Last month, the Federal Court of Appeal released a decision of
importance to all federally regulated employers. In
Atomic Energy of Canada Ltd. v. Wilson,
2015 FCA 17, the Federal Court of Appeal explained that a dismissal
without cause is not necessarily an "unjust dismissal"
pursuant to s. 240 of the Canada Labour Code.
The employee worked for Atomic Energy of Canada Ltd.
("AECL") for four and a half years in a non-management
position. He was dismissed without cause and provided with six
months' severance. The severance provided to the employee far
exceeded the minimum statutory notice and severance the employee
was entitled to, which was a mere 18 days' pay. The employee
filed a complaint pursuant to s. 240 of the Canada Labour
Code alleging that he had been "unjustly
The matter was heard before an adjudicator, who held that AECL
could not terminate the employee without cause, pay him severance,
and characterize the dismissal as just. The decision was judicially
reviewed by the Federal Court. The Federal Court concluded that the
adjudicator's decision was unreasonable. The matter proceeded
to the Federal Court of Appeal.
The Federal Court of Appeal explained that the Canada Labour
Code sets out a complaints mechanism and remedies for
"unjust" dismissals. It does not, however, define the
term "unjust". The common law provides that an employee
dismissed without cause is entitled to reasonable notice, or pay in
lieu thereof. The Canada Labour Code was enacted against
the backdrop of the common law. It does not, either explicitly or
by necessary implication, oust the common law.
The Federal Court of Appeal concluded that a dismissal without
cause is not automatically an "unjust dismissal" under
the Canada Labour Code. When an employee who has been
dismissed without cause files a complaint of "unjust
dismissal", an adjudicator must examine the individual
circumstances to determine whether the dismissal is
"unjust". There may be some circumstances where a
dismissal without cause will be found to be "unjust" but
the mere fact that it was a dismissal without cause is not, in and
of itself, a sufficient basis to establish the dismissal was
This decision of the Federal Court of Appeal has resulted in a
change of the status quo. Previously, adjudicators
commonly held that an employee who was dismissed without cause was
"unjustly dismissed" and entitled to a remedy. One of the
remedies available, and frequently awarded, was reinstatement of
the dismissed employee. This left many employers feeling they had
little choice but to retain employees whom they no longer needed or
wanted, until they were able to establish cause for dismissal.
Now, federally regulated employers may be able
to avoid liability under the "unjust dismissal"
provisions of the Canada Labour Code by dismissing an
employee without cause so long as they provide the employee with
reasonable compensation. This course of action will not preclude an
employee from filing an "unjust dismissal" complaint and
having an adjudicator examine the surrounding circumstances to
determine if the dismissal was "unjust". However, a
dismissal without cause will no longer result in a prima
facie finding that the dismissal was "unjust".
Although the decision is good news for federal employers, it
does leave some matters unresolved in that the Court declined to
provide any direction as to the meaning of "unjust". In
this regard, the Court stated as follows at para. 100:
I shall not comment further on
the meaning of "unjust." It is for Parliament's
chosen decision-makers in this specialized field -- the
adjudicators -- to develop the jurisprudence concerning the meaning
of "unjust" on an acceptable and defensible basis, not
"any basis." It is for us to review the adjudicators'
interpretations for acceptability and defensibility when they are
brought before us.
It therefore remains to be determined what circumstances will
result in in a finding of "unjust dismissal" where an
employee was terminated without cause.
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