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Dismissal without cause not necessarily unjust

Recent case changes the game for federally-regulated employers

By Stuart Rudner

In Canada, the vast majority of employees are governed by provincial employment standards legislation, as opposed to the Canada Labour Code. Provincial legislation allows for an employee to be dismissed on a without cause basis, and sets out parameters regarding the amount of notice of dismissal, or termination pay, that must be provided in such circumstances. Similarly, the common law has always recognized the right of employers to dismiss an employee without cause, as long as the appropriate amount of notice, or pay in lieu of notice, is provided.

However, section 240 of the Canada Labour Code references “unjust dismissal" and has historically been viewed as outlawing dismissals without cause. In other words, the prevailing view has been that an employee governed by the Canada Labour Code could only be dismissed for cause. That has all changed based upon the recent Federal Court of Appeal decision in Wilson v. Atomic Energy of Canada Ltd.

In the Wilson case, the employer was governed by federal legislation, and it purported to dismiss the plaintiff by providing him with six months of severance pay. Not surprisingly, he filed a complaint pursuant to section 240 of the Canada Labour Code, alleging that he was unjustly dismissed.

In the past, the expectation would have been that Wilson would succeed and the dismissal would be found to have been unjust. That was precisely the conclusion reached by the adjudicator appointed to address the complaint. However, the matter was sent to judicial review, and the Federal Court reached the opposite conclusion, surprising many and seemingly changing the rules of the game in the federal context.

This conclusion was affirmed by the Federal Court of Appeal. In the reasons released by the Federal Court of Appeal, Justice Stratas explicitly noted that if parliament intended to divert from the common law and preclude dismissals without cause, it would have done so explicitly. The Court also noted that since there are notice and severance pay provisions within the Canada Labour Code, it stands to reason that parliament did not intend to prevent federal employers from having the same rights as all other non-unionized employers in the country.

The Wilson decision is a game changer. No longer do federal employees have a “job for life," or any protection beyond that enjoyed by their provincially regulated colleagues. Employers governed by the Canada Labour Code can choose to dismiss an employee without cause, so long as they provide the appropriate amount of notice or termination pay.

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Stuart Rudner

Stuart Rudner, Employment Lawyer and MediatorStuart Rudner is the founder of Rudner Law (RudnerLaw.ca), a firm specializing in Employment Law and Mediation. He can be reached at stuart@rudnerlaw.ca, (416) 864-8500 or (905) 209-6999, and you can follow on Twitter @RudnerLaw.
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