Failure to Allege Cause ≠ Unjust Dismissal

October 22, 2013

In the recent decision of Atomic Energy of Canada Limited v Wilson, 2013 FC 733 [AECL], the Federal Court held that Canada Labour Code does not prohibit employer from terminating employees without cause.

In AECL, the employee had been terminated from his employment. His employer did not allege cause for termination. The employee filed a complaint of unjust dismissal pursuant to section 240 of the Canada Labour Code. The adjudicator held that the Canada Labour Code only permits dismissal for cause. Because the employer had not alleged cause for the termination, the adjudicator concluded that the complaint of unjust dismissal had been made out.

The employer judicially reviewed the adjudicator’s decision. The Federal Court held that the Canada Labour Code does not prohibit an employer for terminating an employee without cause. An employer can dismiss an employee without cause so long as the employer gives notice or severance pay pursuant to sections 230 and 235 of the Canada Labour Code. If an employee believes that the terms of his or her dismissal were unjust, the employee can file a complaint of unjust dismissal pursuant to section 240 of the Canada Labour Code. The Federal Court further stated that the fact that an employer has paid the employee severance does not preclude an adjudicator from granting further relief if the adjudicator concludes that the dismissal was unjust. The Federal Court concluded that there is no basis for concluding that the Canada Labour Code only permits employers to dismiss employees for cause because that conclusion would fail to take into account the clear remedies that are provided for in the Canada Labour Code.

The Federal Court found the adjudicator’s decision was unreasonable. The employee’s complaint of unjust dismissal was not made out merely because the employer had not alleged cause for the termination. The matter was referred back to the adjudicator to determine if, in fact, the termination was unjust.

The future impact on this decision remains unknown. However, the decision seems to suggest that federal employers may be able to avoid liability under the unjust dismissal provisions of the Canada Labour Code by terminating employees without cause so long as the employees are provided with severance pay pursuant to the Canada Labour Code. This course of action will not preclude the employee from filing an unjust dismissal complaint. However, it will no longer result in a prima facie finding that the complaint of unjust dismissal has been made out.

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