Court finds termination provisions failed to meet minimum standards under Canada Labour Code
The Ontario Court of Appeal has dismissed an appeal by the Canadian Imperial Bank of Commerce (CIBC), upholding a damages award to three former employees after finding that their employment contracts contained termination provisions that violated the Canada Labour Code (CLC).
In Ghazvini v. Canadian Imperial Bank of Commerce, 2026 ONCA 766, the court upheld a Superior Court decision awarding the employees damages instead of common-law reasonable notice after their termination without cause.
CIBC argued that the trial judge erred in finding the termination provisions unenforceable and maintained that the employees were entitled only to the minimum amounts required under the CLC. Alternatively, the bank challenged the employees’ mitigation efforts and the damages calculation.
The employees had signed employment agreements containing identical termination provisions. The provision allowed CIBC to terminate employment without notice or pay in lieu of notice for reasons including dishonesty, fraud, breach of trust, unsatisfactory performance, and breaches of employment conditions.
The appeal court applied Waksdale v. Swegon North America Inc., 2020 ONCA 391, which established that termination provisions are unenforceable if they fail, in whole or in part, to meet minimum employment standards.
The Court of Appeal rejected CIBC’s argument that the approach in Waksdale applied only to provincially regulated employment agreements, finding no principled reason why it should not apply to agreements governed by the CLC.
The court agreed with the trial judge that CIBC’s definition of cause extended beyond the statutory standard of just cause. It noted that conduct such as dishonesty would not necessarily constitute just cause for dismissal under the CLC.
The court distinguished Baker v. Van Dolder’s Home Team Inc., 2026 ONCA 568, because that case's termination provision preserved minimum statutory entitlements. CIBC’s provision contained no comparable language.
The court concluded that the defective for-cause provision rendered the entire termination provision unenforceable, entitling the employees to common law reasonable notice.
On mitigation, the court found no basis to interfere with the trial judge’s conclusion that CIBC had failed to establish that the employees acted unreasonably by rejecting alternative positions that were not comparable to their previous employment.
The court also upheld the inclusion of variable incentive pay and annual bonus payments in the damages calculation, finding that CIBC had not clearly and unambiguously excluded those components from common law damages. The court dismissed the appeal and awarded the employees costs.
