All I can say is… it’s about time Ontario’s dentist employers got some relief!
Since COVID-19 and that fateful (and WRONG) Ontario Court of Appeal decision in the Waksdale case (discussed further below), it’s been very hard to say with confidence that Ontario dentist employers have been well protected by having employment agreements in place. Because over the last 6 years, employee-side lawyers have used Waksdale to easily poke holes in those contracts and render them invalid – costing employers tens and sometimes hundreds of thousands of dollars in termination costs! A single word—or even a hypothetical interpretation of a word—has sometimes been enough to invalidate an entire termination provision and expose an employer to months of common-law notice.
It’s been terrible… until now.
Because now, the Ontario Court of Appeal (Ontario’s highest court – right before Supreme Court of Canada) has now finally pushed back [applause!!!! clapping!!! smiles!!!]. You can tell that I take this kind of thing personally because I was hoping that the Supreme Court of Canada would call out Waksdale for what it was back in 2020: WRONG! But since they refused to hear it, case after case has come out and employers have paid a hefty price when trying to terminate employees IN RELIANCE on the employment agreement that they had entered into.
What Changed?
In Baker v. Van Dolder’s Home Team Inc.; Li v. Wayfair Canada ULC, 2026 ONCA 568, the Ontario Court of Appeal upheld two employment agreements containing language that would / could probably have easily been used to render the contracts invalid. One contract for example, permitting termination “at any time” and the other permitted termination “at any time and for any reason.” This has typically been fodder for employee-side lawyers because it would hypothetically contradict the minimum standards set by the Employment Standards Act, 2000 (the “ESA”) and thus render the WHOLE employment agreement invalid (even if those offensive provisions were not used or relied upon in any way).
Further, the contracts in question talked about what constituted “just cause” that warranted immediate termination – something again that would hypothetically be against the minimum standards set by the ESA and thus render the whole contract invalid. It seemed like an open and shut case for the employees. But this VERY SMART Ontario Court of Appeal said: “Let’s not look at things in isolation. Let’s look at the overall intention of the parties by looking at other provisions in the contract.” And by doing that, they noticed that there were other ‘saving’ clauses – clauses that specifically said it’s the Employer’s intention NOT to violate the ESA but to abide by it.
And that’s why the court ended up NOT striking down the hypothetically bad clauses but enforcing the termination provisions that WERE relied upon – to the benefit of the employers. For dental practice owners, the decision is welcome. However, it does not eliminate the need for carefully drafted and regularly updated employment agreements—particularly when a dentist is preparing to sell.
The Decision
Note that I previously wrote about the now INCORRECT and now REVERSED decision of the lower Ontario Superior Court HERE. But now with the Ontario Court of Appeal’s decision to reverse the lower’s court’s decision and uphold and enforce the employment agreements, Ontario employers can breathe a LITTLE easier at night 😉
The Court of Appeal heard two appeals together because the employment agreements contained virtually identical language but produced opposite results in the Superior Court.
In Baker, the agreement allowed termination “at any time, without just cause,” provided that the employee received the minimum notice, termination pay, severance pay, benefits continuation and other entitlements required by the ESA. The lower court invalidated the provision. It reasoned that an employer cannot literally terminate an employee “at any time” because the ESA prohibits termination in certain circumstances, including as a reprisal for exercising an ESA right or for reasons connected with a protected leave.
In Li, however, a different judge upheld language allowing termination “at any time and for any reason” because the agreement repeatedly guaranteed the employee’s ESA minimum entitlements.
The Court of Appeal resolved the conflict by upholding both agreements.
The Court’s opening is unusually candid. It acknowledged its earlier observation that “not all of the cases can be easily reconciled.” It then quoted a leading employment lawyer’s much blunter criticism that: “Counsel can do little more than guess at the answers to the central questions of when a termination clause will be upheld as valid and enforceable.” The Court also recognized that employment cases had divided over “the most pedantic or trivial of grounds” and that the failure to insert—or not insert—a single word had often been fatal. I was in shock while reading this. It’s just so true for us lawyers at DMC LLP who live and breathe these employment law cases and try to make heads or tails of what a court will decide when it comes to the enforceability of a termination provision in an employment contract.
That opening matters. The Court was plainly aware that Ontario termination-clause law had become excessively technical and unpredictable.
The Court reaffirmed that employment agreements receive special scrutiny because employees generally have less bargaining power and are particularly vulnerable when employment ends. Employers still cannot contract out of the ESA, and genuinely ambiguous language should still be interpreted in the employee’s favour.
But an employment agreement remains a contract. It must be read as a whole using a “practical, common-sense approach” aimed at determining the parties’ objective intentions.
As the Court explained: “Genuine ambiguity only arises where there are two or more reasonable but differing interpretations considered in the context of the entire contract.” Courts should therefore avoid a “magic words” analysis and “should not strive to find an ambiguity where none reasonably exists.”
Why Does This Matter for Dentists?
Dental employment agreements frequently permit the dentist or dental professional corporation to terminate employment “at any time” and sometimes “for any reason.” Following decisions such as Dufault, employees argued that these ordinary words automatically invalidated a termination provision because they could hypothetically include an unlawful time or reason.
Baker rejects that argument.
The words “at any time” do not reasonably mean that a dentist may dismiss an employee during a protected leave, because of a disability, for reporting a workplace safety concern or as punishment for exercising an employment right. Statutory restrictions continue to apply whether or not the agreement recites every one of them.
Similarly, “for any reason” ordinarily means that an employer terminating without cause does not have to establish or provide a business reason. It does not authorize discrimination, reprisal or another unlawful reason.
The Court found it implausible that an employee intended to surrender statutory protections or that an employer repeatedly promising ESA compliance simultaneously intended to violate the ESA.
The decision is also important for “for cause” provisions. At common law, misconduct may justify dismissal for cause while still falling short of the ESA’s narrower standard of “wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned.”
The agreement in Baker defined cause broadly but expressly preserved “any minimum compensation or entitlements prescribed by the Employment Standards Act.” That saving language worked. An employee dismissed for contractual or common-law cause would still receive ESA entitlements unless the higher statutory misconduct standard was satisfied.
The Court rejected the suggestion that an agreement must teach a “regular employee” the legal difference between contractual cause, common-law just cause and statutory wilful misconduct. ESA entitlements may be incorporated by reference without reproducing or explaining the legislation.
Did the Court Overrule—or Quietly Correct—Waksdale?
Not quite. In Waksdale v. Swegon North America Inc., 2020 ONCA 391 (which I’ve written about extensively on DMC’s blog – for example HERE, HERE, HERE and HERE), the Court held that if one termination provision violates the ESA, the remaining termination provisions are also unenforceable. Consequently, a defective for-cause clause can invalidate an otherwise compliant without-cause clause—even where the employee was not dismissed for cause.
The employer in Baker asked for a five-judge panel to reconsider Waksdale, arguing that it had been wrongly decided. That request was refused. The three-judge panel then declined to reconsider Waksdale because it found that both the with-cause and without-cause provisions were ESA-compliant. There was therefore no defective provision capable of triggering the Waksdale rule.
Formally, Waksdale remains good law.
Nevertheless, Baker materially changes the environment in which Waksdale operates. Waksdale tells courts what happens after a genuine ESA violation is identified: the defect may invalidate the entire termination scheme. Baker tells courts how to decide whether a violation exists in the first place: read the agreement as a whole, identify the parties’ objective intentions and do not manufacture illegality from an isolated phrase or implausible hypothetical interpretation.
That is how the decisions can be reconciled.
Whether Waksdale itself was correctly decided remains debatable. Its all-or-nothing result can impose common-law liability based on a provision that was never used and had nothing to do with the actual dismissal. The opening of Baker suggests that the Court understands the force of that criticism. But it stopped short of overturning Waksdale. Dentists should not assume that a strong saving clause will rescue every genuine ESA violation.
Employment Agreements and the Sale of a Dental Practice
This is especially important for dentists considering a sale.
A purchaser will review the practice’s employment agreements, payroll, employee tenure, benefits, vacation obligations and potential termination liabilities. Long-service employees without enforceable agreements may carry substantial common-law notice exposure. That exposure can affect negotiations, indemnities, purchase-price holdbacks and the purchaser’s willingness to continue the existing workforce.
Dentists should not wait until a letter of intent is signed to examine their agreements. New agreements for existing employees require proper consideration, and employment changes introduced immediately before a sale can create practical and legal complications.
The best time to review the practice’s employment framework is well before going to market.
Bottom Line
Baker is an important return to common sense. It confirms that ordinary expressions such as “at any time” and “for any reason” are not automatic poison pills. It also confirms that an agreement can distinguish contractual cause from ESA wilful misconduct while preserving statutory minimum entitlements through clear language.
But this is not the end of termination-clause litigation. Waksdale remains binding, genuine ESA violations remain fatal, and enforceability still depends upon the exact wording of the entire agreement.
Dental practice owners should have their employment agreements reviewed regularly—and especially before hiring, restructuring, terminating an employee or selling a practice.
If you are considering a practice sale, or if your employment agreements have not been reviewed since Waksdale, speak with the dental lawyers at DMC LLP. Addressing employment liabilities early can protect the practice, improve transaction readiness and prevent an avoidable issue from emerging during purchaser due diligence.
This article provides general information only and is not legal advice.
