The Canada Labour Code offers a unique remedy of “unjust dismissal” to non-union employees who are also “non-managers” with more than 12 months of employment history. Generally speaking, to be excluded from this remedy, a “manager” must have independent decision- making authority. This is a powerful legal remedy that may lead to reinstatement and back pay to the date of the hearing.

The Canada Labour Code applies to persons employed in industries governed by federal as opposed to provincial law. Examples of its jurisdiction are companies engaged in public broadcasting such as television, radio or cable companies, inter-provincial transportation including railways, public harbours, banking, and the federal government. Approximately eleven percent of Ontario employees are governed by federal law.

Remedy

An adjudicator or judge hearing an unjust dismissal case has the power to fashion a remedy particular to the case before him or her. In a civil case of wrongful dismissal, the judge has no alternative but to determine which party wins and which party loses. It is an all or nothing proposition.

However, in an unjust dismissal case, the adjudicator can impose a partial form of discipline, such as ordering reinstatement but declining to order full back pay. In addition, unlike a union setting in which reinstatement is considered a default remedy where no cause is shown, the adjudicator has discretion as to whether reinstatement is appropriate in the context of the case.

Supreme Court Decision

A landmark decision was made by the Supreme Court of Canada in July of 2016. That case determined that an employer cannot simply assert that the termination was “not for cause”, offer a fair severance,[1] and avoid the remedy under the Code. The only means by which the employer could terminate would be to successfully assert just cause for termination or show that there was a genuine discontinuance of the job function held by the employee.

Termination due to Job Cessation

A recent decision[2] considered the obligations of the employer in a case dealing with this issue of lack of work or job discontinuance. In this case, the adjudicator concluded that the test for this defence is a two-step process.

Firstly, the company must show a real and legitimate economic reason for the cessation of the job function. It would be acceptable for the duties to be distributed evenly amongst other remaining employees, but not simply reassigned to a replacement employee. This could be the case even if the “new” position is described as more senior. An examination will follow to determine if the “new” position is remarkably distinct. Essentially this is reflective of a good faith obligation.

Secondly, the company must then show that it has a reasonable explanation for selecting the particular chosen employee to be terminated. In regards to this, the employee must be able to show some alternative motive that inspired the company to choose him or herself. This person may have been, for example, involved in an altercation with management on some other issue such as unfair treatment, or the denial of a promotion. In essence, the employee must assert that the job discontinuance was a coloured attempt to bring about his or her termination. If such a bad motive is shown, then the employer must then prove a true fair decision-making process to allow it to succeed.

This argument is similar to that of a human rights complaint in which the applicant employee must show a “prima facie” or evidently provable case and hence require the company to prove its position to succeed in its defence.

Advice is Critical

The Canada Labour Code offers a powerful remedy to terminated employees that fall under its jurisdiction. Its ramifications must be explored and understood by employees and employers alike. It has a very peculiar limitation period of 90 days. The failure to file within this time period will be fatal to a complaint. An employer considering termination must prepare carefully and proceed cautiously. An employee wishing to seek a remedy under the Code must move quickly.

Get Advice Before You Act

If you are an employer or an employee in a federally regulated industry, take the time to get advice before actions are taken. Contact the offices of Toronto employment and labour lawyers Mallins Law. We regularly advise employees and employers on legal workplace issues, including termination and dismissal. Contact us online or by phone at 647 792 0310 to schedule a consultation.


[1] In this case, the employer offered six months severance. Both the Federal Court on first review and the Federal Court of Appeal on a second review found in favour of the employer and each would have dismissed the case.

[2] Chabot v Ottawa Media. The attached link shows an error in the date of the decision. It was decided in June of 2017, not 1987 as the citation indicates.