February 18, 2015
In its recent decision in Wilson v. Atomic Energy of Canada Limited, the Federal Court of Appeal unanimously concluded that “without cause” dismissals are permitted for non-union non-manager employees under the Canada Labour Code (the “Code”). In doing so, the Court has suggested the proper answer on this issue is the view that had generally been in the minority in Code adjudications. The appellant, Mr. Wilson, was employed at Atomic Energy of Canada Ltd (A.E.C.L.) for four and one-half years prior to his termination. He was dismissed “without cause” and offered six months’ severance pay in exchange for a full and final release. Under the Code, Mr. Wilson would have been entitled to 18 days of severance and notice pay. Mr. Wilson did not sign the release and alleged that he was “unjustly dismissed” under s. 240 of the Code.
Under the Code, if a dismissal is considered “unjust”, a federally regulated non-union employee has recourse to an adjudication process under s. 240. This provision grants an adjudicator appointed under it wide remedial power including the power to reinstate an employee, similar to arbitration in a unionized workplace. The majority of adjudicators treated s. 240 as requiring just cause to terminate an employee, though there was a minority line of cases finding that the unjust standard was something lower than just cause.
In Wilson, the adjudicator found in the employee’s favour, determining that the employer could not terminate Wilson lawfully without cause. The employer applied for judicial review of the adjudicator’s decision, and the Federal Court concluded the decision had been unreasonable. Mr. Wilson appealed the Federal Court decision.
In seeking to reconcile the split in the case law, the Federal Court of Appeal concluded that a dismissal of non-union employees “without cause” was not automatically “unjust” under theCode. It noted that, due to the split in the law, the parties to s. 240 adjudications would potentially face different decision making standards depending upon the identity of their adjudicator. The Court found that if Parliament intended to limit the right of an employer to terminate an employment relationship to only cases where “just cause” existed, it would have done so explicitly. It determined that the adjudicator needed to assess the circumstances of the termination and determine whether a dismissal was unjust, not whether it was for just cause. The Federal Court of Appeal also clarified that an employer’s payment of employee severance will not preclude an adjudicator from granting further relief where the adjudicator concludes that the dismissal was unjust.
While making it clear that “just cause” is not required under s. 240, the Federal Court of Appeal did not comment further on the meaning of “unjust”, stating that it was up to each individual adjudicator to determine (based on the facts of each case) whether a dismissal was just or not. This decision is certainly a departure from the majority of s. 240 decisions, which operated on the interpretation that those provisions of the Code required just cause prior to upholding a challenged dismissal. The next phase of adjudications will be interesting as adjudicators give context to what will be considered “unjust”. Needless to say, that is certainly not clear at this time. While the Federal Court of Appeal was clear that “just cause” was not required, it is not clear where the “bar” will be set. Employers subject to the Code should continue to take care in moving to terminate employees who could bring a claim under s. 240 and legal advice should still be sought. While this decision appears to be a significant change, it should not be assumed that there are no limitations in this area on employers’ rights under s. 240. What those restrictions are will remain unclear until the case law develops.
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