Canada: Federal Court Of Appeal Decision Overturns Longstanding Views About "Unjust Dismissal" Under The Canada Labour Code

In a decision last month in Wilson v. Atomic Energy of Canada Limited, 2015 FCA 17, the Federal Court of Appeal dealt with an employee covered by the Canada Labour Code who had been terminated without cause, but who had been offered reasonable severance pay.  This case is significant for all federally regulated employers.

An adjudicator had been appointed to hear the case under the Canada Labour Code and ruled the fact that the employee had been terminated without cause meant this was an "unjust dismissal" under the Code. As such, the termination would qualify for the "unjust dismissal" remedies, including possible reinstatement in his position, awarding damages, or making other orders "to remedy or counteract any consequences of the dismissal".

This view of the law has been the prevailing interpretation of this part of the Code for decades.  Although not all adjudicators had adopted that interpretation, it was widely accepted as a correct interpretation of the Code.

The court referred to the well-known text Employment Law in Canada by Innis Christie.  The court stated that Mr. Christie "asserts that "[t]he policy of the section is to provide the non-unionized employee with substantially similar protections against unjust discharge as the unionized employee enjoys under a collective agreement".  That view was certainly the most widely held view of the proper interpretation of the Code.  The court decided, however, that the position taken by Mr. Christie "is unsupported by authority and logic".

The court concluded that the "unjust dismissal" provisions of the Code do not oust the common law dealing with terminations of employment contracts.  If the employer terminates an employee without cause pursuant to the employment contract in circumstances that are free from duress, and the employer offers compensation that is reasonable, then the dismissal is probably not an "unjust dismissal" under the Code.  The adjudicator will still consider all aspects of the termination to determine if there are reasons to conclude that a particular dismissal was "unjust", but, so long as the employer has acted properly under the common law, the adjudicator cannot find the dismissal to be "unjust" merely because it is without cause.

Case-by-Case Definition of Unjust Dismissal

The term "unjust dismissal" is not defined in the Code.  It will be up to adjudicators to decide what it means on a case-by-case basis, but, from now on, adjudicators will have to find something unjust in the termination in order to apply the "unjust dismissal" remedies under the Code.  Adjudicators will not be able to find that a termination is "unjust" simply because it is a dismissal without cause.

This decision means that employers in the federal sector can terminate non-union employees without cause provided that the dismissal is not "unjust" for some other reason.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.