🚨 Important Legal Update: Time to Review Your Employment Contracts – Again

In a rare but significant win for Ontario employers, the Court of Appeal has upheld a termination clause that clearly and effectively limits entitlements to the statutory minimums under the Employment Standards Act, 2000 (ESA). In Bertsch v. Datastealth Inc., 2025 ONCA 379 (Datastealth), the Court confirmed that a well-drafted termination provision can, in fact, protect an employer from common law wrongful dismissal claims.

This is welcome news after years of courts striking down termination clauses on the basis of ambiguity or ESA non-compliance. But before you celebrate, this decision is a timely reminder that the legal landscape continues to shift—and the window of enforceability is often narrow and unpredictable.

✅ The Datastealth Decision: A Clarity-First Approach

The clause in question in Datastealth was simple and unequivocal. It stated that the employee, terminated with or without cause, would receive only the minimum entitlements under the ESA, and that those statutory payments would fully satisfy any rights the employee may otherwise have had under the common law.

The employee—a VP dismissed after less than nine months—challenged the clause as ambiguous. But the Court rejected this, stating that the test is not whether a layperson might misunderstand the clause, but whether it can be reasonably interpreted. On that basis, the clause stood.

This is consistent with a point I’ve emphasized in earlier articles: the enforceability of a termination clause is only as strong as its clarity and compliance with the ESA at every stage. As I noted when analyzing Waksdale v. Swegon North America Inc. and Rahman v. Cannon Design Architecture Inc., courts are not just parsing words—they’re assessing the entire agreement in context.

⚖️ Compare and Contrast: Clarke and Waksdale

Some clients have asked, “Didn’t the Court uphold a similar clause before?” Indeed, in Clarke v. Insight Components (Canada) Inc. (2008), the Court upheld a termination provision that today would almost certainly fail under the Waksdale precedent. That’s exactly the problem.

The law changes. Clauses that were safe five years ago may now be legally vulnerable. The Datastealth decision bucks a recent trend but doesn’t reverse the general caution employers must exercise. In fact, Datastealth reinforces the need to keep termination language clean, current, and ESA-compliant—and to ensure no other provisions in the contract undermine it.

💡 What This Means for Your Business

Now is the time to proactively review your employment contracts. Don’t assume that your current agreements—even if drafted or reviewed by counsel years ago—are still valid or enforceable. Key action points:

• Keep It Simple: Avoid formulas or layered clauses. Courts want clarity, not complexity.

• Stay Current: Use language recently upheld by Ontario courts, like that in Datastealth.

• Review the Whole Agreement: As seen in Waksdale, one unenforceable clause can void another.

• Use Professional Guidance: Relying on templates or outdated contracts can be a costly mistake.

At D&DCPD Human Resources Consulting, we specialize in employment law-informed HR support for Ontario businesses. Our employment contract reviews are affordable, fast, and tailored to your business model. Whether you’re updating existing agreements or converting subcontractors to employees, we’ll ensure your documents are enforceable, compliant, and designed to minimize legal risk.

📞 Contact us today to book your free consultation.