According to prominent employment lawyer Howard Levitt, the year 2025 delivered a powerful and unambiguous message to employers across Canada: the traditional balance of power in the workplace has undergone a decisive and permanent shift. In his year-end analysis published on December 30, 2025, Levitt argues that companies clinging to outdated practices are facing severe and costly legal consequences.
The End of the Level Playing Field Myth
Levitt states that 2025 was the year Canadian courts formally abandoned any pretense of an equal footing between employer and employee. Judges repeatedly emphasized the inherent vulnerability of employees at termination, recognizing their dependence on income and fundamental right to dignified treatment. Employers who operated under the assumption that ironclad contracts alone dictated the relationship were swiftly corrected, often through substantial financial penalties.
Key Areas Where Employers Faced Defeat
The legal landscape of 2025 was particularly unforgiving in several critical areas. Termination clauses, a traditional tool for limiting liability, continued their "free fall" in the courts. Levitt notes that despite years of legal warnings, many employers persisted with poorly drafted or outdated clauses. The judicial response was predictable: these clauses were struck down, triggering generous common-law notice periods for dismissed employees. The lesson is stark—only pristine, current, and conservative termination clauses hold any value.
Furthermore, awards for bad-faith damages reached new heights. Employers faced significant sanctions for callous dismissal tactics, such as delaying final payments, cutting off benefits prematurely, or terminating employees during medically vulnerable periods like illness or holiday. Courts moved beyond compensating for lost wages to actively punishing the manner of dismissal.
The New Realities of Remote Work and Worker Classification
Disputes over remote work arrangements exploded in 2025, with employers largely on the losing side. Attempts to unilaterally revoke work-from-home setups or enforce rigid office-attendance mandates were frequently ruled as constructive dismissals. What many employers considered a temporary pandemic accommodation has been judicially solidified as a binding term of employment for many.
Similarly, courts showed zero tolerance for the misclassification of employees as independent contractors. Businesses that exercised control over workers but labeled them as contractors for convenience were ordered to pay a full suite of entitlements, including termination pay, overtime, and vacation pay. The economic reality of the relationship, not the label on a contract, dictated the outcome.
Even traditional layoffs proved risky. Employers who implemented layoffs without explicit contractual authority found themselves facing wrongful dismissal claims, regardless of their financial motivations or good intentions.
A Year of Judicial Skepticism
The unifying theme of 2025, Levitt concludes, was a profound judicial skepticism toward actions taken purely for employer convenience. While cost-cutting and restructuring remain legitimate business activities, they must be executed lawfully and humanely. The era of acting first and dealing with legal fallout later is conclusively over. The final irony, Levitt notes, is that this shift was long predicted. The most important lesson of 2025 may be the high cost paid by organizations that refused to adapt to the new equilibrium of power in the Canadian workplace.
