Sunday, 22 February 2015

Terminations without Cause are not Automatically Unjust: Federal Court of Appeal

In a landmark decision, the Federal Court of Appeal has said that terminations without cause are not automatically “unjust” as defined by the terms of the Canada Labour Code. In “breaking the tie” between competing lines of jurisprudence, the Federal Court of Appeal in Wilson v. Atomic Energy of Canada Limited, 2015 FCA 17 (CanLII) has unequivocally said that the purpose of the “unjust dismissal” provisions of the Canada Labour Code is not to elevate non-unionized employees to the same status as those who are unionized. Put another way, there is no longer any security of employment under the Canada Labour Code. For those employees working in such industries, this is huge.

NOTE: This is a summary of a decision of the Federal Court of Appeal. This decision has since been overturned by the Supreme Court of Canada.


In 2009, Atomic Energy of Canada Limited (AECL), dismissed the plaintiff employee, Mr. Joseph Wilson without cause after 4.5 years of employment. Starting as a Senior Buyer/Order Administrator, Mr. Wilson received many promotions. His last position was Procurement Supervisor, Tooling, a position that was not “managerial” within the meaning of subsection 167(3) of the Canada Labour Code. On November 16, 2009, Mr. Wilson’s employment was terminated on a without cause basis. AECL offered him 6 months’ severance pay in consideration of a full and final release; had his severance package been determined in accordance with the minimum statutory notice and severance requirements under sections 230 and 235 of the Code, he would have been entitled to only 18 days’ pay. Mr. Wilson complained of “unjust dismissal” pursuant to the provisions of Part III, Division XIV of the Canada Labour Code..

A labour adjudicator appointed under the Canada Labour Code, concluded that the CLC only permits dismissals for cause. Therefore, he found that Mr. Wilson’s complaint of unjust dismissal was made out.

AECL sought judicial review of the adjudicator’s decision and applied to the Federal Court. In 2013, the Honourable Mr. Justice O'Reilly held that the adjudicator had erred and that terminations without cause were permissible under the Canada Labour Code: 2013 FC 733.

Mr. Wilson appealed the Federal Court’s ruling to the Federal Court of Appeal.

The Issue

As framed by the Federal Court of Appeal, the issue is essentially this:

[44] The central legal issue before the adjudicator, the Federal Court and this Court concerns a statutory interpretation question. That question is whether Part III of the Canada Labour Code permits dismissals on a without cause basis.

[4] Before the adjudicator, the appellant [Mr. Wilson] submitted that an employee who, like him, is dismissed without cause is, by that reason alone, unjustly dismissed within the meaning of the Code and is therefore entitled to a remedy under that subsection. In other words, says the appellant, the [Canada Labour] Code forbids an employer from dismissing an employee unless there is “just cause” for dismissal. AECL submitted that dismissals without cause are not automatically unjust dismissals under the Code. Some adjudicators under the Code have accepted the appellant’s view of the matter; others, AECL’s view of the matter. These two schools of thought concerning the proper interpretation of the Code have now persisted for decades. [For a list of cases going both ways, see paragraphs 47 and 48 of the Court’s reasons for decision.]


NOTE: This is a summary of a decision of the Federal Court of Appeal. This decision has since been overturned by the Supreme Court of Canada.

In resolving that a termination without cause is not inherently “unjust”, the Honourable Mr. Justice Stratas wrote the following on behalf of the Federal Court of Appeal:

[62] Like the Federal Court and the adjudicators’ decisions in paragraph 48 above, I conclude that a dismissal without cause is not automatically “unjust” under Part III of the Code. An adjudicator must examine the circumstances of the particular case to see whether the dismissal is “unjust.”

On the issue of the tension between adjudicators with respect to the proper interpretation of the Code, Justice Stratas commented, quite bluntly, as follows:

[52] In this case, it is true that Parliament has vested jurisdiction in adjudicators under the Code to decide questions of statutory interpretation, such as the question before us. However, on the statutory interpretation issue before us, the current state of adjudicators’ jurisprudence is one of persistent discord. Adjudicators on one side do not consider themselves bound by the holdings on the other side. As a result, for some time now, the answer to the question whether the Code permits dismissals on a without cause basis has depended on the identity of the adjudicator. Draw one adjudicator and one interpretation will be applied; draw another and the opposite interpretation will be applied. Under the rule of law, the meaning of a law should not differ according to the identity of the decision-maker…

[55] As a result, at a conceptual level, the rule of law concern predominates in this case and warrants this Court intervening to end the discord and determine the legal point once and for all. We have to act as a tie-breaker.

”Key” to reaching the decision that the Canada Labour Code permits terminations without cause was the following analysis, wrote Justice Stratas:

The common law of employment. At common law, an employer can dismiss a non-unionized employee without cause, but is liable to provide reasonable notice or compensation for same. Put another way, an employee dismissed without cause but given reasonable notice is not wrongfully dismissed.

Part III of the Code. In this Part, Parliament has set out a complaints mechanism and remedies for “unjust” dismissals. Subsection 242(3) of the Code empowers an adjudicator to “consider whether the dismissal of the person who made the complaint was unjust.” The Code does not define “unjust.”

Central to the court’s decision was this framing of the issue, “Does Part III of the Code oust the common law of employment as described above? Or does it accept this aspect of the common law as given, supplementing and building upon it?”

In resolving that the Code does not oust the common law, Justice Stratas wrote the following:

[70] …there is nothing in the Code or in its purpose that suggests that Parliament was granting non-unionized employees a “right to the job” or was trying to place unionized and non-unionized employees in the same position: protected from being dismissed without cause. To the contrary, subsections 230(1) and 235(1) expressly allow an employer to terminate an employment relationship even without cause and require that notice or compensation be given.

[71] If Parliament intended to limit the right of an employer to terminate an employment relationship to cases where just cause existed, it could have said so quite explicitly. After all, before Parliament passed the provisions in issue before us, the Nova Scotia Legislature did just that. It amended its labour legislation to provide that an “employer shall not discharge … [an] employee without just cause”: Labour Standards Act, S.N.S. 1975, c. 50, section 4. Further, we have evidence that Parliament knew of Nova Scotia’s legislative initiative when considering whether to pass the relevant provisions before us: Minutes of Proceedings and Evidence of the Standing Committee on Labour, Manpower and Immigration respecting Bill C-8, An Act to Amend the Canada Labour Code (House of Commons, February 9, 1978 at page 18). Yet, Parliament refrained from adopting the “irresistible clearness” of the language used by the Nova Scotia Legislature.

Importantly, Justice Stratas dismissed the employee’s argument that, by allowing terminations without cause the remedial effects of section 240 of the Code would be defeated, saying, at paragraph 94 of his reasons for decision, “That is simply not so. It will always be for the adjudicator to assess the circumstances and determine whether the dismissal, whether or not for cause, was unjust.” On this point Justice Stratas later added:

[99] I note that the Federal Court adopted substantially the same position as the adjudicator in Klein. It held that “[t]he fact that an employer has paid an employee severance pay does not preclude an adjudicator from granting further relief where the adjudicator concludes that the dismissal was unjust” (at paragraph 37). As is apparent from the foregoing, I agree with this statement.

However, as a final point and as the only analysis on the issue of what constitutes “unjust dismissal” Justice Stratas wrote the following, single paragraph:

[100] The Federal Court also said that the broad remedial powers under subsection 242(2) kick in when “the adjudicator … concludes on any basis that the dismissal was unjust”. On this, it bears noting that an adjudicator under the Code does not have free rein to find a dismissal “unjust” on “any basis.” As I have suggested above, “unjust” is a term that sits alongside and gathers much, if not all, of its meaning from well-established common law and arbitral cases concerning dismissal. It is also a term whose meaning must be discerned using accepted principles of statutory interpretation: see paragraph 75, above. I shall not comment further on the meaning of “unjust.” It is for Parliament’s chosen decision-makers in this specialized field – the adjudicators – to develop the jurisprudence concerning the meaning of “unjust” on an acceptable and defensible basis, not “any basis.” It is for us to review the adjudicators’ interpretations for acceptability and defensibility when they are brought before us.


Having had the opportunity to review the court’s decision and reasons for it, I must say that I am left rather wanting. Paragraph 100, cited above, is especially frustrating in a decision ostensibly designed to provide definitive clarity on a central point of law.

It is conceded that the court was clear and unambiguous in its answer to the question it posed: dismissals without cause are not automatically “unjust.”

However, the same is truly as far as the court went in advancing the law. What is not clear is what makes a dismissal unjust. As Justice Stratas noted, that is for the adjudicators to resolve and for the court to later review on a case-by-case basis.

The court was also clear that by providing notice and/or a pay in lieu of notice an employer may not be able to escape from the claim that the dismissal was “unjust.” Under what circumstances a dismissal without cause will be “unjust” is yet to be seen. Is a case in which insufficient notice is provided “unjust”, thus warranting the remedies afforded by the Code, including reinstatement?

Of concern to employers must be this point: if a termination is “unjust” simply because insufficient notice of the termination was provided, the archetype common-law wrongful dismissal case, then is the presumptive remedy under section 242(4) of the Code, reinstatement, an appropriate remedy? Is reinstatement, in fact, the appropriate remedy? Is reinstatement even appropriate in such cases? If not, in what cases will reinstatement be appropriate?

It is certainly worthy of debate that by virtue of its decision, the Federal Court of Appeal has, notwithstanding its representations to the contrary, hollowed the remedial powers afforded to adjudicators under section 242(4) of the Code.

Subsection 242(4) of the Canada Labour Code expressly provides as follows:

Where an adjudicator decides pursuant to subsection (3) that a person has been unjustly dismissed, the adjudicator may, by order, require the employer who dismissed the person to…

(a) pay the person compensation not exceeding the amount of money that is equivalent to the remuneration that would, but for the dismissal, have been paid by the employer to the person;

(b) reinstate the person in his employ; and

(c) do any other like thing that it is equitable to require the employer to do in order to remedy or counteract any consequence of the dismissal.

One has to query, given the Federal Court of Appeal’s decision, under what circumstances an unjust dismissal would warrant such remedies? Clearly, if the employer took the position of having “cause”, which was not made out, then such powers could be appropriate, but what if the employer was simply acting in bad faith?

Under the common law the answer to the question of bad faith is answered by damages – not reinstatement, see Honda Canada Inc. v. Keays, 2008 SCC 39 (CanLII) and Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701.

Justice Stratas expressly referenced this point in paragraph 63 of his reasons, where he comments, “Later development of the case law shows that depending on the nature of the dismissal, an employee can be entitled to further damages.”

One has to wonder whether, given all that Justice Stratas said about the Canada Labour Code not ousting the common law, adjudicators may employ the same to remedy terminations in bad faith by way of simple aggravated or moral damages and not reinstatement.

The decision, if anything, creates more questions than answers. All we know is that a termination without cause where sufficient reasonable notice of that termination is provided is not automatically unjust. What we do not know is what would make a termination without cause unjust, nor what the appropriate remedy in such a case would be. For employees, there remains the possibility of making complaints of unjust dismissal notwithstanding the provision of notice or a payment in lieu; for employers there remains the possibility of facing such claims.

Takeaways for Employees with Labour Pains

The takeaways for employees in federally regulated workplaces (for a discussion of exactly to whom this decision applies see the post Making Sense of the Division of Powers in Employment Standards Legislation) is that it may no longer be possible to complain of “unjust dismissal” simply because you have been let go without cause. However, that is about all we currently know.

If you work in a non-unionized, federally regulated workplace and have been let go without cause, it remains prudent to speak with an experienced employment lawyer before making any final decisions about your case. You may not have offered sufficient “reasonable notice” – for a discussion of what constitutes “reasonable notice” see the post "What is Wrongful Dismissal?". If you have not been offered reasonable notice, then you clearly have options and remedies available to you – if nothing else, there always remains the possibility of a civil claim for “wrongful” dismissal.

If you are an employee looking for further guidance and advice on this issue, The professional, experienced and cost-effective employment lawyers for employees at Ottawa's Kelly Santini LLP would be happy to be of service to you.

Takeaways for Employers with Labour Pains

The takeaway for employers in federally regulated workplaces is that terminations without cause are not inherently “unjust.” Of greater importance, it may now be possible to defeat claims of “unjust termination” simply by providing reasonable notice of the termination.

As the commentary above demonstrates, however, failing to provide reasonable notice has the potential to open a hornet’s nest. The dismissed employee may sue for wrongful dismissal, or may still make a claim for “unjust termination.”

Accordingly, employers in federally regulated workplaces would be especially prudent in ensuring that sufficient reasonable notice of termination is provided to employees dismissed without cause. Calculating reasonable notice is an art, not a science. There is no mathematical formula by which it can be calculated and for that reasonable obtaining experienced legal advice is critical.

If you are an employer and are considering terminating the employment of one of your employees, then the professional, experienced and cost-effective employment lawyers for employers at Ottawa's Kelly Santini LLP would be happy to be of service to your business or organization.

Contact Me

To reach the author of this blog, Sean Bawden, email or call 613.238.6321 x260. You may also use the contact box at the top of this page.

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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.

Sean Bawden, publisher of Labour Pains, can be reached by email at or by phone at 613.238.6321.

Sean P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP. He is also a part-time professor at Algonquin College teaching Trial Advocacy for Paralegals and Small Claims Court Practice.

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