At common law, a non-unionized employee can be dismissed without reasons if he or she is given reasonable notice or pay in lieu. Today, a majority of the Supreme Court of Canada ruled that this common law rule does not apply to federally regulated employers. The Court ruled that federally regulated employers must always provide reasons for the termination of their employees. Furthermore, if the reasons for dismissal do not meet the standard for “just cause” as that term is understood in the collective bargaining context, an employee who has twelve months of continuous service may complain under section 240 of the Canada Labour Code, and may be reinstated, with or without back pay and damages, or compensated with pay in lieu of reinstatement plus damages.
In justifying its decision, the majority stated that when Parliament amended Part III of the Canada Labour Code in 1978 to include section 240, it intended “to conceptually align the protections from unjust dismissals for non-unionized federal employees with those available to unionized employees”. Generally speaking, this means that employers must follow a course of progressive discipline prior to dismissing an employee unless there has been an egregious violation of the employment contract such that immediate termination without prior warning is warranted. The onus on employers to justify terminations with cause is extremely heavy, with the result that discharge complaints/grievances are notoriously difficult to defend.
In a strongly worded dissent, Justices Moldaver, Cote and Brown held that the common law rule regarding without cause dismissal was not ousted by the introduction of section 240 of the Canada Labour Code. In the dissenting judges’ opinion, there is nothing in section 240 or the surrounding sections of the Code which guarantees lifelong job tenure to employees of federally regulated businesses, provided such employees do not give their employers just cause for dismissal.
The majority decision in this case makes it impossible for federally regulated employers to dismiss non-unionized employees without cause. The significance of this ruling cannot be overstated. It is abundantly clear now that all federally regulated employers must engage in well-documented progressive discipline of employees whose employment they may wish eventually to terminate; rarely, if ever, will federally regulated employers be permitted to terminate employment for a single act of misconduct, or for misconduct that has gone unpunished.