Federal Court: Non-Unionized Employees in Federally Regulated Industries Can Be Dismissed Without Cause

September 25th, 2013 by

This blog is written by our summer student, Ira Marcovitch.

In the recent decision of Wilson v. Atomic Energy of Canada Ltd., the Federal Court has confirmed that companies subject to the Canada Labour Code (the “Code”) can dismiss non-unionized employees without cause. Given the number of these employees that work in federally regulated areas –telecommunications, broadcasting and banking (to name just a few), the decision has the potential to impact countless people.

Federal Court: Non-Unionized Employees in Federally Regulated Industries Can Be Dismissed Without CauseIn Wilson, the Plaintiff had worked for Atomic Energy (“AECL) for approximately 4 ½ years. In 2009, the company terminated his employment without cause, and Mr. Wilson was given an 18 month severance package. Shortly thereafter, Mr. Wilson filed a complaint of unjust dismissal under the Code. The adjudicator appointed to hear the case agreed with Mr. Wilson. However, he declined to make a remedial order, until the current application for judicial review by the Federal Court was heard.

For its part, AECL argued that the adjudicator had erred in holding that there was unjust dismissal, as it had provided Mr. Wilson with a reasonable severance package. On review by the Federal Court, the court found that the adjudicator’s decision was unreasonable, as the adjudicator had failed to take appropriate consideration of the termination and severance provisions in the Code. In the Code, there are specific provisions dealing with notice and severance pay for employees terminated without cause (ss.230 and 235), the existence of which is enough to rebut Mr. Wilson’s premise that employers cannot dismiss without cause. Further, the court held that if Parliament had intended to allow employers to dismiss anyone without cause, they simply wouldn’t have enacted ss. 230 and 235. Consequently, the court sent the matter back to the adjudicator to determine whether the terms of Mr. Wilson’s severance were unjust.

While this case may appear to open the proverbial floodgates to dismissals without cause, it really isn’t so. First, only non-unionized employees working in federally regulated industries can be dismissed without cause. Secondly, even if they are dismissed, employers must still provide fair and reasonable severance packages. However, this decision can be seen as a positive step for employers working in federally regulated areas, as non-unionized employees can be dismissed without having to prove (either to the employee or to a labour adjudicator) that they were dismissed with cause.

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For the full text of the Federal Court decision:

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