In a decision released last week, the Ontario Court of Appeal (the “ONCA”) ruled that a portion of a termination clause that failed to accord with legislation made the entire clause unenforceable. Ghazvini v. Canadian Imperial Bank of Commerce, 2026 ONCA 766 is the latest decision to demonstrate that the formulation of employment contracts can open organizations to more risk and liability than they know.
What happened?
In Ghazvini, the ONCA ruled that CIBC, who had dismissed employees without cause, could not rely on any of their agreements’ termination provisions, as one provision contravened the Canada Labour Code (the “Code”).
Despite the fact the employees were dismissed without cause in this case, the ONCA did not determine whether the “without cause” provisions of the agreements were enforceable in themselves. Rather, the ONCA found that the “for cause” provisions of the agreements were contrary to the Code, as the definition of “cause” used in the agreements was broader than “just cause” as defined in the Code. The employment agreements were not saved by the “saving” provisions, which were intended to clarify that, if any of the termination provisions were not valid, the employees would be entitled to the minimum statutory notice required pursuant to the Code.
The ONCA determined that the saving provisions of the agreements did not perfect the otherwise flawed termination provisions. Because of the problematic “for cause” provision, the entirety of the termination provisions were unenforceable.
What does this mean for federally regulated employers?
Ghazvini follows other Ontario decisions like Waksdale v. Swegon North America Inc., 2020 ONCA 391, where the ONCA held that an employer could not rely on a without cause termination provision where the with cause provision in the agreement violated the Ontario’s Employment Standards Act (the “OESA”). Ghazvini shows that Courts, at least in Ontario, will take a strict approach, specifically where impugned provisions fail to account for the statutory definition of just cause.
It is worth noting that not every perceived imperfection in a termination provision may sink the entire clause. For example, in Baker v. Van Dolder’s Home Team Inc., 2026 ONCA 568, the ONCA held that the termination provision, which stated an employee could be terminated “at any time,” was valid, despite the employees’ argument that such a provision could be interpreted as contrary to the OESA. The Court held that this was too literal a reading of the provisions and the parties’ intention to abide by legislation was clear.
What does this mean for employers outside of Ontario?
Ghazvini seems to bring the employee-favoured Ontario approach to the federal sphere. It could prove persuasive for courts determining the enforceability of termination provisions with federal employers. It is unclear whether courts across the country will necessarily follow the same approach.
In BC, for example, the British Columbia Court of Appeal (the “BCCA”) has taken a more intention-focused approach to employment agreement interpretation. In Miller v. Convergys CMG Canada Limited Partnership, 2014 BCCA 311, the BCCA upheld an employer’s termination clause where the employee argued that the probation clause in the same agreement was invalid. The BCCA found the probation clause was valid. Further, the BCCA gave effect to a severing clause contained in the agreement which stated that, if any provision of the agreement was invalid, the other provisions should remain in full force and effect. [1]
In Egan v. Harbour Air, 2024 BCCA 222, the BCCA noted that courts should not disaggregate the words of termination clauses in order to find a clause unenforceable where the intentions of parties are clear. [2]
Both Miller and Egan demonstrate that a BC court’s approach to interpreting termination provisions may be more generous to employers.
Key Takeaways
Considering the trends, there are steps employers can take to reduce risk when drafting and reviewing employment agreements:
- Draft the Agreement Harmoniously: Consider employment agreements as entire documents. Where possible, ensure the intentions of parties – and compliance with applicable legislation – is clear throughout.
- Pay Attention to Employee Jurisdiction: Employment agreements will differ in their force across jurisdictions. If your employees are spread across multiple locations, consider seeking advice on how to adjust agreements accordingly.
- Be Mindful of Wording that Could Contravene Legislation: Consider whether your employment agreements have defined terms that already have a legislative definition and whether these definitions differ from statutes that you are attempting to incorporate.
- Review and Update Mature Agreements: As courts across Canada continue to interpret employment legislation, it is integral to stay up to date on the current state of the law. Review older employment agreements to ensure they remain enforceable. If necessary, seek advice on how to update them.
If you have questions regarding drafting and updating employment agreements or managing termination risk, please contact a member of our Labour & Employment Group and we would be pleased to assist.