The Ontario Court of Appeal has given employers important guidance on when an ESA only termination clause can limit an employee to statutory minimums instead of common law reasonable notice. In Baker v. Van Dolder’s Home Team Inc., 2026 ONCA 568, the Court addressed the Baker and Li v. Wayfair Canada appeals together and confirmed that phrases such as at any time or at any time and for any reason do not automatically make a termination clause unenforceable when the contract, read as a whole, shows an intention to comply with employment standards legislation.

For Alberta employers, the decision is not binding in the same way an Alberta appellate decision would be, but it is still worth attention. It reinforces a practical point: employment agreements should be drafted clearly, reviewed regularly, and aligned with the minimum standards in the Alberta Employment Standards Code while properly addressing common law reasonable notice.

What did the Ontario Court of Appeal decide?

The Ontario Court of Appeal decision in Baker v. Van Dolder’s Home Team and Li v. Wayfair Canada upheld ESA only termination clauses where the wording, viewed in context, preserved statutory minimum entitlements. The Court rejected an overly literal argument that words like at any time necessarily allowed an employer to terminate in circumstances prohibited by the Ontario Employment Standards Act, 2000, such as a reprisal or protected leave situation.

In Baker, the lower court had found the termination clause unenforceable because it allowed termination at any time. In Li v. Wayfair Canada, the lower court reached the opposite conclusion on similar at any time and for any reason language. The Court of Appeal used the two appeals to bring greater consistency to termination clause enforceability, emphasizing that courts should interpret employment contracts as a whole, in context, and in a way that recognizes both employee vulnerability and the parties’ objective intentions.

That does not mean every ESA only termination clause will be enforceable. It means the phrase at any time termination clause is not fatal by itself. The real question is whether the contract clearly provides at least the required statutory minimums and does not, directly or indirectly, contract out of those minimums.

The difference between statutory minimums and common law notice

A written termination clause matters because it can change the financial outcome when employment ends. Without an enforceable clause limiting entitlements, a dismissed employee may be entitled to common law reasonable notice or pay in lieu, which can be significantly more than minimum notice under employment standards legislation.

In Alberta, the Employment Standards Code sets minimum rules for termination notice, termination pay, temporary layoff, and related obligations. Alberta’s official employment standards guidance confirms that Part 2, Division 8 of the Code governs the process for ending employment relationships and the entitlements to termination notice and pay.

Common law reasonable notice is different. It is judge-made law and depends on factors such as length of service, age, character of employment, availability of similar work, and other circumstances. A properly drafted employment agreement may limit an employee to statutory minimums, but only if the clause is enforceable.

For employers, that makes contract drafting more than an administrative task. It is a risk-management tool.

Why statutory minimums only wording still needs careful drafting

An statutory minimums only termination clause is designed to state that, on termination without cause, the employee receives only the minimum entitlements required by employment standards legislation. In Ontario, that legislation is the ESA. In Alberta, the comparable statute is the Employment Standards Code.

The lesson from Baker v. Van Dolder’s Home Team and Li v. Wayfair Canada is not to copy Ontario language into Alberta contracts. The better lesson is to draft for the jurisdiction, the role, and the current law. Alberta employers should avoid vague shortcuts and ensure their contracts refer to the correct legislation, preserve all required minimums, and address without-cause and for-cause termination carefully.

An enforceable clause should generally be clear about:

• The applicable legislation, such as Alberta’s Employment Standards Code, not Ontario’s ESA unless Ontario law actually applies.
• Minimum notice or pay in lieu, including any statutory amounts required at the time of termination.
• Benefit continuation or other required entitlements, where applicable under the governing legislation.
• Accrued wages, vacation pay, and other earned amounts, which should not be cut off by broad limiting language.
• The exclusion of common law notice, if that is the intended result, using plain and careful wording.
• Compliance with protected leaves and reprisal rules, so the clause cannot be read as authorizing unlawful termination.

This is where an employment contract review in Alberta can be valuable. A clause that looks simple may create avoidable exposure if one sentence conflicts with statutory rights or another part of the agreement.

The continuing importance of Waksdale

The keyword many employers remember in this area is Waksdale. In Waksdale v. Swegon North America Inc., the Ontario Court of Appeal held that termination provisions must be read together, and an unlawful for-cause clause can invalidate the termination scheme even if the without-cause clause appears compliant. That decision reshaped how employers approached termination clause enforceability in Ontario and influenced contract review across Canada.

The new Court of Appeal ruling does not erase Waksdale. Instead, it limits a particular line of attack on termination clauses based on phrases such as at any time or for any reason. The Court still treated statutory compliance as essential. It simply refused to invalidate the clauses based on a strained interpretation where the contracts, read as a whole, showed an intention to comply with employment standards minimums.

For Alberta employers, Waksdale remains a reminder to review the whole agreement, not just the without-cause paragraph. If a for-cause provision suggests that the employer can terminate without notice or pay in circumstances where the statute would still require minimum entitlements, that language may create risk.

What does this mean for Alberta employers?

For Alberta employers, the decision is a useful signal, not a complete answer. Ontario Court of Appeal cases can be persuasive, but Alberta courts apply Alberta legislation and Alberta case law. The practical takeaway is that courts may be more willing to uphold clear minimum-standards clauses when the contract shows a genuine intention to comply with the applicable statute.

That said, employers should not assume old contracts are safe. If an agreement was drafted before recent case law developments, borrowed from another province, or assembled from templates, it may not properly reflect Alberta employment law. Even small wording choices can matter when the employee later argues that the clause fails to displace common law reasonable notice.

Alberta employers should consider reviewing contracts when:

1. Hiring new employees into permanent, executive, sales, professional, or operational roles.
2. Promoting employees into materially different positions with new compensation or duties.
3. Updating compensation plans, bonus language, commissions, or benefits.
4. Expanding into another province, where a different employment standards statute may apply.
5. Preparing for restructuring or layoffs, when termination costs need to be assessed accurately.
6. Using older offer letters, especially those that do not clearly exclude common law notice.

If your organization has unionized employees or mixed union and non-union operations, employment agreement review may also overlap with broader workplace strategy. Our Labour Law services can help employers consider collective agreement obligations, policy language, and statutory compliance together.

Practical drafting lessons from Baker and Li

The Baker and Li v. Wayfair Canada appeals are helpful because they move the conversation away from isolated words and toward the agreement as a whole. For employers, that is good news, but it also raises the standard for coherent drafting.

A termination clause should not be treated as a standalone paragraph pasted into an offer letter. It should work with the rest of the contract, including probation, benefits, bonuses, confidentiality, restrictive covenants, and policy references. If another clause contradicts the termination language, a court may have to decide whether the employee truly agreed to give up common law notice.

A practical checklist for Alberta employers

Before relying on a statutory minimum only termination clause, ask these questions:

• Does the agreement name the correct Alberta legislation or refer broadly and accurately to applicable employment standards legislation?
• Does the without-cause clause provide at least the statutory minimum notice or termination pay required by the Employment Standards Code?
• Does the agreement avoid language suggesting the employee loses earned wages, vacation pay, or other accrued amounts?
• Does the for-cause clause preserve statutory minimums where required?
• Does the contract clearly say that statutory minimums are the employee’s full entitlement if that is the intended bargain?
• Was the contract signed before employment began, or was fresh consideration provided for a later update?
• Is the language consistent across offer letters, employment agreements, compensation plans, and policy documents?
• Has the contract been reviewed since the most recent major developments in termination clause case law?

If the answer to any of these questions is uncertain, the employer should seek advice before relying on the clause in a termination package.

Why contract timing and consideration matter

Even a well-written termination clause can fail if the contract formation process is flawed. If an employee signs after starting work, the employer may need fresh consideration, such as a meaningful new benefit, promotion, or other value, to support new restrictive terms. Simply asking an existing employee to sign updated language may not be enough.

Timing also matters during recruitment. Employees should have a fair chance to review the agreement before accepting the role. Rushed signing, inconsistent offer documents, or later cleanup contracts can create disputes about which terms apply.

For employers, the best process is usually simple: provide the full agreement before the employee starts, allow time for review, and keep a clean signed copy. When updating contracts for current employees, use a planned approach rather than rolling out new termination clauses casually.

Common mistakes that create termination clause risk

Many termination clause disputes start with avoidable drafting problems. Employers often intend to comply with the law, but the written agreement does not clearly say so.

Common issues include:

• Using another province’s wording in Alberta contracts without adapting references to the Employment Standards Code.
• Relying on old templates that predate important case law.
• Including broad for cause wording that does not preserve statutory minimums.
• Stating that benefits end immediately when employment standards legislation may require continuation or other entitlements.
• Trying to exclude every possible payment with language that accidentally captures earned wages or vacation pay.
• Using inconsistent documents, where an offer letter says one thing and a later agreement says another.
• Assuming at any time is always safe, rather than reviewing the full contractual context.

The Court of Appeal’s decision makes clear that context can help a clause, but context can also hurt it. The safest agreements are internally consistent, statute-aware, and easy to understand.

A practical takeaway for employers

The Ontario Court of Appeal has made ESA only termination clauses easier to defend in some circumstances, especially where the challenge rests only on at any time wording. But Alberta employers should take a measured approach. The decision supports clear drafting; it does not protect every contract.

If your business uses written employment agreements, now is a good time to review your termination language. A short review before a dispute can be far less costly than arguing enforceasibility after a dismissal.

For help reviewing employment contracts, termination clauses, or severance obligations, connect with our team through our Calgary contact page or Strathmore contact page. We can help Alberta employers assess existing agreements and update language in a practical, compliant way.

FAQ

Does Baker v. Van Dolder’s Home Team apply in Alberta?

The decision is from the Ontario Court of Appeal, so it is not binding on Alberta courts in the same way an Alberta appellate decision would be. However, it may be persuasive and is useful for Alberta employers because it discusses how courts can interpret termination clauses in employment contracts.

Is at any time termination clause wording enforceable?

The Ontario Court of Appeal confirmed that at any time wording is not automatically unenforceasble. The clause still needs to be read in context and must comply with the applicable employment standards legislation.

Can an Alberta contract remove common law reasonable notice?

A properly drafted employment contract may limit an employee’s entitlement to statutory minimums and exclude common law reasonable notice. The clause must be clear, enforceable, supported by proper contract formation, and compliant with the Alberta Employment Standards Code.

When should employers get an employment contract review in Alberta?

Employers should consider a review when hiring, promoting employees, updating compensation, expanding into another province, restructuring, or relying on older contract templates. Review is especially important before using a termination clause to calculate a severance package.

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