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Federal Employers Require Just Cause for Termination of Employment

Whitten and Lublin | Dec 18, 2017

Usually, an employer may choose to terminate an employee by providing ‘reasonable notice’ of termination or payment in lieu equivalent to earning that would have been paid during the notice period. This is the case for provincially regulated employees that are not represented by a union. In contrast, those employees that are federally regulated are granted protections similar to those represented by a union. The Supreme Court ruled that under the Canada Labour Code, employees serving 1 year or more with an employer cannot have their employment ended unless by layoff or for misconduct that warrants an immediate dismissal (known as a ‘summary dismissal’).

This was established in the case of Wilson v. Atomic Energy of Canada Ltd (2016). Here, Wilson, an administrator for Atomic Energy, was dismissed on a ‘non cause basis’ (not for misconduct), and was given a generous severance package as a result. The federal court disagreed with the adjudicator that was appointed by the Canada Industrial Relations Board (CIRB), whom ruled that the employer cannot offer a severance to terminate an employee where an employee has not engaged in misconduct that is deserving of termination. The Supreme Court, however, upheld the adjudicator’s decision and ruled that federally regulated employees are offered protection similar to those in unionized environments. Specifically, an employer cannot terminated an employee without there being misconduct that is serious enough to warrant a termination. The only way employment can come to an end is if there is ‘just cause’ (misconduct deserving of a termination) or layoff due to a slowdown in business. Wilson was eventually reinstated.

In essence, the ruling establishes that any termination that is not based on sufficient misconduct or layoff is a wrongful dismissal for federally regulated employees. Providing an employee reasonable notice of termination or payment equivalent to wages that would have been earned during the notice period is not permissible under federally regulated sectors. Similar to unionized employees, an employee that is wrongfully dismissed may file a complaint to the CIRB and an adjudicator would have the authority to issue a reinstatement of employment, with payment for wages lost between the dismissal and date of reinstatement.

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