CCPartners | Blog

Without Cause Termination is not Necessarily ‘Unjust’ Under the Canada Labour Code

A recent decision has ruled that a valid employment contract can be used as a shield against a claim of unjust dismissal pursuant to the Canada Labour Code (the “Code”).  The issue in this case centered on an adjudicator’s jurisdiction when the parties have entered into a valid and enforceable employment contract allowing for ‘without cause’ termination.

The Code permits a dismissed employee to file a complaint, pursuant to s. 240 of the Code, with the Ministry of Labour if they believe their dismissal was ‘unjust’. This protection is available to all federally regulated workplaces as long as the employee is not subject to a collective agreement and has completed 12 consecutive months of continuous employment prior to the dismissal. The minister is granted the authority to appoint an adjudicator to resolve the complaint. The adjudicator is granted a fairly wide authority on remedy pursuant to s. 242(4):

(4) Where an adjudicator decides pursuant to subsection (3) that a person has been unjustly dismissed, the adjudicator may, by order, require the employer who dismissed the person to

(a) pay the person compensation not exceeding the amount of money that is equivalent to the remuneration that would, but for the dismissal, have been paid by the employer to the person;

(b) reinstate the person in his employ; and

(c) do any other like thing that it is equitable to require the employer to do in order to remedy or counteract any consequence of the dismissal. 

In this case the employer raised a preliminary objection to the adjudicator’s jurisdiction based on an inability to grant a remedy.

In October of 2012 the employee (“Sigloy”) was dismissed pursuant to an employment contract signed by both parties. The employment contract stipulated that the employee could be dismissed without cause if provided minimum notice and severance requirements pursuant to the Code. Sigloy was dismissed and provided the statutory notice and severance. Sigloy claimed his dismissal was unjust and, therefore, he is entitled to remedies pursuant to the Code.

The employer’s position was that a termination in accordance with a valid and enforceable contract of employment is not unjust. Further, an adjudicator cannot grant a remedy unless the dismissal was unjust, and an adjudicator’s jurisdiction is grounded in the ability to grant a remedy.

Adjudicator Rose agreed with the employer and granted the preliminary objection. In this case the complainant made no allegations that the termination was discriminatory, a reprisal, or in bad faith. The case law on this issue has been inconsistent but Arbitrator Rose found the most recent decision, Atomic Energy of Canada Limited v. Wilson (“Atomic Energy”), to be persuasive. The Federal Court in Atomic Energy held that a previous adjudicator erred in determining that the Canada Labour Code only permitted just cause dismissals. Adjudicator Rose found that since Atomic Energy it is clear that without cause terminations are permitted under the Canada Labour Code. From applying these principles it was determined that he did not have jurisdiction to hear the complaint.

This case is good news for employers. Through the use of a well drafted employment agreement an employer can avoid liabilities beyond statutory minimums. If you operate in a federally regulated industry, the lawyers at CC Partners have the experience needed to guide you through the legislative framework and draft effective employment agreements.