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Federal Court of Appeal Upholds Without Cause Dismissal under the Canada Labour Code

Federally-regulated employees may be dismissed on a without cause basis under the Canada Labour Code (the “Code”). This was the conclusion by the Federal Court of Appeal in Wilson v. Atomic Energy of Canada Limited. The decision upheld the same ruling provided in a judicial review decision of the Federal Court. Our blog on the Federal Court decision can be found here. The previous blog reviews the original adjudicator’s decision as well as the judicial review. As a reminder, the complainant had been dismissed without cause and provided a 6-month severance package.

Historically, s.240 of the Code was interpreted by adjudicators such that “just cause” and “unjust” were synonymous. Therefore federally regulated employers faced the possibility that dismissed employees would be reinstated  if the employer could not prove  just cause for dismissal. The good news for employers is the Federal Court of Appeal has determined this line of reasoning does not hold up to scrutiny. 

In reaching its decision, the unanimous court focused on the relationship between common law employment principles and Part III of the Code. Specifically, whether the remedies offered by Part III oust the common law. Under common law principles, an employer may dismiss an employee without cause by providing reasonable or statutory notice. A clear intention from the legislator is required before a common law principle can be ousted which the Court of Appeal could not find within the language of the Code. Rather, the remedies available under the Code (such as reinstatement) are seen to build upon common law principles.

In support of their conclusion, the 3-panel court relied on neighbouring provisions that specifically recognize the existence of common law remedies as well subsections 230(1) and 235(1) which permit termination without cause if compensation is provided. The court also found that the section 242(4)(b), which grants an adjudicator the ability to reinstate an employee, can exist harmoniously with the common law. The reinstatement remedy merely provides an additional tool to adjudicators rather than substantively reforming the right of employers to dismiss without cause. Ultimately an adjudicator must determine whether a dismissal was “unjust”, and the absence of cause is not determinative.

This decision upheld a positive decision for federally regulated employers and is expected to provide greater flexibility when an employment relationship comes to an end. If you are a federally regulated employer, the lawyers at CCPartners can help you understand how this decision affects you.