In a momentous decision that overturns 35 years of arbitral case
law, the Federal Court has just confirmed the right of Federally
regulated employers, including private sector companies and crown
corporations, to dismiss their non-unionized employees on a
'without cause' basis. Such a right has long been availed
to Provincially regulated employers.
Until now, the majority of arbitrators held that Federal
employers, who are subject to Part III of the Canada Labour
Code ("CLC"), could only
terminate their employees for "just cause". It was a
generally held view that, when Parliament introduced the
CLC's dismissal legislation in 1978, the intent was to
provide non-unionized employees with the same protection given to
their unionized counterparts.
In Atomic Energy of Canada Limited v. Wilson
(T-1531-12) (02 July 2013)*, the Court, in its judicial review of
one such arbitral award, quashed this notion and expressly stated
that "there is no basis for concluding that the CLC
only permits dismissals for cause". This is particularly so in
light of the express provisions in the legislation that permit
employers to dismiss employees in the absence of 'just
cause' simply by providing them with appropriate notice (or
termination pay in lieu thereof) and severance pay. The Court
further stated that, had Parliament intended to create a
legislative regime under which employers could only dismiss
employees for cause, it would have expressly provided for it as it
has done in other Federal legislation.
The decision also clarifies that, where an employee has been
provided with a severance package and the adjudicator considers it
to be 'unjust', the adjudicator can exercise his or her
broad remedial powers to grant the employee further relief as may
be appropriate in the circumstances.
The Decision's Impact on Employers
Federal employers no longer have to wait until they have
"just cause" to dismiss an employee, such as on the basis
of misconduct, incompetence or permanent incapacity. They can now
terminate employees on a 'without cause' basis by providing
them with termination and severance pay;
Where an employee views his or her severance package to be
"unjust" and files a complaint under the CLC,
the employer will have to demonstrate the 'justness' of the
Employers cannot dismiss employees contrary to legislation
(such as on a prohibited ground pursuant to the Canadian Human
Rights Act) under the guise of having terminated the employees
on a 'without cause' basis. Where such a breach is found to
have occurred, adjudicators may exercise their broad remedial
powers, including making orders for reinstatement and/or awards for
aggravated and/or punitive damages.
*The Respondent has until 30 September 2013 to appeal this
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