A recent 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 law.
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.
