Without a termination provision in an employment contract, an employee is entitled to common law notice. Common law notice is a calculation of how much notice it would reasonably take for an employee to find a new job, taking into consideration their age, length of employment, position and responsibilities, as well as the availability of similar employment. Although these factors are good on a human level, as no one wants to suffer financial stress from loss of employment caused by no fault of their own, it can be costly for employers. In the right circumstances, an employee could be entitled to up to 2 years of pay in lieu of notice, and sometimes more, which could easily cost an employer thousands of dollars.

A termination provision is meant to limit common law entitlements to notice. However, all termination provisions must comply with the minimum notice entitlements under the Employment Standards Act (ESA). Recently plenty of older termination provisions have been ruled invalid by courts for clauses that permit a without cause terminations that fail meet the O. Reg. 288/01’s rule that employees should be given notice unless they engage in conduct that is “guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.” However, the Ontario Court of Appeal ruled last year that it is possible to draft a binding termination provision that will limit the common law notice entitlements.

Bertsch v. Datastealth Inc., 2025 ONCA 379

In Bertsch v. Datastealth Inc., Gavin Bertsch worked at Datastealth Inc. for 8.5 months as the vice-president, earning a base salary of $300,000 per year. Mr. Bertsch was terminated without cause, with him only receiving four weeks of pay in lieu of notice. Mr. Bertsch commenced an action seeking common law damages for wrongful dismissal, stating that the termination provision in his employment contract is unenforceable due to it permitting the employer to terminate for cause short of being “guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer” as set out in O. Reg. 288/01.

The initial motion judge stated that there was “no reasonable interpretation [of the relevant provisions] which would be contrary to the minimum requirements of the ESA and regulations.” As such, the motion judge dismissed Mr. Bertsch’s claim, holding that the employment contract’s termination provision was enforceable and that he was provided with sufficient compensation.

Mr. Bertsch appealed the motion judge’s disposition to the Ontario Court of Appeal (ONCA). Mr. Bertsch’s counsel attempted to argue that the motion judge erred when he refused to find that the termination clause was ambiguous. The ONCA found no error with the motion judge’s decision. The ONCA agreed that the termination clause is unambiguous and, when reasonably interpreted, it does not depart from the minimum standards provided in the Employment Standards Act (ESA). As such, the ONCA dismissed the appeal, finding the termination provision enforceable, and ordered Mr. Bertsch to pay Datastealth Inc. $10,000 for costs, inclusive of disbursements.

How Suzanne Desrosiers Professional Corporation can help

The decision in Bertsch v. Datastealth Inc. shows that termination provisions can be enforceable and can protect the employer from a potentially significant wrongful dismissal claim. It is advisable that all employers have employment contracts with termination provisions and update the employment contracts every couple of years. At Suzanne Desrosiers Professional Corporation, we can help employers draft or update employment contracts to ensure that they are aligned with the current edition of the Employment Standards Act. To speak to one of our employment lawyers about drafting or updating an existing employment contract, please call us at 705-268-6492 or email us at info@sdlawtimmins.com.