Can the same termination clause be unenforceable in one courtroom and valid in another?
That is the puzzle left by two recent decisions of the Supreme Court of British Columbia:
- Salina v. Investors Group Financial Services Inc., 2026 BCSC 1168; and
- Smith v. Investors Group Financial Services Inc., 2026 BCSC 1310.
Released just three weeks apart in June and July 2026, both cases involved wrongful dismissal claims against the same employer, Investors Group Financial Services Inc., and featured identical termination clauses. Despite these similarities, the Court reached different conclusions about whether the termination clause was enforceable.
These decisions highlight the continued uncertainty surrounding termination provisions in BC and underscore the importance of carefully drafted employment agreements.
Background: The presumption of reasonable notice
The starting point in Canadian employment law is a presumption that an employer cannot end an indefinite working relationship without giving reasonable notice. That presumption can be displaced by contract, but only within limits.
The leading authority is the Supreme Court of Canada’s decision in Machtinger v. HOJ Industries Ltd. Under Machtinger, the presumption of reasonable notice is rebutted only where a contract clearly and unambiguously limits the employee’s entitlement to “some other period of notice.” A clause that successfully rebuts the presumption is enforceable. If it does not, the worker keeps the common law right to reasonable notice.
Whether the common law presumption has been rebutted is often the central dispute in wrongful dismissal claims.
The termination clause
Both agreements contained the following provision:
This Agreement may be terminated at any time by either party, with or without cause and with or without notice or any compensation in lieu of notice and, without limitation, may be terminated by IGFS upon the breach by the Consultant of any of the terms, conditions or provision of this Agreement. On any termination or pending termination of a Consultant, IGFS shall provide its clients with the appropriate notice [emphasis added].
Because both workers were subject to the Securities Act, the minimum notice requirements of the Employment Standards Act did not apply. The Courts were therefore required to interpret the termination clause on its own merits.
The two cases
In Salina v. Investors Group Financial Services Inc., the Court found that the worker was a dependent contractor and held that the termination clause was unenforceable for two reasons:
- Justice Morishita found that the words “with or without notice” implied that the employer could terminate the employee without any notice whatsoever. He held that “no notice” does not meet the requirement that a contract provide “some other period of notice.” Because the clause tried to reduce notice to zero rather than specify a defined period, it failed to rebut the presumption under Machtinger.
- Independently, the Court found that the phrase “with or without notice” was ambiguous. It suggests the worker might receive notice or might not. A clause intended to remove a valuable common law right must be free of ambiguity.
Just three weeks later, in Smith v. Investors Group Financial Services Inc., the Court reached a different conclusion. Justice Bennett dismissed the worker’s claim and suggested that the same termination clause was enforceable. She reasoned that, because the ESA minimums did not apply, nothing prevented the parties from agreeing to a clause that permitted termination without notice. Under this analysis, “no notice” is “some other period of notice.”
A conflict in the law?
At first glance, these decisions appear to conflict. Two judges of the BC Supreme Court reached opposite conclusions about the contractual language. So, what does the state of the law look like going forward? Can a “with or without notice” clause be successfully challenged or not?
Well, there is a straightforward answer and a more complicated one.
The straightforward answer is that Justice Bennett’s comments in Smith that the termination language was enforceable were obiter dicta, meaning they were not necessary to decide the case. While those comments may be persuasive, they are not binding on future courts.
Earlier in the decision, Justice Bennett had already concluded that Mr. Smith had not been constructively dismissed as he claimed, and he had acquiesced to the changes in his employment. As a result, the principles of common law notice of termination did not apply.
For that reason, Salina is the stronger authority going forward – at least for now. The Court’s conclusion that the clause was unenforceable was essential to the outcome and is therefore binding on future cases.
That said, the fact that two judges at the same court reached opposite conclusions suggests that the law in this area is uncertain. Employers drafting workplace contracts should be wary that even our judges do not agree on the applicable standard. Further comments from the courts, either through an appeal or future decisions, are likely.
Until then, this remains an area of employment law worth watching closely.
Key takeaways for employers and HR
These decisions offer several practical lessons for employers:
- Avoid relying on “without notice” termination language. A clause that reduces notice to zero, or that leaves some ambiguity, risks being struck down. If it is, the default becomes reasonable notice at common law, which can be an expensive mistake for employers.
- Specify a clear, defined amount. Even where the ESA does not apply, a clause that states a concrete notice period or a formula is far more defensible than one that tries to eliminate notice altogether.
- Be cautious about relying on case law without consulting a lawyer first. Even seemingly clear statements in a court decision may not fully represent the state of the law.
- Review termination clauses regularly. Employment law continues to evolve, and a clause that was enforceable when drafted may not be enforceable today. Regular reviews can help ensure your agreements continue to comply with current legal principles.
If you have questions about drafting or reviewing termination clauses, employee/contractor classifications, or wrongful dismissal claims, please reach out to Scott Dallen or any of the lawyers at Ascent Employment Law – we’re here to help!
