Federally regulated employers take note. The Federal Court of
Appeal has recently confirmed that without cause dismissals are not
automatically deemed to be "unjust" under the provisions
of the Canada Labour Code (the "Code").
For decades, adjudicators have been at odds with one another
regarding the question of whether the Code permits dismissals on a
without cause basis. As a matter of background, the Code applies
only to federally regulated employers such as banks, railways and
telecoms. After years of uncertainty in this area, the Federal
Court of Appeal recently decided to end the discord and
definitively determine the legal point.
In the case of Wilson v. Atomic Energy of Canada
Limited, Mr. Wilson was employed for 4.5 years before being
terminated on a without cause basis and offered a common law
package equal to about 6 months of pay. Mr. Wilson chose not to
sign a release in exchange for the offer and instead filed a
complaint under the Code which alleged that he had been unjustly
After both an adjudication and a Federal Court hearing, the
matter proceeded to the Federal Court of Appeal, which found that a
dismissal without cause is not automatically "unjust"
under the Code and that adjudicators must examine the circumstances
of each particular case in order to decide whether or not a
dismissal is unjust. In its analysis, the court determined that
Part III of the Code (which contains exceptional remedies such as
reinstatement of employment) is merely intended to offer employees
more remedies than exist under the common law, but only if the
dismissal is unjust. The extra remedies granted under Part III do
not, however, mean that all without cause dismissals under the Code
are automatically unjust.
As a result, federally regulated employees who are terminated
without cause must prove that they have been terminated unjustly if
they want that conclusion to be drawn. In practical terms, this
means that where there is no finding of unjust dismissal, a
federally regulated employee can be terminated without cause and
simply provided with a notice or severance package. In order to
gain the benefit of Code remedies which do not exist under the
common law, such as the right to reinstatement, the employee must
go the extra step and establish that the without cause termination
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