Outdated contracts are creating costly and avoidable termination liability across Canada, says HRD Employment Law Masterclass Canada speaker
If your employment contracts haven’t been reviewed since the Waksdale decision in 2020, you’re likely sitting on unquantified liability. That’s the message from Jordan Epstein, employment lawyer and partner at Gowling WLG in Ottawa, who’s set to lead a session titled “You Think You’re Safe – You’re Not: Termination Clauses, Cause and Litigation Risk” at the HRD Employment Law Masterclass Canada on Sept. 29, 2026. His premise is pointed: what looks enforceable on paper often is not – and the cost of finding that out at termination is rising fast, says Epstein.
The 2020 Ontario Court of Appeal decision in Waksdale v. Swegon North America Inc., 2020 ONCA 391 – confirmed final when the Supreme Court of Canada denied leave to appeal in January 2021 – fundamentally changed how employment agreements must be read, according to Epstein. The court found that if any part of an employer's termination scheme violates the Ontario Employment Standards Act, 2000 (ESA), the entire termination framework is void. That means a single defective for-cause clause can nullify an otherwise compliant without-cause provision, even if the two are separate sections of the same contract.
The ruling wasn’t a surprise to those watching the courts closely, says Epstein. "Even before Waksdale, which was the COVID era of 2020, the decisions that had been released at that time were increasingly ruling in employees' favour – and it was almost an escalating scale," he says. "It was only a matter of time until a decision such as Waksdale was going to come."
‘Natural progression’ of termination clause standards
The trend has continued. In Dufault v. Ignace (Township), 2024 ONCA 915, the Ontario Court of Appeal again declined to revisit Waksdale, awarding a terminated employee over $157,000 – the full remaining value of her fixed-term contract – after finding her for-cause clause defined misconduct more broadly than the ESA's narrow wilful misconduct threshold. Epstein describes subsequent decisions as the natural progression of a long-building legal shift.
"The decisions since Waksdale have almost been the natural progression – just further protection of employees and further challenges for employers to try to draft and enforce these types of clauses," he says.
While Waksdale is an Ontario decision, courts across the country have increased their scrutiny of termination clauses. And Ontario continues to be a battlefield around enforceability of termination provisions – a dynamic Epstein says makes contract review non-negotiable for human resources (HR).
The most dangerous misconception around employment contracts
The single most persistent error Epstein encounters is employers trusting that their existing contract language will hold, he says. "Unfortunately, companies believe or like to believe that the language of their contract is as enforceable as it reads," he says. "Even a well-drafted clause that on paper seems like it should limit termination entitlements – I’m often the bearer of bad news when I explain that's not the case and their misconception of enforceability turns into a costly termination."
The risk doesn’t live only in the termination clause itself. Epstein warns that problematic language anywhere in the employment agreement – including confidentiality or intellectual property provisions – can compromise an otherwise clean termination clause. "The message to be conveyed is that the entire contract really needs to be reviewed at each instance that you're updating an employment agreement, and you should do so regularly," he says. "Now it's more risky than ever to simply have a template that isn't regularly reviewed and updated."
Can one template cover multiple provinces?
Employers with staff across Canada often hope a single contract can do the job nationally. Epstein is measured on the point – he says it’s theoretically possible across most provinces, but not without risk.
"It's certainly possible to draft a provision that’s compliant across the common law provinces, excluding Quebec," he says. "But it's definitely a lot easier to have a province-specific template, even if it's minor revisions from province to province. It’s stronger and safer to have a provincial specific contract."
Epstein notes that Quebec is an exception. The province operates under civil law rather than common law, and French language legislation requires that all human resources documents be available in French. "Even if a company wants to try a nationwide template, they certainly would need a separate version for Quebec," he says.
The bonus liability most employers overlook
One area where HR teams consistently underestimate exposure is incentive compensation, according to Epstein. When an employee is terminated without cause, the damages calculation doesn’t stop at base salary – and the shortfall can be substantial.
"Oftentimes, employers are unaware of their exposure when it comes to bonus compensation regarding terminated employees,” he says. “Absent very specific and limiting language, there's going to be exposure to bonus pay – and many companies don't know that while others don't want to hear it, but it could be an expensive endeavour when you start adding bonuses – not just maybe one bonus, but multiple bonuses exposure claim in addition to a severance package."
A bonus plan specified in an employment agreement or an incentive plan provided separately could go a long way towards limiting risk, adds Epstein.
Acting before liability arrives
Epstein's masterclass session –"You Think You're Safe, But You're Not" – is designed to move HR and business leaders from awareness to action. The title is frank by design, he says. "It's not my goal to scare anyone into submission, but it’s important for some awareness of exposure when it comes to this," he says. "It just means there's some action that HR leaders need to take in reviewing these contracts and putting better ones in place."
Epstein’s core takeaway is simple: the investment in proactive review is small compared to the alternative. "A small investment to update a contract template now could go a long way in saving money in the long run – it’s not an isolated exercise of setting a template and forgetting about it until the next problem comes," he says. "Being proactive will be really helpful in limiting cost and liability."
Jordan Epstein will be speaking at the HRD Employment Law Masterclass Canada on Sept. 29, 2026. Registration is open at canada.employmentlawmasterclass.com.
