Federal Court Of Appeal Confirms Federally-Regulated Employers’ Right To Dismiss Non-Unionized Employees Without Cause

The Federal Court of Appeal confirmed that non-unionized employees do not have a "right to a job" and may be dismissed by their employer without cause.

On January 22, 2015, the Federal Court of Appeal ("FCA") held that the Canada Labour Code (the "Code") permits dismissals on a without cause basis in its long-awaited judgment: Wilson v. Atomic Energy of Canada, 2015 FCA 17.

There was ongoing jurisprudential controversy over the issue of whether a federally-regulated employer could lawfully dismiss an employee without cause under the Code. Some adjudicators had held that the Code does not permit dismissals without cause while others disagreed.

In light of the divergent jurisprudence which persisted for decades, the FCA applied the standard of correctness and decided to act as a tie-breaker.

The complainant in that case, Mr. Joseph Wilson, worked for Atomic Energy for four and a half years. He was dismissed on a "without cause" basis with a monetary severance package equaling six months' pay. He filed an unjust dismissal complaint under section 240 of the Code. In defense, the employer argued that he was terminated with a generous dismissal package that exceeded the statutory requirements under ss. 230 and 235 of the Code.

The adjudicator decided that the Code only permits dismissals for cause. He ruled that employers cannot escape the unjust dismissal provisions of the Code (sections 240-245) by resorting to the termination and severance payment provisions of sections 230 and 235 of the Code or by giving a sizable severance package.

Mr. Justice O'Reilly of the Federal Court quashed the adjudicator's decision. He held that the Code permits employers to terminate employees without cause as long as notice and severance pay under sections 230 and 235 are provided, but specified that the employee may still complain that his/her dismissal is unjust or that the reasons given by the employer were unjustified. Under his reasoning, a dismissal may be made "without cause" provided that the dismissal is not "unjust".

The Federal Court's conclusion was upheld by the FCA last week.

The FCA based its determination on the following considerations:

At common law, employers may dismiss non-unionized employees without cause by providing reasonable notice or compensation. In order to depart from this prevailing right, explicit language or language of "irresistible clearness" is required in the Code. Part III of the Code does not contain such explicit language...