February 9, 2015
In a surprising decision of the Federal Court of Appeal released January 22, 2015, the Court has held that s. 240 of the Canada Labour Code, R.S.C.C. L-2 (the “Code”) permits dismissals on a without cause basis.
On Appeal from the Federal Court, the Federal Court of Appeal considered a complaint which had been decided by a labour adjudicator appointed under the Code. The adjudicator determined that the employee had been “Unjustly Dismissed” under the Code when he was terminated by his federally regulated employer without just cause and held that the employee was entitled to an appropriate remedy. The employer applied to the Federal Court for judicial review on the basis that an “Unjust Dismissal” under s. 240 of the Code permitted it to terminate the employee without cause and that the employee was not entitled to a remedy for that reason alone.
On the merits, the Federal Court determined that the adjudicator’s interpretations of s. 240 of the Code was unreasonable; quashed the adjudicator’s decision and remitted it back to the adjudicator to determine whether the terms of the dismissal were “unjust”.
On appeal to the Federal Court of Appeal it noted that the employee had been employed for 4 ½ years and was a Procurement Supervisor, Tooling, a non managerial position, at the time of the termination. He had been offered a severance package by the employer equivalent to approximately 6 months’ pay in exchange for a full and final release; well in excess of the minimum statutory requirement under the Code totaling 18 days’ pay. While the employee rejected the sufficiency of the offer, he remained on payroll and benefits for approximately 6 months; receiving the full amount of the offer. The employee had also argued that he was terminated because he had complained about improper procurement practices by the employer.
The Federal Court of Appeal held that a dismissal without cause is not automatically “unjust” per se under the Code and that an adjudicator must examine the particular circumstances to make that determination. In so concluding, the Federal Court of Appeal relied upon the concept of common law employment whereby an employee who is given reasonable notice is not wrongfully dismissed and stated that the Code did not oust the common law. It rejected a number of previous adjudicator and Federal Court decisions, as well as academic articles, which had interpreted s. 240 as bestowing a right to employment akin to a unionized employee, rather than simply a right to reasonable notice.
The Federal Court of Appeal concluded by emphasizing the fact that an employer paying an employee severance does not preclude an adjudicator from granting further relief where there is a finding that the dismissal was “unjust”. However, it further stated that the term “unjust” cannot be found on any basis and must “gather much, if not all, of its meaning from well-established common law and arbitral cases concerning dismissal” and principals of statutory interpretation.
Wilson v. Atomic Energy of Canada Limited, 2015 FCA 17 (CanLII)