By Barry W. Kwasniewski and Martin U. Wissmath

Court of Appeal Upholds Clear ESA-Only Termination Clause, Dismisses Employee Appeal

Ontario employers received welcome confirmation that well-drafted employment agreements limiting termination entitlements to statutory minimums can withstand judicial scrutiny — so long as the language is clear and compliant. In Bertsch v Datasealth Inc., the Ontario Court of Appeal (the “Court”) dismissed the employee’s appeal and upheld the enforceability of a termination clause limiting entitlements strictly to the Employment Standards Act, 2000 (“ESA”) minimum standards. The May 16, 2025 decision affirms the lower court’s ruling, previously covered in our October 2024 Charity & NFP Law Update, where the judge found the agreement excluded common law notice without violating the ESA. The key issue before the Court was whether the termination provision was void for ambiguity or statutory non-compliance. The Court held it was not.

The appellant, Gavin Bertsch (the “Employee”), was terminated without cause after 8.5 months of employment as a vice-president earning $300,000 annually. He received four weeks’ pay in lieu of notice, which was three weeks in excess of the ESA minimum standards. The employment agreement expressly excluded any entitlement to common law notice and emphasized that only ESA minimums applied “with or without cause.” It also included a “failsafe” clause that provided for ESA minimums where the contract might otherwise fall short.

The Employee argued that the termination clause was void and unenforceable because it was ambiguous and could suggest termination without notice for cause falling short of the “wilful misconduct” standard under the ESA Regulation 288/01. He also contended that the language in the employment agreement might mislead an average employee. The Court rejected these arguments.

Applying precedent in Amberber v. IBM Canada Ltd., the Court reaffirmed that ambiguity requires “something more than the mere existence of competing interpretations.” It concluded that the termination clause was unambiguous, compliant with the ESA, and validly excluded common law entitlements.

For all employers in Ontario, including charities and not-for-profits, this case underscores that carefully drafted employment agreements remain a reliable tool for managing termination liability exposure.

Saskatchewan Court Finds Long-Serving Worker Was an Employee Despite ‘Contractor’ Label

In Saskatoon Minor Basketball Association v MacDonald, the Saskatchewan Court of Appeal dismissed an appeal from a not-for-profit sports association that had classified its long-serving executive director as an independent contractor. The April 17, 2025 decision upheld a lower court’s award of 22 months’ reasonable notice (less three months’ working notice) and confirmed that the working relationship was one of employment, not independent contractor. While not binding in Ontario, the judgment may be persuasive as courts across Canada continue to scrutinize employment status in substance rather than form – particularly relevant for Ontario charities and not-for-profits that rely on informal or long-standing contractor arrangements.

Randi MacDonald (the “Employee”) had worked for the Saskatoon Minor Basketball Association (the “Employer”) for over 16 years, beginning as a part-time administrative assistant and later becoming its executive director. Although the Employee worked from home, invoiced monthly, and was treated as an independent contractor for tax purposes, she worked exclusively for the Employer and performed a broad scope of administrative, operational, and governance-related duties. Her contract was renewed annually but rarely signed. In 2021, amid a restructuring caused by the Covid-19 pandemic, the Employer offered the Employee a three-month role, an expanded position for which she had “no experience or training”, or six weeks’ severance pay. The Employee accepted the short-term role “without agreeing that this constituted settlement of the matter” and later sued for wrongful dismissal.

The lower court judge found in favour of the Employee and awarded damages reflecting 22 months’ reasonable notice. The long notice period was calculated according to the common law, as the judge found the termination clauses in the unsigned employment contracts were invalid, and there was no enforceable agreement to waive the Employee’s common law rights or limit her termination notice entitlements to statutory minimums. The Employer appealed, arguing that the judge erred by granting summary judgment, mischaracterizing the relationship, and misapplying the law of mitigation.

The Court of Appeal disagreed. Applying established precedent, the court held that while some indicators pointed to independent contracting – such as Ms. MacDonald’s home office and GST remittances – the totality of the relationship showed that she was economically dependent on the Employer, subject to its control, and lacked business risk. The weight of the evidence regarding objective factors such as remuneration, length of relationship, supervision, power imbalance, role, and integration favoured the conclusion that Ms. MacDonald was in fact an employee, and that she was not in business for herself as an independent contractor.

The Court of Appeal also rejected the Employer’s argument that the Employee failed to mitigate her damages by not accepting a nine-month role that required new duties and a release of claims. The offer, the court found, was not objectively reasonable and could not negate her entitlement to reasonable notice. The court further upheld the trial judge’s $11,000 cost award, finding no error in principle.

Although this decision is from Saskatchewan, Ontario courts may reference out-of-province appellate rulings on employment characterization, especially where summary judgment and long-term service are involved. This case adds persuasive weight to the view that courts will look past tax structures, labels, and unsigned documents to assess the reality of a working relationship.

Charities and not-for-profits across Ontario, as well as in other provinces, should take note: long-term, exclusive contractor arrangements – especially where the individual functions as part of the organization – are increasingly likely to be found as legal employment relationships, not contractor relationships. In such cases, employers may face lengthy common law notice obligations. Reviewing contractor relationships for alignment with employment law remains a prudent risk management strategy.

Upcoming New Employment Standards Act Requirements include Long-Term Illness Leave

The Working for Workers Six Act, 2024 (the “Act”) received royal assent on December 19, 2024, and introduces further employer obligations under Ontario’s Employment Standards Act, 2000 (“ESA”), building on earlier statutes. Two key measures will take effect in the coming months.

Effective June 19, 2025, the Act adds Long-Term Illness Leave to the ESA. This new unpaid statutory leave entitles employees to up to 27 weeks off in a 52-week period, provided they have completed at least 13 consecutive weeks of employment. The leave is available where the employee is unable to work due to a serious medical condition and a qualified health practitioner issues a certificate stating both the condition and the expected duration of the employee’s absence from their duties.

A “qualified health practitioner” includes physicians, registered nurses, and psychologists licensed in the jurisdiction where treatment is provided. The Ministry of Labour’s Policy and Interpretation Manual confirms that the practitioner determines whether the condition qualifies as “serious,” including chronic and episodic conditions.

Effective July 1, 2025, under Ontario Regulation 477/24, employers with 25 or more employees must provide specified information to new employees no later than their first day of work or as soon as reasonably possible thereafter. This includes the legal and business names of the employer, contact details, work location, wage rate, pay frequency, and anticipated initial hours of work.

Employers should review internal practices now to align with these upcoming statutory requirements.

​Read the May 2025 Charity & NFP Law Update