Another one doesn’t bite the dust: Good news for employers

Dan Wilband, JD/BCL, MA

Another termination clause has survived.

Ontario courts are reading these clauses differently now.

For years, employers have watched these clauses fail. A stray phrase, a missing word, or one arguably loose sentence, and months of common law notice came flooding back in.

Then the Ontario Court of Appeal started pushing back. In Bertsch last year, it refused to manufacture ambiguity where none existed. This summer, in Baker, it went further and told courts to stop hunting for magic words.

Last week, the Ontario Superior Court showed what that looks like in practice.

The employee was a CEO. She had left a 20-year law practice for the role, lasted 11 weeks in it, and sued for 24 months' pay in lieu of notice, plus $500,000 in moral and punitive damages.

Her termination clause was clean. It promised only Canada Labour Code minimums on any lawful dismissal.

So she looked elsewhere for problems.

Four sections earlier, in a clause about workplace policies, she found one problem sentence. It said a breach of confidentiality policies "will be cause for severe discipline and/or termination of employment for cause." Read literally, she argued, it let the employer fire her for cause over any breach at all and then walk away from her statutory minimums.

The court didn’t buy it. It applied Baker. It read the contract as a whole, in context, and asked what the parties actually intended.

So the court noted the word “or,” which meant not every breach would be cause. It also read the termination clause, with its express promise to follow the Code. It read the room, too: the employee was a lawyer with 20 years of experience.

Neither side, the court concluded, could have meant one sentence about confidentiality to undo all of that.

The clause stood and her claim to common law notice failed.

The rest flowed from that. Her moral damages claim rested on alleged retaliation for raising concerns about legal retainers. The court held that went to why she was dismissed, and nothing pleaded about how she was dismissed came close to bad faith. The whole claim was struck, without leave to amend.

For employers, this seems like good news, at least in Ontario, where the direction is becoming clear: a termination clause must be read in the contract as a whole, and a single sentence taken out of context won’t determine everything.

Do not mistake this for permission to draft loosely, though.

Your termination clause does not live in isolation. It sits beside your policies, your probation terms, and your confidentiality agreements, and all of that can still be read against it.

So prepare the whole agreement as if a judge will read every word of it after the relationship goes south.

Henshell v. BFN of Ojibways, 2026 ONSC 5768