Canada: A "Without Cause" Dismissal Is Not Automatically An "Unjust" Dismissal: A Federal Employment Law Update

The decision in Wilson v. Atomic Energy of Canada Limited, released by the Federal Court of Appeal (the "FCA") on January 22, 2015, marks the end of a long-standing tug of war. The FCA held that non-unionized employees in the federal sector do not have a "right to a job" and that dismissal from employment on a without cause basis is not automatically an "unjust dismissal" under the Canada Labour Code (the "Code").

Part III of the Code provides an adjudication process for non-unionized employees who claim that they have been unjustly dismissed from their employment. An adjudicator may order the employer to provide compensation or other remedies to the employee, including reinstatement.

Historically, some adjudicators have held that the Code prohibits employers from dismissing an employee unless the employer can demonstrate that there is "just cause" for dismissal. For example, in cases where the employee engaged in severe misconduct like theft or insubordination. For this reason, the Code has been perceived to provide non-unionized employees in the federal sector with rights and protections comparable to those realized by unionized employees.

However, there have also been many decisions in which adjudicators have held that a dismissal without cause does not constitute an unjust dismissal under the Code. This approach more closely aligns with the common law, under which an employee dismissed without cause and provided with reasonable notice is not wrongfully dismissed. The FCA's recent decision confirms this latter interpretation of the Code.

Background

Wilson had been employed by AECL for four and a half years when he was dismissed without cause and provided with six months' severance pay. He brought an unjust dismissal complaint against AECL. The adjudicator held that an employee dismissed without cause is, for that reason alone, unjustly dismissed and is entitled to a remedy under the Code.

AECL brought an application for judicial review of the adjudicator's decision to the Federal Court, which held that the adjudicator's interpretation of the Code was unreasonable. Wilson then appealed the decision of the Federal Court to the FCA.

Decision

The FCA held that a dismissal without cause is not automatically "unjust" under Part III of the Code because the legislation does not explicitly oust the common law approach.

The FCA confirmed that a legislator (in this case, the Federal government) will not be presumed to depart from common law unless it has expressed "its intentions to do so with irresistible clearness". The complaints mechanism under the Code does not expressly prohibit an employer from dismissing employees absent misconduct or other grounds constituting "just cause". In fact, there are provisions of the Code which expressly contemplate dismissal without cause and which require that the employer must provide notice or compensation in those circumstances. Overall, the Code fails to oust the common law rule that an employee can be dismissed without cause if provided with reasonable notice.

Implications for Federally-Regulated Employers

Federally-regulated employers no longer have to overcome the "just cause" hurdle to be successful in defeating an unjust dismissal complaint. Instead, the circumstances of the dismissal and the amount of notice or severance pay received by the employee will be factors in an adjudicator's analysis of whether a dismissal is unjust.

The FCA's decision is consistent with recent findings that a dismissal without cause in accordance with the express terms of an employment contract is also not automatically an unjust dismissal. An adjudicator will consider any factors which may suggest that the dismissal was "unjust", such as whether the employee was under duress when entering into the employment contract and the circumstances surrounding the manner of dismissal.

The decision in Wilson v. Atomic Energy of Canada Limited has put an end to the notion that the Code provides non-unionized employees with the "right to a job" and, in doing so, has resolved a long-standing divide in the decisions of adjudicators appointed under the Code.

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