Many employment lawyers are aware of the Ontario Superior Court decision Dufault v. The Corporation of the Township of Ignace (2024 ONSC 1029). In Dufault, it was held that a without cause termination clause which stated, inter alia, that an employee could be dismissed “at any time” and at the “sole discretion” of the employer, was invalid. Since an employee cannot be terminated at the conclusion of their leave (section 53) or in reprisal for exercising a right under the ESA (section 74), it was held that the language of the termination clause exceeded the powers granted to employers under the ESA.
For employers, it was disappointing that this interpretation was not directly addressed on appeal (2024 ONCA 915), or, for that matter, at the Supreme Court of Canada, which dismissed an application for leave ( 2025 CanLII 51603 (SCC)). It is no secret that many employment contracts provide employers with broad discretion to dismiss employees without cause, some explicitly using the “at any time” and/or “sole discretion” language at issue in Dufault.
However, two recent cases have since emerged which question the scope of the trial decision in Dufault. With rumors swirling that these cases will be heard together at the Court of Appeal in early 2026, it is more important than ever for employers and their counsel to be aware of these decisions.
Li v Wayfair Canada ULC (2025 ONSC 2959)
In Li, the subject termination clause stated that the employer was permitted to terminate an employee for cause “…at any time…without notice, pay in lieu of notice, severance, benefits continuance or other compensation or damages of any kind” and “unless expressly required by the ESA in which case only the minimum statutory entitlements will be provided”.
The termination clause further stated that after an employee’s probationary period ends, the employer may terminate an employee “…at any time and for any reason” by providing the employee with the statutory minimums contemplated under the ESA.
On termination, the employee, Li, relied on the decision in Dufault. The employee stated that the language “for any reason” was analogous to “sole discretion” and that the employer was not permitted to dismiss them “at any time”.
Dow J. held that while it agrees with the principle in Dufault, the wording in Li’s employment contract was distinguishable and necessitated a different conclusion. Dow J. emphasized that the for cause and without cause termination provisions sought only to limit the employer’s obligations based on the provisions set forth in the ESA. This made Li distinguishable from Dufault, as the scope of the subject language only extended as far as permitted under the ESA. The termination provisions were held to be valid and enforceable.
Jones v. Strides Toronto, (2025 ONSC 2482)
In the Jones case, the without cause section of the termination clause contained a provision which held that the organization could terminate the employment of the employee “at any time.” It did not contain the phrase “sole discretion”, nor anything analogous to it.
The employee submitted that, based on Dufault, the words “at any time” meant that the employee could be terminated at the conclusion of an employee leave or in reprisal for exercising a right under the ESA, which would run contrary to ss. 53 and 74, thereby making the provisions unenforceable.
The employer argued that Dufault does not stand for the proposition that the words “at any time” are problematic in itself. The employer argued that the true concern in Dufault was that that the employer had the sole discretion to terminate an employee’s employment at any time and that this broad discretion could not be granted to an employer. If an employer did have this power, it would lead to possible conflict with the ESA, which seeks to limit an employer’s sole discretion by its very nature.
While ultimately ruling in favour of the employee for other reasons, Moore J. agreed with the employer’s position on the specific interpretation of the phrase “at any time”. Moore J. held that absent any language about the employer having “sole discretion” to terminate the employee’s employment, the phrase “at any time” was not improper.
Summary
Li and Jones have narrowed the scope of the Dufault decision. Li has demonstrated that the phrases “at any time” and “sole discretion” discussed in Dufault can be compliant with the ESA as long as the termination clause is expressly subject to the ESA’s provisions. Jones held that the phrase “at any time” does not necessarily contravene the ESA, either, absent further language that provides an employer with absolute discretion to terminate an employee.
Employers are encouraged to regularly review the terms of their employment agreements with their counsel, and this line of cases illustrates why. With two ‘employer friendly’ decisions set to be considered at the Court of Appeal, employers and their counsel should watch this space. The validity of your employment contracts could very well change “at any time”.
About the Author
Nick Kruiper is an associate lawyer at Soloway Wright LLP practicing in the areas of banking and insolvency, commercial litigation and employment law.
If you are looking for assistance with your employment related matters, reach out to Nick Kruiper and our litigation team at solowaywright.com.
