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January 26, 2015

BREAKING NEWS: Federal Court of Appeal Says Federally Regulated Employers can Dismiss Employees Without Cause, Overturns Decades of Jurisprudence

Author Hendrik Nieuwland

For decades, it was generally understood that employees governed by the Canada Labour Code (“CLC”) (the governing statute for federally regulated employment), which includes employees in the banking, air and marine transportation, and telecommunications industries, among others, could only be terminated for just cause. If there was no just cause, such employees could seek broad remedies, including reinstatement, under the “unjust dismissal” provisions of the CLC.

In the ground-breaking decision, Wilson v. Atomic Energy of Canada Limited, 2015 FCA 17 (“Wilson”), the Federal Court of Appeal (“FCA”) held last week that federally regulated employers may dismiss employees without cause.

So what does this mean for federally regulated employers?

  1. You can treat your employees like provincial employees are treated; namely, you can terminate without cause without that termination being presumed to be “unjust” and contrary to the CLC.
  2. While the FCA does not fully describe when a termination will be “unjust”, it appears from this case that a dismissal will be unjust if:
  • the employer doesn’t provide either reasonable notice at common law, or notice under the terms of the employment contract; or
  • the termination is not made for a legitimate business reason (for example, if it is made for a discriminatory reason contrary to the Canadian Human Rights Act).

Federally regulated employers will have to wait until adjudicators apply the Wilson decision before having greater certainty about how “unjust dismissal” will be interpreted and applied going forward. In the meantime, however, federally regulated employers can be confident that, as the law now stands, it is possible to dismiss employees without just cause.

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