Federally regulated employers can now terminate without just cause

The recent Federal Court of Appeal decision in Wilson v Atomic Energy of Canada Limited addressed the long-standing question of whether federally regulated employers under the Canada Labour Code can terminate employees without just cause. Judge Stratas at the Federal Court of Appeal found that federally regulated employers may dismiss employees without cause upon reasonable notice or pay in lieu thereof, stating that:

“In conclusion…Part III of the Canada Labour Code does not jettison the common law principles which govern the termination of an employment relationship. Had Parliament intended to implement a drastically different legal order in which common law principles played no role, it would have said so in plain language.”

Background and procedural history

Mr. Wilson was employed by Atomic Energy of Canada Ltd. (AECL) for four and a half years. He was terminated on a without cause basis and offered six months severance in exchange for a release. Under the Canada Labour Code which governs AECL, he would only have been entitled to 18 days of notice.

Mr. Wilson did not sign the release. Instead, he filed a complaint under Part III of the Canada Labour Code, alleging that he had been unjustly dismissed. The labour adjudicator appointed to hear the complaint found that the Canada Labour Code does not allow for termination without cause, and therefore Mr. Wilson’s termination was unjust as he had been terminated without cause.

Disagreements amongst labour adjudicators

On judicial review, the Federal Court disagreed with the labour adjudicator’s decision, and found that the Canada Labour Code does allow for dismissal without cause. In upholding the Federal Court’s decision, Judge Stratas at the Federal Court of Appeal took note of the long-standing disagreement amongst adjudicators as to whether Part III of the Canada Labour Code permits dismissal without cause. He acknowledged that for a long time, the answer to the question depended largely on which adjudicator you get.

Conclusion

Judge Stratas rejected the line of case law holding that Part III of the Canada Labour Code disallows terminations without cause, and found that a dismissal without cause is not automatically unjust under the Canada Labour Code.

This post was also contributed by Ruoxi Wang (Articling Student)