Unjust Dismissal Under the Canada Labour Code Remains Alive
September 13, 2016
The Supreme Court of Canada recently overturned a controversial decision of the Federal Court of Appeal (Koskie Minsky LLP Employment Blog February 9, 2015).
Specifically, the Federal Court of Appeal held that “Unjust Dismissal” provisions pursuant to sections 240 to 246 of the Canada Labour Code, R.S.C. 1985, c.L-2 (the “Code“) only provided non-unionized federally regulated employees the right to challenge a dismissal without cause where reasonable notice had not been provided, similar to the common law standard. Accordingly, a dismissal without just cause was found not to be “unjust” per se.
The majority of the Supreme Court of Canada disagreed, stating that the “Unjust Dismissal” provisions (sections 240-246 of the Code) consist of “expansive protections like those available to employees covered by a collective agreement” in respect of non-unionized federally regulated employees who have completed 12 consecutive months of employment; those protections including being the right not to be unjustly dismissed.
The Supreme Court of Canada held that unless an employee has been terminated for “just cause”, whether or not the employee has been provided with statutory notice and severance pay under the Code, reasonable notice at common law (or pay in lieu) or pursuant to contract, the employee still has the right to:
(i) ask the employer for a written statement setting out the reason for dismissal, which must be provided within 15 days; and
(ii) apply under the Unjust Dismissal provisions of the Code for an inspector to determine whether the dismissal was unjust, and seek an appropriate remedy, including reinstatement or compensation.
The only exceptions are where the employee has been laid off for lack of work, the discontinuance of a function, or if the employee’s position is managerial.
The Supreme Court of Canada decision reinstates the longstanding interpretation by an overwhelming majority of arbitrators and labour law scholars alike, and the vast majority of legal counsel, that the Unjust Dismissal provisions prevent the termination of covered employees other than for “just cause” or a termination due to lack of work or the discontinuance of a function.
The Supreme Court of Canada decision will have a huge impact upon a vast number of employees; those within the Federal government, banks, airlines and other federally regulated businesses, and renews the right of such employees to file an Unjust Dismissal complaint pursuant to the Code to seek reinstatement and other equitable relief rather than, or in addition to, monetary compensation. The decision will be a significant point of leverage in negotiations relating to the quantum of reasonable notice to be provided by an employer to avoid the prospect of reinstatement.