Ontario Court finds termination clause unenforceable under the Canada Labour Code

A recent court ruling reinforces that termination provisions for federally regulated employees must strictly comply with the Canada Labour Code. Clauses that are too broad or rely on saving language risk being struck down, exposing employers to significant notice obligations.

In Ghazvini v. Canadian Imperial Bank of Commerce, 2025 ONSC 5218, the Ontario Superior Court of Justice held that the Canadian Imperial Bank of Commerce’s (“CIBC”) termination clause breached the Canada Labour Code (the “CLC”) and was unenforceable.

I.    Background

Two CIBC Mobile Investment Consultants were dismissed without cause as part of a restructuring. Their employment contracts included detailed “for cause” and “without cause” termination clauses, along with a “saving” clause meant to ensure compliance with applicable employment standards legislation.

The employees sued for wrongful dismissal, arguing that the termination language in the contract violated the CLC. CIBC countered that the clause was valid and had already been upheld in Horwitz v. CIBC, 2019 ONSC 7583.

Justice Merritt disagreed with CIBC and found the termination provision unenforceable, awarding seven months’ notice to Mr. Ghazvini and twelve months’ notice to Ms. Rose, including bonuses, commissions, and benefits.

II.    The Court’s reasoning

     1. The “For Cause” clause was too broad

The Court found that the “for cause” clause allowed CIBC to terminate employment for a wide range of conduct, such as “dishonesty” or a “breach of the Code”, that might not meet the just cause threshold under the CLC.

Because the clause permitted termination without notice in situations where the CLC would still require payment, it effectively sought to contract out of the CLC. Justice Merritt noted that employees should know, with certainty, when an employer can lawfully terminate their employment. The open-ended language (“includes, but is not limited to”) made that impossible.

     2. “At Any Time” language raised red flags

Although not decisive, the Court also took issue with the “without cause” clause allowing termination “at any time.” Under the CLC, employers cannot dismiss employees arbitrarily, they must have a legitimate reason, such as redundancy or reorganization. Justice Merritt observed that suggesting otherwise could mislead employees into believing they could be terminated for unjust reasons.

     3. The saving clause couldn’t fix the problem

CIBC’s saving clause, which stated that statutory minimums would apply if any term conflicted with legislation, didn’t help. Citing Rossman v. Canadian Solar Inc. (2019 ONCA 992), the Court reiterated that employers cannot use saving clauses to cure a contract that violates the law from the outset.

As Justice Merritt put it, saving clauses cannot “reconcile a conclusory provision that is in direct conflict with the statute.”¹

III.    The result

Because the termination clause was invalid, the plaintiffs were entitled to common law reasonable notice. The Court also found that both were owed their 2022 annual bonuses, as they would have been actively employed when the bonuses were paid had they received proper notice.

This decision highlights that termination clauses for federally regulated employees will be read strictly and in light of recent case law like Waksdale v. Swegon North America Inc., 2020 ONCA 391. Federally regulated employers should take this as a reminder to review existing contracts, particularly those relying on boilerplate termination language, to ensure they meet the current legal standards under the CLC.

 ¹ Ghazvini v. Canadian Imperial Bank of Commerce, 2025 ONSC 5218, at para 79.