Federal Court Of Appeal Affirms Federally Regulated Employees Can Make Unjust Dismissal Complaints After Signing Releases

Recently, in Bank of Montreal v. Li, 2020 FCA 22, the Federal Court of Appeal (FCA) dismissed the Bank of Montreal's (BMO's) appeal of the decision of the Federal Court (FC) in Bank of Montreal v. Li, 2018 FC 1298. Our Insight discussing the decision of the FC is here.

The issue in this matter is whether a federally regulated employee can make a complaint for unjust dismissal under s. 240 of the Canada Labour Code (CLC) after signing a release and settlement agreement.

The following provisions of the CLC are relevant to the discussion:

Section 240(1) of the CLC, which allows federal employees who have completed 12 consecutive months of employment and who are not subject to a collective agreement to make a written complaint regarding a perceived unjust dismissal within 90 days of the date of dismissal. Section 168(1), which states that all provisions under Part III of the CLC (Standard Hours, Wages, Vacations and Holidays), which contains the unjust dismissal provisions, apply notwithstanding any law, custom, contract or arrangement, unless the law, custom, contract or arrangement grants rights or benefits to the employee that are more favourable than those granted under Part III of the CLC. The Appeal

In its appeal, BMO argued that the FCA should depart from its earlier decision in National Bank of Canada v. Canada (Minister of Labour), [1997] 3 FCR 727 (FC), aff'd, 1998 CanLII 8077 (FCA) ("National Bank"), which provided that due to s. 168 of the CLC, it is possible for employees to utilize the unjust dismissal complaint process even when they have signed releases or accepted severance payments.

Set out below are BMO's arguments in support of its position together with the FCA's response to each argument:

Distinction between Prospective and Retrospective Waiver

BMO argued National Bank was wrongly decided because it conflates prospective and retrospective waivers of statutory rights, ignoring the common law principle permitting retrospective waiver. The FCA held that this argument was without merit for the following reasons:

Subsection 168(1) does not distinguish between prospective and retrospective waivers, therefore the distinction should not be drawn; Since National Bank was decided, the CLC has been amended more than once. If Parliament believed National Bank was wrongly decided it could have amended s. 168(1) to allow explicitly for BMO's interpretation; The jurisprudence relied upon by BMO in support of its distinction between...