Ontario Termination Clauses in 2026: What Employers Should Check
September always feels like a second January to me. Calendars fill up, and the "we should really fix that" list that sat untouched all summer is suddenly back on the desk.
For a lot of my clients this fall, employment agreements sit right at the top of that list. So this month is all about contracts.
16 Years, No Contract, and a Letter Asking for 24 Months
Earlier this year, a new client let a sixteen-year employee go on the spot. No agreement, no termination plan. Two weeks later, a lawyer's letter arrived asking for twenty-four months' pay.
You know how this math works: no enforceable clause means common law reasonable notice, not the ESA's eight weeks. The part owners feel in their gut when this happens is the gap between those two numbers, and that gap is exactly what a well-drafted termination clause closes.
"Just Tell Me the Wording That Can't Be Challenged"
A client asked me exactly that a few months ago. My answer: this is tricky, and I'm not the one who should write it. I can flag the risk in an agreement. The final language belongs with an employment lawyer.
Lately, though, the risk itself kept moving. Since Dufault v. Ignace (2024), where a Superior Court judge found that "at any time" and "sole discretion" language breached the ESA, employee-side counsel have been picking termination clauses apart phrase by phrase.
On August 6, the Ontario Court of Appeal put its foot down. In Baker v. Van Dolder's Home Team and Li v. Wayfair Canada (2026 ONCA 568), the Court upheld clauses allowing termination "at any time, without just cause" and "at any time and for any reason."
The reasoning is the part worth sitting with. Judges shouldn't hunt a contract for "magic words" and strike it down phrase by phrase. Read the whole clause, in context. "At any time" describes when a termination can happen. It isn't a secret attempt to fire someone on a protected leave.
Safer isn't the same as safe. What the ruling does NOT change:
➡️ Contracting out of the ESA still kills the whole clause. It doesn't get scaled back to the minimum. It gets struck down entirely, and you're back to common law notice.
➡️ One bad clause can still sink a good one. Since Waksdale (2020), a non-compliant "for cause" clause can take a perfectly fine "without cause" clause down with it.
➡️ A clause that was fine when signed can fail later if the job underneath it has changed. More on that below.
What actually changed for the reviews I'm doing this month: ESA-fallback language is still what does the real protecting, and some of what got over-engineered over the last two years to survive a hostile court is finally safe to simplify.
Refreshing Agreements: What Still Trips People Up
A ruling like this one tends to kick off a round of template updates. A few things worth keeping front of mind when you roll them out:
1. Consideration - the bar is low, but it's still a bar. In Giacomodonato v. Pear Tree Securities (2024), the Court of Appeal confirmed it looks at whether consideration exists, not whether it's generous. Where refreshes fall apart in practice is timing: the new agreement goes out in a different month than the raise, or a new hire signs on day one after the offer letter already set the terms. Tie the signature to the benefit, on paper, at the same time.
2. Promotions can quietly retire a termination clause. In Celestini v. Shoplogix (2023), an executive's role grew so much that the Court of Appeal agreed the original agreement no longer fit the job. One month's notice plus twelve months' salary became an eighteen-month award. Role changes rarely trigger a contract review, and they should.
3. Contracts don't age well, because the rules keep moving. Non-competes have been off the table for most Ontario employees since October 2021, yet they still turn up in agreements I review. And since July 2025, employers with 25+ employees owe new hires specific written information before day one. A 2019 agreement was written for a different set of rules.
On that non-compete point: what actually protects the business is a well-drafted non-solicitation clause, the one that stops a departing employee from taking clients or poaching the team.
Your Fall Contract Check ✅
Four questions worth running against your agreements this month:
✅ Does every employee (and contractor) have a signed agreement, signed before their start date?
✅ Does the termination clause, including the "for cause" section, tie back to ESA minimums?
✅ Has anyone's role, pay, or scope changed significantly since they signed?
✅ Is a non-compete still trying to do a job only a non-solicit can do?
If one of those made you wince, that's the agreement to fix first. And line up the consideration (next raise, next bonus cycle) before anything goes out.
The most expensive employment agreement you'll ever have is the one you never put in place.
Grab Your HR Gut-Check 💬
If you've got long-tenured staff with no agreement, or contracts nobody has opened since before the non-compete ban, let's look at them before a termination forces the question.
Book a free HR Gut-Check: a 30-minute 1:1 call where we go through your current setup, and you walk away knowing which agreements need attention first. No strings attached.
Or just email anna@humanizehr.ca, or call 647-291-5741
Be Well and Stay Human 💙
Anna Boshoer
Founder, Lead HR Consultant and Integrator @ HumanizeHR
anna@humanizehr.ca | 647-291-5741
This article shares general information, not legal advice. For contract wording, work with an employment lawyer. Happy to refer you to one I trust.
