the employee’s intention regarding their continued employment.

McFarlane v. King Ursa Inc., 2025 ONSC 3553: Constructive Dismissal can be a Costly Concern for Employers

This case serves as a strong warning to employers: changes to an employee’s role must be handled with extreme care, particularly when the employee is returning from a protected leave such as a maternity leave.

In this case, an Executive Vice President with four years of service was demoted and had her pay significantly reduced shortly after returning from maternity leave. The Court found that these changes amounted to a constructive dismissal and awarded the employee 12 months’ notice plus $40,000 in moral damages for the employer’s “unduly insensitive conduct” and noted her vulnerable position upon returning from a maternity leave.

The decision makes several key points clear:

1. Financial difficulties do not relieve employers of their legal obligations (the attempted demotion had no legitimate business justification);
2. Even though the employee had relatively short service, the lack of comparable senior executive roles justified a 12-month notice period; and
3. Most importantly, the Court emphasized the serious harm caused to the employee’s dignity, self-esteem, particularly where her executive role was closely tied to her professional identity.

For employers, the takeaway is clear: role changes, demotions, or compensation adjustments, especially following a protected leave, must be carefully planned, well-justified, and thoughtfully communicated. Failing to do so can carry significant legal risk.

Key Legislative Changes Introduced in 2025

Over the course of 2025, Ontario continued to introduce several amendments to the Employment Standards Act, 2000, (ESA). The proposed changes include, but are not limited to, the following:

• Effective January 1, 2026, Ontario Employers with 25 or more employees are now required to do the following for public advertised job postings:
  • Include in a publicly advertised job posting information about the expected compensation or range of expected compensation (within $50,000). This does not apply to positions with compensation of more than $200,000.
  • Disclose the use of artificial intelligence during the hiring process.
  • Exclude the requirement for Canadian experience.
  • Disclose if the posting is for an existing vacancy or not.

• Effective January 1, 2026, if an Ontario employer with 25 or more employees interviews an applicant for a publicly advertised job posting, they are required to provide information to that applicant about whether a hiring decision has been made for that posting within 45 days after the date of the last interview either in person, in writing or using technology.

• Effective July 1, 2025, Employers with 25 or more employees are required to provide new hires with written information before their first day of employment or as soon as possible after, including:
  • Legal and any operational business name.
  • Contact information (Address, Phone Number, Contact Names)
  • General description of the initial work location.
  • Starting hourly wage or commission.
  • Pay period and payday.
  • Description of initial anticipated work hours.

• Effective June 19, 2025, a maximum of 27-week long-term illness unpaid leave for employees who have worked at least 13 consecutive weeks came into effect.

If you are navigating any of the issues outlined above or have any employment law concerns, please feel free to contact Rodney Employment law at info@rodneyemploymentlaw.com or by completing our contact form here. We are happy to provide copies of any of the cases referenced if you would like to review them in full, or to discuss how these principles may apply to your specific circumstances.

If you have any questions regarding employment law or termination, please do not hesitate to reach out to Rodney Employment Law at info@rodneyemploymentlaw.com or complete our contact form here.