For a number of years, there have been differing viewpoints on
whether Part III of the Canada Labour Code (the Code)
permits dismissals on a without cause basis. In October 2013, we
discussed the decision of Joseph Wilson v. Atomic Energy of Canada
Limited, wherein the
Federal Court held that federally regulated employers may dismiss
its employees without cause. Recently, the Federal Court of Appeal
(the FCA) confirmed such an approach. After analyzing the
diverging viewpoints on the topic, the FCA made clear that
employers subject to the Code may dismiss non-union employees
without just cause, despite the "unjust" dismissal
provisions contained therein.
Key to the FCA's conclusion was the common law of
employment. As employers are well aware, at common law, an employer
can terminate non-unionized employees without cause so long as it
satisfies its common law severance obligations. The FCA held that
absent explicit language of "irresistible clearness" the
employer's common law right to dismiss an employee without
cause cannot be removed. The FCA concluded that the Code does not
contain such explicit language.
Mr. Wilson argued that the Code "bestows a right to the
job" and not simply reasonable notice as under the common law.
The FCA disagreed noting that nothing in the Code or in its purpose
suggests that the Code grants non-unionized employees a "right
to the job" or suggests that non-unionized employees be in the
same place as unionized employees i.e. protection from without
cause dismissal. In fact, the FCA pointed to sections 230 and 235
of the Code and found that these sections "expressly allow an
employer to terminate an employment relationship even without
cause" so long as proper notice and/or compensation is
Additionally, the FCA noted that the remedies available to
adjudicators under section 242 of the Code to reinstate employees
and to require an employer to "counteract any consequence of
the dismissal." are new statutory remedies, which are over and
above remedies available under the common law. The FCA held that
these statutory remedies do not support the proposition that
federally regulated employers are precluded from dismissing
employees without cause.
Lastly, at the Federal Court level, Justice O'Reilly made
clear that while federally regulated employers are not precluded
from dismissing employees without cause, it is still open to the
employee to make an "unjust" dismissal complaint and
request further relief. Justice Stratas of the FCA avoided making a
determination on the definition of "unjust" in this
context, but did note that "just dismissal" entails
"dismissal based on an objective, real and substantial
cause...entailing action taken exclusively to ensure the effective
operation of the business." In other words, an employer's
decision to terminate should relate to the proper functioning of
its business and not based on "caprice, convenience or purely
personal disputes." In the end, the FCA left it to Parliament
and adjudicators to further develop the meaning of an "unjust
This decision confirms employees working for federally regulated
employers can be dismissed without cause. However, a dismissed
employee is not precluded from bringing a complaint against his or
her former employer for "unjust" dismissal if the
employee believes the reason for the terms of the dismissal were
unjust, even where the employee is provided with a severance
package greater than his or her entitlements under the Code. While
this decision is welcomed news for employers, the extent to which
an employee may nevertheless advance a claim of "unjust
dismissal" remains to be further developed.
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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Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
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