Quick Hits
- The Ontario Superior Court of Justice read a “for cause” confidentiality provision together with a CEO’s termination clause and found that the parties objectively intended to comply with the Canada Labour Code, rather than isolating individual words.
- The court distinguished Ghazvini v. Canadian Imperial Bank of Commerce and Henderson v. Slavkin, finding that the clauses in those cases permitted termination without notice where the statute prohibits it, and that neither decision applied the Baker framework.
- Allegations that the CEO was dismissed in retaliation for raising concerns about legal retainers went to the reason for dismissal, not the manner of dismissal, and did not support moral damages.
- The claim was struck in its entirety without leave to amend, and the plaintiff was ordered to pay $24,500 in costs.
In Henshell v. Batchewana First Nation of Ojibways, 2026 ONSC 5768, the court applied the Court of Appeal for Ontario’s interpretive framework in Baker v. Van Dolder’s Home Team, 2026 ONCA 568, and held that a chief executive officer’s termination clause complied with the Canada Labour Code. The court also struck the former CEO’s claims for moral and punitive damages and dismissed the action without leave to amend.
Background Facts
The plaintiff, who pleaded that she was a practising lawyer with twenty years of experience, left her law practice to become CEO of Batchewana First Nation of Ojibways (BFN) under a written employment agreement. She was employed from May 6, 2024, until her employment was terminated without cause on July 23, 2024.
Section 13 of the agreement permitted BFN to terminate employment “for any lawful reason” upon providing the notice or pay in lieu of notice, and other entitlements, required by the Canada Labour Code, and excluded any further notice at common law. Separately, section 9 stated that any breach of BFN’s confidentiality policies “will be cause for severe discipline and/or termination of employment for cause.”
The plaintiff claimed $350,000, representing twenty-four months’ pay in lieu of reasonable notice, along with moral and punitive damages of $500,000 arising from her dismissal. BFN moved under Rule 21.01 of the Ontario Rules of Civil Procedure to have the termination clause declared enforceable and the claim struck.
The Court’s Findings
The Termination Clause Was Enforceable
The plaintiff argued that section 9 allowed BFN to terminate her employment for any confidentiality breach without her statutory entitlements, which rendered section 13 unenforceable. The court acknowledged that this reading might be plausible if the words were read literally and in isolation, but noted that it ignored the word “or,” which indicated that not every breach would result in termination for cause.
Applying Baker, the court described the framework as a “welcomed departure” from comparing isolated words from case to case, and asked instead whether the termination provisions reflected an objective intention to comply with the minimum statutory standards. Reading sections 9 and 13 together, the court found that neither party—including the plaintiff, an experienced lawyer—could reasonably have intended to displace her Canada Labour Code entitlements. The clause was valid and enforceable, and the plaintiff was not entitled to common law reasonable notice.
Moral, Punitive, and Repudiation Claims Were Struck
The court confirmed that moral damages are not an extension of the notice period and remain available even where a termination clause is enforceable. However, none of the facts pleaded—inducement to leave her practice, an “unceremonious” termination, alleged retaliation, a council member’s conflict of interest, and the denial of a promised second opportunity to address council—amounted to bad faith in the manner of dismissal. Citing the Supreme Court of Canada’s decision in Wallace v. United Grain Growers Ltd., the court noted that employers are not required to have “good faith” reasons for dismissal, and found there was no legal right to a second attendance before council.
The punitive damages claim failed because no independent actionable wrong was pleaded, and the alternative claim for repudiation failed because the alleged conduct fell well short of the egregious behaviour required. Because the plaintiff had already pleaded all of the facts on which she relied, the court refused leave to amend and fixed costs at $15,000 for the motion and $9,500 for the action.
Key Takeaways
Henshell illustrates how Baker is shifting the analysis of termination clauses away from a “magic words” approach and toward the parties’ objective intentions, read in light of the contract as a whole and the surrounding circumstances. While this may give employers greater confidence in well-drafted provisions, it is not a substitute for careful drafting. Employers may want to consider:
- including clear language in termination provisions confirming that, in all circumstances, employees will receive at least their minimum entitlements under the applicable employment standards legislation;
- reviewing “for cause” language in confidentiality, conflict of interest, and policy compliance provisions to ensure it does not suggest termination without statutory entitlements;
- documenting relevant contract terms at hiring, such as probationary periods and the treatment of prior service, which the court noted were inconsistent with the plaintiff’s allegation that she was promised long-term employment; and
- ensuring that the dismissal process itself is honest, transparent, and professional, as moral damages remain available even where a termination clause is enforced.
Ultimately, the decision suggests that an employer’s reason for dismissal, where that reason is not alleged to be unlawful, is unlikely on its own to attract moral damages—but how the dismissal is carried out remains open to scrutiny.
Ogletree Deakins’ Canadian offices will continue to monitor developments and will post updates on the Canada and Cross-Border blogs as additional information becomes available.
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