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
In this case the employer raised a preliminary objection to the
adjudicator's jurisdiction based on an inability to grant a
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
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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