The Federal Court of Appeal in Wilson v. Atomic Energy of Canada Ltd., 2015 FCA 17 ("Atomic Energy") confirmed that federally regulated employers can dismiss non-union employees without cause.
The Canada Labour Code (the "Code"), which applies to federally regulated employers, provides that non-union employees with 12 months or more service can bring complaints alleging that the termination of their employment was "unjust." An adjudicator, appointed under the Code, can award a range of remedies, if they find the termination was unjust, including reinstatement of the employee.
Prior to Atomic Energy the "unjust dismissal" provisions in the Code were commonly interpreted by adjudicators to mean that non-unionized employees in the federal jurisdiction could only be dismissed for just cause similar to the protection afforded to unionized employees. In Atomic Energy, the Court stated that this interpretation of the "unjust dismissal" provisions was "unsupported by authority and logic" and rejected the notion that the "unjust dismissal" provisions were tantamount to a grievance procedure in a union contract. Rather than an automatic presumption that without cause dismissals are unjust, "an adjudicator must examine the circumstances of the particular case to see whether the dismissal is unjust."
The Court elected not to comment in detail on the meaning of "unjust" but rather left that to be decided by adjudicators in subsequent cases. However, the Court did provide some guidance in that it expressed approval of a previous case where a termination was held not to be "unjust." In that case, the employee was provided with a severance payment in accordance with the terms of an employment contract that was freely negotiated between the parties before employment commenced.
This a very positive legal development for employers since it effectively does away with the presumption that federally regulated employers cannot dismiss employees without cause. To ensure a termination will not be found to be "unjust" you may wish to consider negotiating notice and severance provisions in written employment contracts prior to the start of the employment relationship and ensuring that these provisions exceed the statutory minimum notice and severance set out in the Code. When dismissing existing employees without employment contracts, you may wish to provide employees with notice and severance in excess of their statutory entitlements under the Code and consistent with what the employee would be entitled to at common law (in exchange for a release). Of course, in all cases it is important to ensure that employees are treated with dignity and respect throughout the termination process.
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