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Special thanks to our articling student Keyonna Trojcak for contributing to this update.

Baker v. Van Dolder’s Home Team Inc., 2025 ONSC 952, following a novel finding in the recent case of Dufault v. The Corporation of the Township of Ignace[1], held, among other findings, that a “without cause” termination provision was not enforceable because it permitted the employer to terminate employment “at any time.” The Court concluded that this violated the Employment Standards Act, 2000 (“ESA”), which does not allow an employer to terminate at any time (e.g. as an act of reprisal or at the conclusion of an employee’s statutory leave). The Court found that the language in the clause specifically incorporating compliance with the ESA was insufficient to “save” the provision.

Key Takeaways

Baker serves as, yet another, reminder to employers to take great care when they draft termination provisions. It also shows how in Ontario, even the slightest discrepancy a court finds can render a termination clause void. This approach is different than other common law provinces, which are more likely to uphold termination clauses that are not unconscionable and do not clearly violate the applicable employment standards legislation.

Thus, employers in Ontario should review their agreements annually to ensure they meet the requirements of the ESA and to keep up with updates in case law. In particular, employers should revise their employment agreement templates to remove sweeping phrases like “at any time” or “for any reason” from the termination provisions.

Background

The defendant had ended the plaintiff’s employment without cause. The Court was asked to determine whether the plaintiff’s termination clause in their employment agreement was enforceable. The relevant terms from the plaintiff’s employment agreement were as follows:

“Termination without cause: we may terminate your employment at any time, without just cause, upon providing you with only the minimum notice, or payment in lieu of notice and, if applicable, severance pay, required by the Employment Standards Act. If any additional payments or entitlements, including but not limited to making contributions to maintain your benefits plan, are prescribed by the minimum standards of the Employment Standards Act at the time of your termination, we will pay same. The provisions of this paragraph will apply in circumstances which would constitute constructive dismissal.”

“Termination with cause: we may terminate your employment at any time for just cause, without prior notice or compensation of any kind, except any minimum compensation or entitlements prescribed by the Employment Standards Act. Just cause includes the following conduct:

a. Poor performance, after having been notified in writing of the required standard;

b. Dishonesty relevant to your employment (such as misleading statements, falsifying documents and misrepresenting your qualifications for the position you were hired for);

c. Theft, misappropriation or improper use of the company’s property;

d. Violent or harassing conduct towards other employees or customers;

e. Intentional or grossly negligent disclosure of privileged or confidential information about the company;

f. Any conduct which would constitute just cause under the common law or statute. “

Justice Sproat applied the Dufault case, and found that the “without cause” termination clause was unenforceable. This is because it stated the employer could end employment without cause “at any time”, but employers cannot end employment “at any time” under the ESA. The Court confirmed that general language stating that the employer will comply with the ESA would not save such statements.

Interestingly, the Court also found that the “with cause” provision (which also contained “at any time” language) was unenforceable, despite expressly stating that employees would still receive “any minimum compensation or entitlements prescribed by the Employment Standards Act.” Notably, Justice Sproat explained that “Given that many employees will not be familiar with the ESA provisions, many employees would assume that they had no entitlement if they breached the contractual standards”. The Court noted that the employer failed to properly detail or explain the  ESA’s “wilful misconduct” standard, and that it differs from the contractual standard. This finding is novel, as it has not been suggested in prior case law that employers must explicitly define or explain the ESA “wilful misconduct” standard if they are to impose a contractual “cause” standard.

As a result, the Court dismissed the employer’s motion for summary judgement. The Court noted that although the employer intended to comply with the ESA, the current law sets “an exacting standard that many employers and knowledgeable counsel have failed to attain despite their good faith and best efforts.”

The case is currently under appeal. We will continue to monitor this and provide updates as needed.

For support reviewing your company’s employment agreements (and the termination provisions contained therein), please contact a member of our team. The upfront investment in legal review can reduce the need for lengthy (and costly) disputes later.

[1] 2024 ONSC 1029 (aff’d 2024 ONCA 915).

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Special thanks to our articling student Andie Hoang for contributing to this update.

As artificial intelligence and its integration into business operations continues to evolve rapidly, many employers are exploring the use of AI systems in a bid to make hiring decisions more efficient and data-driven. “AI” encompasses a wide range of technologies from simple automated resume screening tools and complex machine learning systems to the forward-looking agentic AI – the kind of AI that does tasks independently.

This rise in the use of AI tools in making employment-related decisions has spurred legislators to regulate their use. This has created a minefield of increased legal liability for employers, especially concerning privacy considerations and the potential for these tools to exhibit biased decision-making. This article provides an overview of the current state of legislative developments related to AI in hiring and recruitment in Ontario, federally, and internationally. It also highlights best practices for employers who are considering the adoption of such tools. 

Legislative Developments in Ontario, the Federal Jurisdiction and Beyond

Ontario

On March 21, 2024, Bill 149 – Working for Workers Four Act received Royal Assent as part of a series of legislative initiatives that have been introduced by the Ontario government under the “Working for Workers” banner since 2021. Each piece of legislation in this series seeks to address various contemporary issues within Ontario workplaces through amendments to the Employment Standards Act, 2000 (the “ESA”). Bill 149 brings about a number of additional changes that will be relevant for employers (which are summarized in our blog post), especially relating to the use of AI in the hiring process.

Starting January 1, 2026, employers will be required to disclose in job postings whether they are using artificial intelligence in the hiring process (i.e., if AI is being used to screen, assess or select applicants for the given position). For the Ontario government, the purpose of such disclosure is “to strengthen transparency for job seekers given that there are many unanswered questions about the ethical, legal and privacy implications that these technologies introduce.”

Continue Reading Artificial Intelligence, Real Consequences? Legal Considerations for Canadian Employers Using AI Tools in Hiring
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In the recent case of Preston v. Cervus Equipment Corporation, Ontario’s Court of Appeal offered employers a friendly reminder that well-drafted settlement documents will survive judicial scrutiny.

Key Takeaways for Clients

Preston underscores the necessity of clear and precise language in settlement agreements. Employers should use broad and inclusive release language that can encompass a wide range of claims, even those not explicitly mentioned. By carefully drafting settlement agreements, employers can ensure that the settlement documents have the intended effect of concluding the employment relationship without courts stepping in to frustrate the finality of the settlement documents.

Background

The case revolves around the interpretation of a release and indemnity clause in the settlement documents signed by Mr. Preston after his termination from Cervus Equipment Corporation. Mr. Preston was employed by Cervus from 2014 to 2018 and participated in the company’s Deferred Share Plan.

Upon his termination without cause in January 2018, Mr. Preston had 4,964.04 vested stock units valued at $75,949.81 and 4,499 unvested stock units. Cervus informed him that his vested stock units could be exercised according to the Plan and offered him a severance package of 15 weeks’ pay in lieu of notice. The parties then discussed and settled the matter. The settlement documents included a broad release of claims, which Mr. Preston signed after receiving independent legal advice.

Notably, the release language in the settlement documents did not specifically refer to the stock plan and vested stock units in question, but did reference that Mr. Preston was releasing all claims connected to his employment, and that he had no entitlement or claim with respect to any bonus, share award, stock option, or similar plan that his employer had offered to him.

Continue Reading Ontario’s Court of Appeal Highlights the Importance of Respecting Broad Release Language in Employment Settlement Agreements
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Special thanks to our articling student Andie Hoang for contributing to this update.

As we wrap up 2024 and look forward to 2025, here are 10 key developments Canadian employers should track:

1. Changes to Termination Notice Periods for Federal Employees

In February 2024, amendments to section 230 of the Canada Labour Code came into effect requiring federal employers to provide their employees with a graduated notice of termination based on the length of an employee’s continuous employment. Prior to this, employers had to provide a minimum of two weeks’ notice of termination or pay in lieu of notice to an employee who had completed at least three months of continuous employment with said employer.

The amendments also require employers to provide a written statement of benefits to employees who have been terminated. Prior to these amendments, this was only required for group terminations, but now will also apply to individual terminations. These statements must outline an employee’s right to vacation benefits, wages, severance pay and any other benefits and pay arising. A federal employer’s obligation to pay severance pay under section 235 of the Code, however, remains unchanged. 

Please see our full blog on the updated amendments and notice lengths, “Reminder for Federal Employers: Changes to Termination Notice Period in Effect NOW.”

2. New Obligations for Ontario Employers Under Bill 149 – Working for Workers Four Act

On March 21, 2024, Bill 149 – Working for Workers Four Act received Royal Assent as part of a series of legislative initiatives that have been introduced under the “Working for Workers” banner since 2021. Each piece of legislation in this series seeks to address various contemporary issues within Ontario workplaces. Bill 149 introduces significant changes to Ontario’s employment law, including:

  • Job Postings: Employers who publicly advertise job postings are now required to disclose either the expected compensation or a range of expected compensation. The range of expected compensation shall be subject to conditions, limitations, restrictions or requirements as may be prescribed. Further, employers will also be required to disclose in job postings whether they used artificial intelligence in the hiring process (i.e., if AI was used to screen, assess or select applicants for the position). These new requirements will come into force on January 1, 2026.
  • Tips and Tip Policies: If an employer has a policy in respect of tip pooling, they are required to both post and keep posted a copy of their policy in a conspicuous place in their establishment where the policy is likely to come to the attention of employees. Further, employers are required to retain copies of any written tip pooling or sharing policy for a period of three years after it is no longer in effect.

The Act brings about a number of additional changes that will be relevant for employers, which are summarized in our blog post, “* UPDATE * Ontario Passes Bill 149, Working for Workers Four Act, 2024, Imposing Pay Transparency Requirements Among Other Things.”

3. Timely Judicial Reminder re Termination Provisions and Fixed-Term Contracts

The Ontario Superior Court of Justice in Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029, delivered a decision that will impact the way employment agreements are drafted going forward. The Plaintiff was employed by the Defendant Township on a fixed-term contract. However, with 101 weeks remaining in her contract term, the Township terminated her employment without cause. Following this, the Plaintiff sued the Township for wrongful dismissal, arguing that the termination clause in their contract was unenforceable and that they were therefore entitled to reasonable notice of termination. Ultimately, the Court found the termination provisions unenforceable as the contract did not comply with the Employment Standards Act, 2000, for three reasons.

Continue Reading Top 10 Canadian Labour & Employment Law Developments of 2024
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We are thrilled to invite you to our upcoming event series, featuring a range of sessions in Canada and across North America.

In our 75-minute Canadian Employer Update webinar, we will bring you up to speed on major developments like Ontario’s ‘Working for Workers’ legislation, managing pay transparency obligations across Canada, significant case law updates and best practices for managing AI tools in HR and more.

Register to reserve your spot today!

Canadian 2024–2025 Employer Update

Tuesday, February 11, 2025
12 PM ET | 75-Minute Webinar
1.25 CPD/CLE and HRPA credits pending.
Click here to register.

Our North America Employer Update series will also include a webinar for California, an in-person event in Illinois, and an on-demand video for Mexico. A focal part of our US and Mexico programs will be what to expect from the recent presidential elections in each country. In addition, we’ll address key legislative updates, workplace immigration changes, data privacy developments, new pay transparency obligations, and expanding leave entitlements.

Please RSVP for the additional location(s) and topic(s) most of interest to you:

California 2024–2025 Employer Update

Wednesday, December 11, 2024
12 PM PT | 75-Minute Webinar
1.25 CLE credits pending.
In our typical “quick hits” format, our California team will bring you up to speed on hot topics like what to expect with the new Trump administration (including immigration changes and shifting enforcement priorities), California and federal 2025 legislative changes, new obligations with respect to pay equity reporting and wage / salary transparency, best practices for using AI tools in HR, practical tips and best practices with respect to confidentiality provisions, key data privacy developments, and workplace immigration updates.
Click here to register for the California webinar.

Illinois 2024–2025 Employment & Compensation Law Update 

Cohosted with the North Shore Labor Counsel
Wednesday, January 8, 2025
8 AM CT | Breakfast, Registration & Networking
8:30 – 10 AM CT | 90-Minute In-Person Legal Update
Chicago Botanic Garden
1000 Lake Cook Rd, Glencoe, IL 60022
1.5 CLE credits pending.
At our popular in-person event to kick off the new year, our Chicago team will cover what to expect with the new Trump administration (including immigration changes and shifting enforcement priorities), Illinois and federal 2025 legislative updates, important labor developments in the US and beyond, best practices for managing AI tools in HR, and practical tips for navigating employee activism.
Click here to register for the Illinois event.

Mexican 2024–2025 Employer Review / Preview Video Chat

Proposed new labor reforms under Mexican President Claudia Sheinbaum Pardo aim to reshape Mexico’s workforce landscape. In our Review/Preview video chat, our Mexico team will outline best practices and practical tips to prepare what’s ahead in 2025.
Click here to register to receive our on-demand “Quick Chats” video.

If you are unable to attend during the live programming, please “register” for a copy of the webinar recording and materials.

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In the recent case of Bertsch v. Datastealth Inc., 2024 ONSC 5593 (Bertsch), an Ontario court upheld a termination provision that did not specify every detail. While recent decisions suggest that such provisions may have to be flawless to be enforceable, Bertsch is a welcome decision showing that employers do not necessarily have to meet that high bar to protect themselves.

Key Takeaways

Bertsch reminds employers of the importance of including clear and compliant termination provisions in employment agreements. Ontario employers should review their agreements to ensure they meet the requirements of the Employment Standards Act, 2000 to avoid potential legal challenges. Employers should continue to confirm their termination provisions are:

  1. Clear and unambiguous to avoid disputes and potential invalidation by the courts.
  2. Compliant with the ESA and its regulations.
  3. Inclusive of language stating that compliance with the ESA and whatever other entitlements are listed in the employment agreement satisfy any common law notice of termination or pay in lieu thereof.

Bertsch demonstrates that while courts will continue to closely scrutinize termination provisions in employment agreements, employers must only ensure that the provisions are legal and unambiguous. This provides some relief for Ontario’s employers by indicating that they do not necessarily have to rely on “perfect” termination clauses that reference all scenarios and laws in their employment agreements to enforce them.

Even with this positive decision for employers, we continue to encourage all Canadian employers to assess the enforceability of termination provisions in existing employment agreements.

Continue Reading Don’t Let Perfect Be the Enemy of Excellent: Ontario Court Validates Termination Clause that is Unambiguous and Legal
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Special thanks to our articling student Andie Hoang for contributing to this update.

In 2022, the Ontario government sought to establish a new legal framework for “digital platform work” through the introduction of the Digital Platform Workers’ Rights Act, 2022. It is now set to come into force on July 1, 2025. The Act, stemming from the Working for Workers Act, 2022, introduces new rights and protections for workers within the gig-economy. Specifically, the Act will apply to workers who perform “digital platform work” (such as ride share, delivery, or courier services) and “operators” who facilitate the performance of digital platform work through a digital platform.

Summary of Significant Changes

In conjunction with the Act, the Government of Ontario has recently published regulations that further clarifies the new rights and obligations under the Act. Key worker rights and new obligations include:

  • Right to a Minimum Wage: Digital platform operations will be required to pay a worker at least the minimum wage rate payable under the Employment Standard Act, 2000 (ESA), exclusive of tips and other gratuities, for each “work assignment” performed. Subject to specific exceptions, a “work assignment” will typically begin when a worker accepts a work assignment through a digital platform and ends when the worker performs the assignment.
Continue Reading A New Gig for Digital Platform Work: Ontario’s Legal Framework for Digital Platform Workers Comes into Force July 1, 2025
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On October 28, 2024, Ontario’s Working for Workers Five Act, 2024 (Bill 190) received royal assent. Here’s what employers need to know:

Key Changes

  1. Prohibition on sick notes for ESA sick leave. Employers are prohibited from requiring an employee to provide a certificate from a qualified health care practitioner (i.e. a sick note) as evidence of entitlement to ESA “sick leave.” Under section 50 of the ESA, an employee who has been employed for at least two consecutive weeks is entitled to three days of unpaid sick leave per calendar year in instances of personal illness, injury or medical emergency. Employers will not be permitted to request a certificate from a qualified health practitioner as evidence of entitlement to these three days of sick leave.
  1. Employment Standards Act amendments:
  • Job postings: employers must now disclose whether a vacancy truly exists in publicly advertised job postings and respond to interviewees within a specified period.
  • Increased fines: the maximum fine for individuals convicted of an offence for contravening the ESA or for failing to comply with an order, direction or other requirement under the ESA increased from $50,000 to $100,000.
  1. Occupational Health and Safety Act updates: The Act now includes provisions for maintaining washroom facilities, updating definitions of workplace harassment to include virtual activities, and applying the Act to telework performed in private residences. In addition, posting requirements under the OHSA may now be satisfied by providing workers with access to electronic copies, so long as workers are directed where to access that information and the information is in a format that can readily be accessed by workers in the workplace.

Takeaways for Employers

  • Train HR and managers on the amendments concerning statutory sick leave. Review existing policies and practices regarding statutory sick leave to ensure managers do not require employees to provide a certificate from a qualified health care practitioner to prove their entitlement to sick leave under the ESA. While employers retain the right to ask an employee to provide information “reasonable in the circumstances,” they may no longer require a ‘sick note’ from a qualified health practitioner.
  • Review job posting practices. Ensure that all publicly advertised job postings accurately reflect existing vacancies and establish a process for timely responses to interviewees.
  • Update workplace policies. Revise policies to include provisions for virtual harassment and telework. Ensure that all required information is accessible electronically. Help managers understand that OHSA legislation will apply to remote work performed at a private residence.

By staying informed and proactive, employers can ensure they are compliant with the new regulations and continue to support their workforce effectively. Please contact a member of our team with any questions.

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Changes to the capital gains inclusion rate and the employee stock option deduction rate (as proposed in Budget 2024) will apply to stock options exercised and shares sold on or after June 25, 2024. 

The new measure reduces the stock option deduction and capital gains tax exemption from 1/2 of the taxable amount to 1/3 of the taxable amount, if an individual’s annual combined limit of CAD 250,000 has been exceeded. The individual taxpayer can choose how to allocate the preferential tax treatment between the stock option income and capital gains to the extent the combined limit has been exceeded. 

There is still uncertainty as to how employers should manage tax withholding on stock option income (i.e., apply a 1/2 or 1/3 exemption), given they would not be in a position to know whether the combined limit has been reached by the employee and how the employee has chosen to allocate the exemptions. Further technical changes in the legislation are expected to be introduced at the end of July 2024 that may provide additional clarification on this point. For now, it may be reasonable for employers to assume that only 1/3 of the stock option income is exempt and withhold taxes accordingly and leave it up to the employees to claim the 1/2 deduction (if available) when they file their individual tax returns. 

Continue Reading Changes to Taxation of Stock Options and Capital Gains – Effective Immediately
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We are thrilled to announced that the latest edition of The Global Employer: Focus on Global Immigration & Mobility is now available! This handy, go-to desk reference guide includes:

  • An overview of key global immigration and mobility issues to consider related to immigration, employment, compensation and employee benefits, income taxes and social insurance, and global equity compensation.
  • An executive summary for 27 jurisdictional chapters identifying key government agencies, highlighting current compliance and enforcement trends, and describing short and long term visas appropriate for business travel, training and employment assignments. The handbook includes other can’t miss insights for global human resources and legal teams.

Click here to access now.

Baker McKenzie offers comprehensive legal advice related to global immigration – delivered locally around the world. We help employers plan and implement global transfers and provide on-site legal support to companies and employees in most major business communities around the globe. To know more, visit our Global Immigration & Mobility page or contact us here.

*Jurisdiction chapters available for Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Colombia, Czech Republic, Germany, Hong Kong SAR, Hungary, Italy, Japan, Luxembourg, Mexico, Myanmar, The Netherlands, Philippines, Poland, Singapore, Spain, Switzerland, Taiwan, Ukraine, United Kingdom, United States, and Vietnam.

Global Employment & Compensation Resource Suite

Looking for additional resources to ensure your HR and legal counsel remain up-to-date on the latest employment law regulations globally?

Access our Global Employment & Compensation Practice Group’s full digital library of legal content on-demand.

The Global Employment & Compensation Resource Suite is a self-service database that provides our clients with 24/7 access to our global employment resources. Once registered, users can browse our range of Global Employer Handbooks, Blogs and Media, and Legal Updates.

Click here to request access.