In a clear “win” for employers, the Ontario Court of Appeal recently upheld a contractual termination provision that limited the employee’s termination entitlements to the minimum standards under Ontario’s Employment Standards Act, 2000.
In Bertsch v. Datastealth Inc., 2025 ONCA 379 (Datastealth), the employer dismissed a Vice President without cause after 8.5 months of service by providing the employee with four weeks’ pay in lieu of notice. The employee sued for wrongful dismissal. The employer defended the employee’s action by relying on the following termination provision in the employee’s employment agreement:
Termination of Employment by the Company: If your employment is terminated with or without cause, you will be provided with only the minimum payments and entitlements, if any, owed to you under the Ontario Employment Standards Act, 2000 and its Regulations, as may be amended from time to time (the “ESA”), including but not limited to outstanding wages, vacation pay, and any minimum entitlement to notice of termination (or termination pay), severance pay (if applicable) and benefit continuation. You understand and agree that, in accordance with the ESA, there are circumstances in which you would have no entitlement to notice of termination, termination pay, severance pay or benefit continuation.
You understand and agree that compliance with the minimum requirements of the ESA satisfies any common law or contractual entitlement you may have to notice of termination of your employment, or pay in lieu thereof. You further understand and agree that this provision shall apply to you throughout your employment with the Company, regardless of its duration or any changes to your position or compensation.
In upholding the clause and dismissing the employee’s wrongful dismissal claim, the Court rejected the employee’s argument that an “ordinary person” untrained in the law might find the clause to be ambiguous. In the Court’s view, the issue was not whether an ordinary person might adopt an incorrect interpretation of the contractual termination provision; rather, it was how the agreement could be reasonably interpreted. On that basis, the Court ruled as follows:
The termination provision specifically states that an employee who is terminated “with or without cause” will receive the minimum payments and entitlements under the ESA and its regulations. We see no error in the motion judge’s conclusion that the termination provision in the employment agreement is unambiguous, and that, when reasonably interpreted, it does not depart from the minimum standards guaranteed by the ESA. As such, the termination provision is enforceable and precludes the appellant’s claim for common law damages for wrongful dismissal.
Lessons for employers:
After a series of decisions that have struck down countless termination provisions, this case is a welcome development for provincially regulated employers in Ontario. The message to these employers is clear: keep it simple. While employers can always choose to exceed an employee’s contractual entitlements at the time of dismissal, when drafting a termination provision, employers should avoid complicated formulas as past case law demonstrates that such an approach can increase the risk of a court setting aside the provision on the basis that it is ambiguous or otherwise does not comply with the applicable employment standards legislation.
Employers may consider adopting the Datastealth termination clause in their employment agreements as it has the “stamp of approval” from the highest court in Ontario. However, the law is in flux and there are no guarantees that the courts will enforce this termination clause in future. In 2008, the Ontario Court of Appeal approved a termination clause in the case of Clarke v. Insight Components (Canada) Inc. that would not be enforceable today. Employers should keep up to date on caselaw developments and obtain regular legal reviews of their employment agreements to ensure that no other clauses in those agreements could arguably invalidate an otherwise enforceable termination clause.
For more information, please reach out to the authors, Andy Pushalik and Adrian Miedema.
