Canada: Unjust Dismissal In Federally Regulated Organizations – The Rift In The Case Law Has Been Healed

Last Updated: December 14 2016
Article by Charles Wagner and Mélanie Sauriol

The Supreme Court of Canada's recent decision in Wilson v. Atomic Energy of Canada1 ("Wilson") impacts more than 500,000 non-unionized employees, who work for organizations under federal jurisdiction (banks, telecommunications, interprovincial transportation enterprises and some Crown corporations). The decision puts an end to the controversy that had surrounded the remedy for unjust dismissal provided for in sections 240 to 246 of the Canada Labour Code2 (the "CLC"). It marks a major turning point for unjust dismissal hearings.

The regime created by sections 240 and following of the CLC grants non-unionized employees who have completed at least 12 months of continuous employment protection similar to that enjoyed by unionized employees covered by a collective agreement. For provincially regulated organizations in Quebec, a parallel can be drawn with the complaint for dismissal without good and sufficient cause under section 124 of An Act Respecting Labour Standards. An arbitrator called upon to decide the faith of a complaint for unjust dismissal has broad remedial powers, including the reinstatement of the employee.

The Wilson decision provides answers to a debate that has divided arbitral jurisprudence since section 240 was introduced into the CLC in 1978. Since then, the following two schools of thought have been followed in arbitrations involving claims for unjust dismissal:

(i) Federally regulated employers can legally dismiss a non-unionized employee without cause by providing said employee with a reasonable notice or pay in lieu thereof, and the employee is not entitled to contest his dismissal under section 240 of the CLC.

(ii) Federally regulated employers cannot legally dismiss a non-unionized employee without cause by providing the employee with a reasonable notice or pay in lieu thereof. The dismissed employee can file a complaint under section 240 CLC, and, if the employer is subsequently unable to demonstrate that the dismissal occurred for cause, the arbitrator can apply a variety of remedies, including the reinstatement of the employee.

It should be noted that the first school of thought was essentially followed in provinces other than Quebec.

I – The facts

Mr. Wilson had been employed by Atomic Energy of Canada for four and a half years. On November 16, 2009, he was dismissed without cause. The employer offered him a six months' indemnity in lieu of notice, which was very generous compared to the 18-day prior notice he was entitled to under the CLC. Mr. Wilson nevertheless filed a complaint for unjust dismissal under section 240(1) of the CLC, alleging that he was dismissed without cause.

II – The lower court decisions

Arbitrator's decision

The arbitrator acknowledged the two schools of thought canvassed above concerning unjust dismissal under the CLC. He stated that an employer could not avoid the application of the CLC by offering a severance package, no matter how generous. He found that the employer did not have a cause for dismissing the employee and concluded that the dismissal of an employee without cause automatically constitutes unjust dismissal for the purposes of section 240 of the CLC.

Decision of the Federal Court

According to the Federal Court, dismissal without cause is legal if it is not unjust. It concluded that the sections of the CLC providing for prior notice would not have been included in the statute if only dismissals for cause were authorized, and, that if such had been the case, the legislature would have clearly expressed its intention to create such a regime.

Decision of the Federal Court of Appeal

The Federal Court of Appeal upheld the decision of the Federal Court while acknowledging the existence of a divergence of opinion in the arbitral jurisprudence in this regard. The Court was of the view that the provisions of the CLC at issue did not create a right to employment comparable to that enjoyed by unionized workers. On the contrary, the sections dealing with prior notice allowed an employer to dismiss an employee without cause provided the employee was given a reasonable prior notice or pay in lieu thereof.

III – Decision of the Supreme Court

The country's highest court had to decide whether dismissal without cause coupled with the payment of a generous severance package was tantamount to a lawful dismissal under the CLC.

According to the Court, it is obvious that the "Parliament intended to expand the dismissal rights of non-unionized federal employees in a way that, if not identically, at least analogously matched those held by unionized employees"3. In this regard, it pointed out that "employees covered by collective agreements are protected from unjust dismissals and can only be dismissed for 'just cause'. This includes an onus on employers to give reasons  showing why the dismissal is justified, and carries with it a wide remedial package including reinstatement and progressive discipline"4.

The Court found that the arbitrator's decision was not unreasonable and reiterated that federally regulated employers cannot avoid the application of the CLC's provisions regarding unjust dismissal merely by offering the minimum severance package calculated pursuant to sections 230 and 235, or an even more generous severance package.

In such cases, employees can avail themselves of the remedy under section 240 to contest the legality of the dismissal, even where the employer has offered to pay the minimum severance package or an even greater amount. In other words, federally regulated employers must show that there was a cause for the dismissal.

According to the Court, this is a coherent interpretation of the provisions of the CLC that is anchored in parliamentary intention, arbitral jurisprudence and labour relations practice5. Moreover, it adds: "the alternative approach of severance pay in lieu falls outside the range of 'possible, acceptable outcomes which are defensible in respect of the facts and law' because it completely undermines this purpose by permitting employers, at their option, to deprive employees of the full remedial package Parliament created for them"6.

The Court also commented on the divergence of opinion in the arbitral jurisprudence acknowledged by the lower courts. It noted that the opinion it was repudiating had been followed in only 18 out of more than 1,700 cases over the last 20 years. It accordingly downplayed the importance of that line of cases, stating that they amounted to "a drop in the bucket which is being elevated to a jurisprudential parting of the waters"7.

IV – Comments

The Supreme Courts' decision reflects Quebec employment law, under which dismissal must be for a good and sufficient cause. In fact, Quebec law does not even recognize the possibility of dismissal without cause.

Federally regulated employers must now adjust their employment practices accordingly in light of this decision. In particular, they must be more vigilant during the 12 months following the hiring of new employees, as the latter are not entitled to the protection provided by section 240 of the CLC until the first anniversary of their hiring date. Consequently, an employee who has not reached that seniority threshold can be dismissed without cause, provided that he or she is given the requisite prior notice under the CLC or an indemnity in lieu thereof. However, once that threshold has been passed, the employee is protected from unjust dismissal by virtue of section 240. This means that employers will now have to weigh-in the legal and financial consequences should they intend to dismiss any employee who has more than 12 months' seniority.

It should be noted that the Supreme Court's decision has no impact on an employer's ability to dismiss an employee for cause. The employer and the employee in question can nevertheless come to an understanding regarding the termination of the employment relationship in a written agreement coupled with a release and discharge which may include financial compensation. That being said, the Wilson decision definitely gives employees with sufficient seniority an additional arrow in their quiver, as in the event negotiations on the termination of the employment relationship fails and the employee is dismissed, he or she can then pursue the remedies under sections 240 and following of the CLC.


1. 2016 SCC 29

2. RSC 1985, c L-2.

3. Supra, note 1 at par. 44

4. Ibid, at par. 51

5. Ibid, at par. 69

6. Ibid, at par. 39

7. Ibid, at par. 61

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Charles Wagner
Mélanie Sauriol
Similar Articles
Relevancy Powered by MondaqAI
Lawson Lundell LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Lawson Lundell LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions