decision of Canada's Federal Court of Appeal has provided
clarity to a decades-long debate as to whether non-unionized,
federally regulated employees can be terminated without cause. The
genesis for the debate lies in the wording of the Canada Labour
Code which allows an employee to make a complaint where the
dismissal is "unjust". The case law has been divided on
this issue, with some adjudicators interpreting this as providing
just cause protection.
Most employment relationships in Canada are subject to
provincial regulation. Generally, speaking, provincially
regulated employers may terminate a non-unionized employee at any
time without cause provided that the terminated employee receives
their contractual entitlements on termination (which must at least
meet minimum standards set out in provincial regulations), or in
the absence of contractual entitlement, reasonable notice of
termination at common law.
On the other hand, most collective agreements provide that
unionized employees may not be terminated other than for "just
cause". Redundancy is generally handled by permitting
layoffs, usually in inverse order of seniority, which convert to
terminations when recall rights expire.
It is exceedingly difficult for employers to prove just cause,
whether for unionized or non-union employees. As a result, if the
word "unjust" in the Canada Labour Code confers
"just cause" protection upon non-union employees that is
similar to the formulation in most collective agreements, that is a
significant restraint on management's rights.
Wilson v Atomic Energy of Canada Limited
The employer, Atomic Energy of Canada Limited
("AECL"), is a nuclear science and technology
laboratory. It is a Crown Corporation that is under Federal
jurisdiction. The employee was dismissed without cause after
4.5 years of service as a procurement supervisor. He was provided
with six months' pay on termination of employment.
The employee made a complaint of unjust dismissal to an
Adjudicator under the Canada Labour Code. The Adjudicator
interpreted the word "unjust" in the Canada Labour Code
as permitting only dismissal for cause. Since the employer had not
alleged cause for dismissal, the termination was unjust. AECL
brought an application for judicial review of the adjudicator's
decision to the Federal Court. The Federal Court quashed the
adjudicator's decision as being unreasonable. This was upheld
by the Federal Court of Appeal.
Decision of the Federal Court of Appeal
The Federal Court reasoned that a dismissal without cause is not
automatically unjust pursuant to the Canada Labour Code.
The Court found that the adjudicator's power under the
Canada Labour Code to determine wither a dismissal was
unjust does not oust the common law doctrine of reasonable notice,
but instead supplements and builds on it.
The Court held that the determination as to whether a
termination is 'unjust' must be made on a case-by-case
basis. As a result, even where an employer has provided an employee
with termination pay, other factors could lead an adjudicator to
make a finding that the termination was "unjust".
Unfortunately, the Court did not elaborate on the meaning of
"unjust" which will likely be developed through the case
This decision is significant for federally regulated employers.
Since just cause is a difficult standard to meet, if the Court had
found that non-unionized federally regulated employees have just
cause protection this would make it much more difficult to
terminate employment. That being said, Canada Labour Code
adjudicators still have the power to consider whether the
termination was "unjust". This suggests that employers
should still tread carefully and ensure that termination decisions
are based on reasonable grounds.
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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