Federal Court clarifies protections afforded to employees under the Canada Labour Code – rejects adjudicator’s conclusion that CLC only permits dismissal for cause

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A recent judicial review decision of the Federal Court rejects the notion that section 240 of the Canada Labour Code (the “Code”) prohibits federally regulated employers from terminating non-union employees without cause.  In Atomic Energy of Canada Limited and Wilson (July 2, 2013), the employer terminated Mr. Wilson’s employment without cause and provided six months’ severance pay.  Mr. Wilson complained of unjust dismissal and a labour adjudicator was appointed under the Code.  The adjudicator concluded that the Code only permits dismissal for cause and that Mr. Wilson was entitled to the remedies set out therein.

On judicial review, Justice O’Reilly of the Federal Court considered the regime set out in the Code, and stated that an employer is in fact able to dismiss an employee without cause so long as it gives notice or severance pay.  Where the employee believes that the terms of the dismissal were unjust, the employee can complain under section 240 of the Code and an adjudicator is appointed. Except, no complaint shall be considered by an adjudicator where the dismissal resulted from a lay-off for lack of work or a discontinuance of a function, or the employee has some other statutory remedy. If the adjudicator concludes that the dismissal was unjust, the adjudicator has the broad remedial powers set out in the Code to compensate the employee, reinstate the employee, or grant any other suitable remedy.  Justice O’Reilly went on to reject the adjudicator’s conclusion that the Code only permits dismissal for cause, as such a position would fail to take into account sections 230 and 235 of the Code which provide for notice and severance for persons dismissed without cause.  Justice O’Reilly concluded that the adjudicator’s decision was unreasonable and remitted the matter back to the adjudicator to decide whether the terms of Mr. Wilson’s dismissal were just, and if not, to decide on the appropriate remedy.

In Our View

The decision in Atomic Energy of Canada Limited and Wilson is consistent with the adjudication decision in Tony Klein and Royal Canadian Mint (November, 2012) (see Adjudicator rejects non-union employees’ “right to the job” under Canada Labour Code) which also rejected the notion that federally regulated non-union employees have a “right to the job” under section 240 the Code.  This growing body of jurisprudence is certainly positive for federally regulated employers and helps to clarify the scope of the protections afforded to non-union employees falling within federal jurisdiction.

For further information, please contact Paul Lalonde at 613-940-2759, or Sébastien Huard at 613-940-2744.