Recently, the Federal Court of Canada confirmed that
federally regulated employers subject to the Canada Labour
Code (the Code) may dismiss non-union employees without just
cause, despite the unjust dismissal provisions contained in the
Code. This decision was made in the context of a judicial review of
a labour adjudicator's decision in which the arbitrator
concluded that federally regulated employers are only permitted to
terminate employees for just cause.
The employee in this case, Joseph Wilson, had worked for Atomic
Energy of Canada Ltd. (AECL) for four and a half years when his
employment was terminated on a without cause basis. Wilson was
provided with a severance package, in excess of his Code severance
entitlements, equal to 6 months' pay. Unsatisfied with this
payment, Wilson filed a complaint under the Code claiming unjust
dismissal. The adjudicator appointed to hear the case found that
Wilson's employment was an unjust dismissal under the Code
solely because it was not a termination for cause. AECL applied to
the Court for judicial review of the arbitrator's decision,
arguing that it was unreasonable and an improper interpretation of
Federal Court of Canada Decision
After reviewing the decisions relied upon by the adjudicator,
Justice O'Reilly rejected the adjudicator's conclusion that
the Code only permits terminations for just cause and overturned
the decision. Justice O'Reilly found that the adjudicator did
not properly interpret the decisions on which he relied and noted
that the Code provides for notice and severance pay for employees
who are dismissed without cause, which is a clear indication that
the intent of the Code is to allow termination without cause.
Justice O'Reilly went on to clarify that a federally
regulated employer may dismiss an employee without cause, provided
that it gives notice or severance pay in accordance with the Code.
It is, however, open to the employee to make an unjust dismissal
complaint and request further relief, except in cases where the
dismissal was a result of a lay-off for lack of work, a
discontinuance of the employee's position or where the employee
has a right to another statutory remedy. If the adjudicator
determines that, based on the circumstances, the dismissal was
unjust, the fact that the employer paid the employee severance pay
does not preclude the adjudicator from granting further relief,
such as additional compensation, reinstatement or another suitable
This decision alters the previously held view that employees
working for federally regulated employers could not be dismissed on
a without cause basis. While favourable to employers that are
subject to the Code, this decision also makes it clear that an
employee is not precluded from bringing a complaint against his or
her former employer for unjust dismissal if the employee believes
the reason for or the terms of the dismissal were unjust, even
where the employee is provided with a severance package in excess
of his or her Code entitlements.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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