Terminations under the Canada Labour Code need not be for Cause

An employer dismissed its employee without cause and provided him with 6 months’ severance pay. A labour arbitrator decided that the employee’s allegation of unjust dismissal was made out because the Canada Labour Code (CLC) only permitted dismissals for cause. The decision of Redlon Agencies Ltd. v. Norgren, 2005 FC 804 (“Redlon”), was cited for this premise.

On judicial review of this decision, the Federal Court found that Redlon did not stand for the proposition that the CLC permitted only dismissals for cause. In Redlon, the Arbitrator determined that no entitlement of an employee to severance under the CLC does not mean that he or she cannot be entitled to compensation for unjust dismissal.

An employer under federal jurisdiction can dismiss an employee without cause under the CLC if it gives notice or severance pay (sections 230 and 235), but an employee can still complain that the dismissal is unjust (exceptions are: lay-off, discontinuance of a position and where another statutory remedy exists), and an arbitrator may additionally award a remedy within his or her broad remedial powers if one is merited.

The case was remitted back to a different arbitrator to determine whether the dismissal was just and whether a remedy would be appropriate.

Click here for a PDF copy of the Federal Court decision.