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Federal Court rules on access to unjust dismissal provisions of Canada Labour Code

In recently released judgments, the Federal Court has considered two distinct issues dealing with access to the unjust dismissal provisions in the Canada Labour Code. In each case, the Court has come down on the side of liberal access to the statutory adjudication procedures.

The provisions in question, sections 240 through 246, are found in Part III of the Code, and set out a procedure under which non-unionized workers under federal jurisdiction who believe they have been unjustly dismissed can seek to have their case heard before an adjudicator. The adjudicator, unlike a judge in a common law action for wrongful dismissal, has the power to order reinstatement as a remedy.

NATIONAL BANK v. CANADA: TERMINATION RELEASE INEFFECTIVE TO OPT OUT OF CODE

In this decision, released June 19, 1997, the Trial Division of the Federal Court considered whether a complaint of unjust dismissal could be heard by an adjudicator, despite the fact that the employee had entered into an agreement with her employer under which she received compensation in return for a waiver of any demands, claims or rights of action, including those under the Code. The Bank claimed that this release meant that an adjudicator could not be appointed to hear the complaint.

The Court rejected this position, noting that section 168(1) of the Code was critical in deciding the case. That provision states that Part III of the Code applies "notwithstanding any other law or any custom, contract or arrangement...". It then goes on to provide that, where another contract is more beneficial to the employee, the contract prevails.

The Court noted that this showed that Part III of the Code should be seen as a safety net of minimum standards for employees, and that employees could opt out of it only to the extent it was to their advantage to do so. To the objection that this interpretation had a "chilling effect" on voluntary settlements between employers and terminated employees, the Court responded that, despite this policy concern, it was clear that the Code was intended to be "interventionist in employer-employee relations."

However, the Court pointed out, despite the intrusive nature of the legislative scheme, it contained several features which should be of comfort to employers: employees have only 90 days to file a complaint; an adjudicator will not necessarily award anything more than the voluntary agreement already provides; and the Minister has the discretion not to appoint an adjudicator.

BEOTHUK DATA SYSTEMS v. DEAN: SEASONAL WORKERS HAVE ACCESS TO ADJUDICATION PROCEDURE

This judgment by the Federal Court of Appeal, issued on August 28, 1997, reversed a ruling by the lower court that seasonal employees were not eligible to have their complaints of unjust dismissal heard by an adjudicator. At issue in the case was the interpretation of section 240(1)(a) of the Code, which sets out the requirement that the employee have completed "twelve consecutive months of continuous employment" in order to have access to the adjudication procedure.

The employees had worked for their employer approximately 12 weeks a year for over ten years. The adjudicator determined that they were "permanent seasonal employees" and held that they met the conditions for eligibility. He reasoned that the provision did not require 12 consecutive months of continuous work, and that the employees had "implicit employment contracts ... for an indeterminate period."

The adjudicator's ruling was reversed by the Trial Division judge, who relied heavily on the use of the word "travailler" (to work), as opposed to an equivalent of "employment", in the French version of the Code. The judge reasoned that, because the French text had a narrower meaning than the English, it was a clearer expression of legislative intent.

This reasoning was rejected by the Federal Court of Appeal which held that, by favouring a narrow reading of the provision, the judge was ignoring the overriding purpose of the unjust dismissal provisions of Part III. That purpose was to provide non-unionized workers under federal jurisdiction with an alternative to the common law for addressing complaints of unjust dismissal.

In light of this purpose, the Court held that it was unacceptable to interpret section 240(1)(a) in a manner that "would have the inevitable effect of excluding all seasonal employees from the protections afforded by the Code regardless of the permanency of their employment."

In Our View

Observers have noted that the National Bank case is an interesting variation on the theme of contracting out of minimum employment standards. Here, the standard being contracted out of was not a term or condition of employment, but the right to pursue a particular avenue of redress following the termination of employment. It therefore appears that there is limited purpose to be served by including language barring access to the Code's procedures for employees who otherwise would be eligible under Part III.

However, it should be noted that, as the judge pointed out, the Minister has the discretion not to appoint an adjudicator where he or she is satisfied that the settlement reached was reasonable and voluntary. The judge went on to suggest that, where an employee does proceed to file a complaint, it may be in the employer's interest to provide details surrounding the termination agreement to the Minister in order to forestall the appointment of an adjudicator.

For more information on this subject, please contact Colleen Dunlop at (613) 563-7660, Extension 222.