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A recent decision by the Federal Court of Appeal has potentially changed the game for federally-regulated employers. In the case of Wilson v. Atomic Energy of Canada Limited, Mr. Wilson was an employee with four and a half years of service before his employment was terminated on a without cause basis. He was offered a package equal to about 6 months of pay, and asked to sign a release in exchange for the package. Mr. Wilson refused the package and filed a complaint alleging unjust dismissal under the Canada Labour Code (the “Code”).

After an adjudication (where the adjudicator allowed the complaint on the basis that an unjust dismissal complaint could not be avoided by simply providing a severance package, and that AECL was not permitted to terminate Mr. Wilson on a without cause basis) and a hearing at the Federal Court, the matter made its way up to the Federal Court of Appeal. There, the Court of Appeal confirmed that a without cause dismissal is not automatically deemed to be unjust: if an employee wants a finding of unjust dismissal under the Code, they are going to have to prove that the dismissal was in fact unjust.

The Court of Appeal held that the adjudicator had failed to consider the notice and severance pay provisions under the Code. Further, the Court of Appeal found that a without cause dismissal is not automatically unjust. Instead, adjudicators are required to examine the circumstances and particulars in each case and determine on a case by case basis whether the dismissal was in fact unjust. In its analysis, the Court of Appeal looked at Part III of the Code containing remedies such as reinstatement, and held that its purpose is to offer employees remedies over and above those at common law. But, those remedies are not available in every circumstance: they are only available if the dismissal was in fact unjust. The addition of remedies to those available at common law, does not mean that without cause dismissals are not allowed under the Code, nor does it mean that all without cause dismissals are unjust.

Until this point, the case law has been unclear. For decades, adjudicators had fallen on both sides regarding whether a federally-regulated employer could terminate an employee on a without cause basis without violating the unjust dismissal provisions in the Code. The result was a lack of clarity for employees and employers who were governed by the Code.

While the advantage to this ruling is that it provides some clarity, with this Federal Court of Appeal ruling in place employees are now going to have a harder time accessing the unjust dismissal provisions of the Code, as they will have to prove the unjustness of the dismissal. Instead, an employee whose employment is governed by the Code can now be dismissed and simply provided with a severance package, unless there is evidence that the dismissal was unjust.

The decision affects thousands of employees working in federally regulated industries, as it means that employers may dismiss non-union employees without cause, so long as reasonable notice (whether at common law or under the Code) is provided, and provided that dismissal is not unjust (for example, if the reasons for termination were discriminatory). It reverses the decisions of many Code adjudicators that federal non-unionized employees whose employment is regulated by the Code could only be dismissed for just cause.

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2021 Nelligan O’Brien Payne LLP.

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