What most would have thought was a pretty clear principle
– that an employer whose business is covered by Part III of
the Canada Labour Code had the right to dismiss employees
without cause – was, for a period of time, cast into doubt by
an adjudicator. Fortunately for employers, the Federal Court of
Canada recently set matters right again.
Part III of the Canada Labour Code is sets out what are
commonly known as employment or labour standards. It applies to
employees whose operations are regulated by the federal government,
such as banks, radio and television stations, inter-provincial and
international transportation companies, and most federal Crown
Atomic Energy of Canada, an employer who falls under Part III of
the Code, dismissed one of its employees without cause. The
employee was paid six months' severance pay: well more than the
Code required to be paid.
The employee filed an unjust dismissal complaint under the Code.
The Code allows for an employee to make an allegation of unjust
dismissal. If the unjust dismissal complaint is unresolved, the
exemployee may request that an adjudicator review the dismissal.
The employee did just that.
It is at this point that things started to go wrong for the
employer. In a surprising twist, the adjudicator determined
employers covered by Part III of the Canada Labour Code
did not have the right to dismiss employees without cause. He made
that decision on the basis of a previous Federal Court decision
where the Court found that an employer could not avoid the unjust
dismissal provisions of the Code by providing severance pay to the
employee at the time of dismissal. Remarkably, the adjudicator took
this to mean that employees under the Code could not be dismissed
After making this decision, the adjudicator told the employer
and ex-employee to try to work out a remedy.
Judicial Review of Adjudicator's Decision
The employer declined the adjudicator's offer. Instead, it
applied to the Federal Court to set aside this decision.
The ex-employee argued first that the court application was
premature because the adjudicator had not finished the job and not
determined what the employee's remedy would be. The ex-employee
also argued that the adjudicator's decision was reasonable, and
therefore should not be interfered with.
The Court did not accept that the judicial review application
was premature. The Court also did not accept the adjudicator's
determination that employers under Part III of the Canada
Labour Code could only dismiss employees for cause. The Court
went to some length to show how the adjudicator's analysis in
this area was flawed.
The Court did note that paying an employee severance pay will
not bar an unjust dismissal complaint under the Code. In that event
the adjudicator has the power to determine whether the amount of
severance pay that was paid was appropriate.
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about your specific circumstances.
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