Summary
Earlier this year, we wrote about the Ontario Court of Appeal’s decision in Baker v. Van Dolder’s Home Team Inc., 2026 ONCA 568, a case that signalled a more contextual approach to the interpretation of termination provisions. In Baker, the Court cautioned against examining isolated contractual language without the broader agreement and instead emphasized the importance of interpreting employment contracts as a whole.
The Ontario Superior Court’s recent decision in Henshell v. BFN of Ojibways, 2026 ONSC 5768, is one of the first decisions to consider the impact of Baker. In Henshell, the Court upheld a termination provision governed by the Canada Labour Code (“CLC”), rejecting the employee’s argument that a separate provision of the employment agreement rendered the termination clause unenforceable.
Background
The Plaintiff was hired as Chief Executive Officer of Batchewana First Nation of Ojibways (“BFN”) and was dismissed without cause approximately two and a half months after commencing employment. She subsequently commenced an action seeking common law reasonable notice damages, moral damages, and punitive damages.
The employment agreement contained a termination provision providing that the employer could terminate employment for any lawful reason upon providing the employee with the notice, severance pay, and other entitlements required by the CLC. The agreement also expressly excluded any entitlement to common law notice.
Rather than challenging the wording of the termination provision itself, the Plaintiff relied on a confidentiality provision elsewhere in the employment agreement. That provision stated that,
[…] you should be aware that protection of the Employer’s confidential information is extremely important to the success of the Employer and consequently, any breach of the confidentiality of information policies or procedures which are in effect from time to time will be cause for severe discipline and/or termination of employment for cause.
[Emphasis added]
The Plaintiff argued that this language could permit termination in circumstances that would not satisfy the CLC standard for just cause, thereby rendering the termination provisions unenforceable.
The Court’s Analysis
The Court rejected the Plaintiff’s argument and upheld the termination provision.
In doing so, Justice Chiappetta relied extensively on the reasoning in Baker. As discussed in our previous article, the Court of Appeal in Baker rejected an overly technical approach to contract interpretation and confirmed that employment agreements should be read harmoniously and in their entirety.
Applying that framework, the Court found that the parties had clearly expressed an objective intention to comply with the CLC. In particular, the Court rejected the Plaintiff’s focus on the confidentiality provision in isolation. The use of the word “or” contemplated a range of disciplinary responses and did not suggest that every breach of confidentiality would result in termination for cause. The Court emphasized the significance of the word “or” and found that when this section was read together with the termination provision, the agreement reflected an intention to provide the minimum statutory entitlements.
The decision demonstrates how courts may apply Baker going forward.
Moral and Punitive Damages Claims Dismissed
The Plaintiff also alleged that she was terminated after raising concerns regarding legal retainers and potential financial irregularities.
The Court struck the claims for moral and punitive damages, finding that the pleadings did not disclose the type of conduct necessary to support such awards. While the Plaintiff alleged an improper motive for her dismissal, the Court held that those allegations related to the reason for dismissal rather than the manner of dismissal and therefore could not support a claim for moral damages. Further, the Court found that the Plaintiff’s pleadings did not establish an independent actionable wrong capable of supporting punitive damages.
Having found the termination provision enforceable and the remaining claims could not succeed, the Court dismissed the action in its entirety and awarded costs.
Key Takeaways for Employers
For employers, as we noted in our discussion of Baker, the Court of Appeal signalled a shift away from an overly technical approach to the interpretation of termination provisions. Henshell suggests that lower courts are prepared to apply that guidance and is a welcome reminder that employment agreements should be interpreted as a whole. As always, Employers should continue to ensure that employment agreements, including termination provisions, are carefully drafted and comply with applicable employment standards legislation.
Need More Information?
For more information or assistance with employment contracts, contact Emily Durand at edurand@filionlaw.com or your regular lawyer at the firm.