The unjust dismissal sections of the Canada Labour Code were thought to have provided enhanced job security for non-unionized individuals employed in the federal sector by significantly narrowing the circumstances in which an employer could discharge an employee. The Canada Labour Code applies to federally regulated employers, primarily those in the banking, broadcasting, telecommunication, inter-provincial transportation and aeronautics sectors. Although there were some contrary authorities, the prevailing view was that a non-union, non-managerial employee with more than 12 months of service could only be dismissed because of lack of work or the discontinuance of a function unless the employer could establish a ”cause”. Cause was a relatively high standard; comparable to the concept of “just cause” applicable to most unionized employees.
The Federal Court of Appeal’s recent decision in Wilson v. Atomic Energy of Canada rejects the previous prevailing interpretation. Mr. Wilson was dismissed without cause and, upon termination, was provided with six (6) months pay. He filed an unjust dismissal complaint pursuant to the Canada Labour Code. His complaint was referred to an adjudicator who concluded that the Canada Labour Code did not permit dismissals without cause. The employer applied to the court, Trial Department for judicial analysis. The Trial Division found that there was no basis for concluding that the Canada Labour Code only permits dismissals for cause. The court went on to note that the Canada Labour Code sets out the following regime for dismissals.
[35] An employer can dismiss an employee without cause so long as it gives notice or severance pay (ss 230, 235). If an employee believes that the terms of his or her dismissal were unjust, he or she can complain (s 240). The only exceptions to the general right to make a complaint are where the dismissal resulted from a lay-off for lack of work or a discontinuance of the employee’s job, or the employee has another legal remedy (s 242(3.1)).
[36] In addition, an employee can complain if he or she believes that the reason given by the employer for the dismissal was unjustified or if the dismissal is otherwise unjust (eg, based on discrimination or retaliation) (s 240(1)). If the arbiter nominated to consider the complaint concludes on any basis that the dismissal was prejudiced, he or she has wide mandatory powers to repay the employee, reinstitute the employee, or allow any other suitable remedy (s 242(4)).
[37] The fact that an employer has paid an employee severance pay does not preclude an adjudicator from granting further relief where the adjudicator concludes that the dismissal was prejudiced. Correspondingly, there is no foundation for deducing that the Canadian Labour Code only permits dismissals for reason. That deduction would flunk to consider of the clear remedies provided in ss 230 and 235 (ie, notice and severance) for people discharged without cause.
Mr. Wilson appealed from the Trial Division judgment to the Federal Court of Appeal. The Court of Appeal dissolved his appeal in a judgment released on January 22, 2015. The Court of Appeal stated:
Like the Federal Court…, I conclude that a dismissal without cause is not automatically “unjust” under Part III of the Canada Labour Code. An adjudicator must examine the circumstances of the particular case to see whether the dismissal is “unjust”.
The Court identified a distinction between a “just” and an “unjust” dismissal based on one of its earlier judgments:
In Boisvert, the majority of this Court went about understanding the meaning of “unjust dismissal” by considering common law cases (see, e.g., at pages 458-459). In coexisting rationale, Marceau J.A. sought to interpret “unjust dismissal” by considering its opposite, just dismissal. He defined a just dismissal as a “dismissal based on an objective, real and substantial cause…entailing action taken exclusively to ensure the effective operation of the business.” Viewed in its genuine conditions, this Court was not stating that the “real and substantial cause” had to relate to the affected employee. Rather the cause had to entail “action taken exclusively to ensure the effective operation of the business” and had to be something other than “caprice, convenience or purely personal disputes.”
While the Court of Appeal confirmed that not every termination must be for cause, it also concluded that an employee who did not fall into one of the exclusions (e.g. managerial, less than 12 months of service) could file an unjust dismissal complaint. Unless the claim is settled, an adjudicator will then “assess the circumstances and determine whether the dismissal, whether or not for cause, was unjust”.
The Trial Division decision in Wilson was recently considered and followed by Adjudicator Rose in Sigloy v. DHL Express (Canada). In Sigloy, the complainant entered into an employment contract with this employer, DHL Express, which provided that he could be dismissed without cause upon receiving the greater of two (2) weeks’ notice in writing or the minimum notice and severance required by the Canada Labour Code. Mr. Sigloy was dismissed without cause and on termination received his statutory entitlements to termination and severance pay. The complainant did not advance any basis to support his claim that his dismissal was “unjust”.
The issue before Adjudicator Rose was whether he had jurisdiction to hear Mr. Sigloy’s complaint as his employment was terminated without cause and in compliance with a “valid and enforceable contract of employment and the Code”. Depending on Wilson, Adjudicator Rose inferred that there had been no unjust dismissal.
Practical Implications
From a risk management perspective, and in light of the recent clarification in the law, federally regulated employers should consider including “termination without cause” provisions in all offers of employment and employment contracts.
The fact that an employee has been given notice and paid severance in accordance with a valid and enforceable employment contract does not necessarily preclude a claim of unjust dismissal under the Canada Labour Code. The unjust dismissal protections in the Canada Labour Code will continue to be available to employees who allege dismissals were unjust because they were motivated by improper considerations (reprisal, discrimination, arbitrariness, etc.). If a complaint is filed, the employer will, according to the Court of Appeal in Wilson, need to establish that its decision was made to “ensure the effective operation of the business”.
The Labour and Employment Group will continue to monitor these developments and provide updates as they become available.
Justice Laws Website: http://laws-lois.justice.gc.ca/eng/acts/l-2/
Helping you understand what’s in your pocket…
Until next time
Let us know what you think