Most employees know that if they lose their job without cause, they may be entitled to compensation. But how much? In Ontario, an employment contract can sometimes limit an employee to only the minimum entitlements required by the Employment Standards Act, 2000 (ESA), rather than the potentially greater amount available under common law. A recent Ontario Court of Appeal decision looked at exactly when that kind of termination clause will hold up. The case is important for both employers writing employment agreements and employees trying to understand what they may be entitled to when their employment ends.
In Bertsch v. Datastealth Inc., 2025 ONCA 379, the Ontario Court of Appeal confirmed that a properly drafted termination clause limiting an employee’s entitlements to the minimums under the ESA can be enforceable.
The dispute centred on one question: did the employee’s contract legally limit him to the minimum amounts required by the ESA, or was the wording of the termination clause flawed enough that he could instead seek common law wrongful dismissal damages?
Gavin Bertsch was hired as a vice-president with a base salary of $300,000 per year. After 8.5 months of service, his employment was terminated without cause. He received four weeks’ pay in lieu of notice and then brought a wrongful dismissal claim seeking common law damages.
Datastealth Inc. relied on the termination clause in his employment agreement. It stated that if his employment was terminated “with or without cause,” he would receive only the minimum payments and entitlements owed under the ESA and its regulations.
The agreement also included a separate provision stating that if anything provided under the agreement was, or could be, less than the employee’s minimum ESA entitlements, the employee would instead receive the ESA minimums.
The motion judge held that the clause was enforceable and dismissed the claim. The Court of Appeal agreed.
The employee argued that the clause was ambiguous and could be understood by an ordinary employee to permit termination without notice for conduct such as negligence. He argued that this would make the clause unenforceable because the ESA only permits an employee to lose certain statutory termination entitlements in more limited circumstances.
The Court of Appeal rejected that argument.
The court emphasized that ambiguity requires more than simply pointing to another possible interpretation. The question was whether the clause could reasonably be interpreted in a way that complied with the ESA.
Here, the court found the wording clear. The clause expressly stated that termination “with or without cause” would result in only the minimum payments and entitlements required under the ESA and its regulations. In the court’s view, that wording did not attempt to provide the employee with less than the statutory minimums.
The court also considered the separate provision in the agreement that acted as a failsafe. It provided that if any entitlement under the agreement was, or could be, less than the employee’s minimum ESA entitlement, the employee would receive the statutory minimum instead. While the motion judge considered this provision unnecessary because the termination clause was already clear, it reinforced the overall structure of the agreement.
On that basis, the Court of Appeal held that the termination provision was unambiguous, enforceable and effective in preventing the employee from recovering common law wrongful dismissal damages.
The decision provides an important reminder for both sides of an employment relationship. An “ESA-only” termination clause can be enforceable when it is carefully drafted to comply with the statutory minimums and does not contain broader language that makes it invalid.
For employers, that means the exact wording of a termination clause matters. For employees, it means a contract will not necessarily be unenforceable simply because it limits termination entitlements to the ESA minimums.
Clear drafting and early legal review can make a significant difference when an employment agreement is being negotiated, updated or enforced. If this issue may affect your workplace or employment contract, our Employment Law team can help assess the clause and its practical implications.
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