Ontario Employment Law Guide

Is Your Termination Clause Enforceable?

Your contract may say you’re limited to ESA minimums. Since the 2020 Waksdale decision, most Ontario termination clauses aren’t worth the paper they’re printed on. Here’s how to tell.

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The Waksdale Rule: One Defect Voids the Whole Clause

In Waksdale v. Swegon North America Inc. (2020, Ontario Court of Appeal), the court established a simple, devastating rule: a termination clause must be read as a whole. If any part of it violates the Employment Standards Act — even a part that was never used against you — the entire clause is void.

When the clause falls, your employer can’t rely on it to cap your severance. You’re entitled to full common-law reasonable notice instead — often 3–5x what the contract allowed. The Supreme Court reinforced the same principle decades earlier in Machtinger v. HOJ Industries (1992): you cannot contract out of ESA minimums.

Why this matters for your payout

A void clause is the difference between 8 weeks’ ESA minimums and 12+ months of common-law notice. For a $90,000 salary, that’s roughly $13,800 vs. $90,000+.

5 Signs Your Termination Clause Is Unenforceable

  1. 1

    It limits “with cause” termination below ESA standards

    If the clause lets your employer fire you “for cause” using a lower bar than the ESA’s “wilful misconduct” standard — even in a section that wasn’t applied to you — Waksdale voids the whole thing.

  2. 2

    It’s silent on benefits or bonuses during the notice period

    A clause that caps you at base salary, ignoring the benefits and bonuses Matthews says you’re owed, attempts to contract out of the ESA.

  3. 3

    It was never actually signed, or signed after you started

    An unenforceable formation — no fresh consideration for a mid-employment contract — kills the clause before Waksdale even matters.

  4. 4

    It gives the employer “sole discretion” over entitlements

    Discretionary language that could pay you less than ESA minimums in some scenario is enough for a court to strike it.

  5. 5

    It hasn’t been updated since before 2020

    Pre-Waksdale boilerplate almost never survives the “read as a whole” test. If your contract predates 2020 and was never refreshed, be skeptical.

What a Void Clause Means for Your Payout

If your clause is void, the analysis resets to the Bardal factors: your age, length of service, role seniority, and job prospects. Courts routinely award 3–4 weeks per year of service up to 24 months — and your total compensation (salary, benefits, bonuses) counts, per Matthews v. Ocean Nutrition (2020 SCC).

Our calculator asks about your contract situation and factors a potentially void clause into your estimate automatically.

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Related guides

General information only — not legal advice. Whether a specific clause is enforceable depends on its exact wording and your circumstances.