Ruling says termination provisions met minimum statutory entitlements
In two wrongful dismissal actions, the Ontario Court of Appeal found in the employers’ favour upon determining that the employment contracts’ termination provisions complied with the minimum entitlements required under the province’s Employment Standards Act, 2000 (ESA).
Baker v. Van Dolder’s Home Team Inc., 2026 ONCA 568, involved two wrongful dismissal proceedings commenced by former employees: Mr. Baker’s action against Van Dolder’s Home Team Inc. and Mr. Li’s action against Wayfair Canada ULC.
On Nov. 2, 2020, Mr. Baker began working for Van Dolder as its controller, head of finance, at a $95,000 annual salary, plus benefits.
On Mar. 24, 2023, when Mr. Baker was 71 years old, Van Dolder gave him written notice of the termination of his employment without cause as of that date.
Under s. 57(b) of the ESA, given his tenure of between one and three years, Mr. Baker was entitled to two weeks’ notice or pay instead of notice. Van Dolder offered to give him four weeks’ pay in lieu of notice if he signed a release.
Refusing to sign the release, Mr. Baker sued for wrongful dismissal. He alleged that the common law reasonable notice regime applied because the employment contract’s termination provisions were void for inconsistency with the ESA.
Van Dolder paid Mr. Baker the minimum two weeks’ pay in lieu of notice.
On Feb. 11, 2025, Justice John Sproat of the Ontario Superior Court of Justice denied Van Dolder’s summary judgment motion. The motion judge held that the without cause and with cause provisions were unenforceable for inconsistency with the ESA.
Van Dolder appealed. On Aug. 6, 2025, the Ontario Court of Appeal granted leave to intervene for the Ontario Chamber of Commerce and refused leave to intervene for the Canadian Association of Counsel to Employers.
On Jan. 23, 2023, Mr. Li started working for Wayfair as senior product manager at a $221,546 annual salary, plus benefits.
On Oct. 17, 2023, when Mr. Li was 45 years old, Wayfair terminated his employment without cause. Under s. 57(a) of the ESA, given his tenure of less than a year, he should get a week’s notice or pay instead of notice.
Mr. Li received his salary and benefits for the one-week period. Suing Wayfair for common law damages for wrongful dismissal, he claimed that his employment contract’s without cause and with cause provisions were unenforceable for inconsistency with the ESA.
On July 9, 2025, Justice Grant Dow of the Superior Court found the without cause provision enforceable.
Interpreting the employment contract in its entirety, the motion judge found that it aimed only to exclude Mr. Li’s right to common law damages and to limit his entitlement to the ESA-required minimum.
Mr. Li appealed.
In Baker v. Van Dolder, the Ontario Court of Appeal allowed Van Dolder’s appeal and set aside the motion judge’s order dated Feb. 11, 2025.
The appeal court thus dismissed Mr. Baker’s wrongful dismissal action and ordered him to pay Van Dolder $2,500 in costs, including taxes and disbursements.
The appeal court deemed both termination provisions in Mr. Baker’s employment contract enforceable for satisfying the ESA. The appeal court recognized that he had received his full statutory entitlements.
In Li v. Wayfair, the Ontario Court of Appeal dismissed Mr. Li’s appeal and ordered him to pay Wayfair $10,000 in costs, including taxes and disbursements.
The appeal court considered Wayfair’s requested amount of costs reasonable in the circumstances.
For the employment contracts in both cases, the Ontario Court of Appeal found the termination provisions valid and enforceable.
The appeal court explained that the termination provisions reflected an objective intention to provide the terminated employees with the minimum statutory entitlements under the ESA.
The appeal court did not consider the outcome harsh because the ESA contemplated that contractual terms could explicitly exclude the presumption of reasonable notice, which was merely a common law principle.
If the minimum ESA entitlements were deemed insufficient substitutes for common law reasonable notice, the court pointed out that the legislature could address the issue.
Here are some other labour and employment law decisions by the Court of Appeal for Ontario.
Last Apr. 16, the appeal court partly allowed an employer’s appeal to the limited extent of reducing the award of damages to a wrongfully dismissed employee upon determining that a judge failed to deduct money earned in mitigation.
In a case involving a limitation period suspended in response to the COVID-19 pandemic, the appeal court issued an Oct. 21, 2025 decision affirming that s. 4 of Ontario’s Limitations Act, 2002, statute-barred an employee’s wrongful dismissal claim.
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