Labour and Employment Law Blog

For our clients in the federal sector, we often receive questions about the unjust dismissal provisions in the Canada Labour Code (the “Code”).

Under the Code, federally regulated employees in non-management positions with more than 12 months of service are protected from unjust dismissal. If such an employee is dismissed and the dismissal is unjust, the employee generally has ninety days to make a complaint. An employer may defend such a complaint by arguing the dismissal was just, or that the employee was let go due to lack of work or the discontinuance of a function.

In our previous post, we discussed the Supreme Court of Canada decision Wilson v. Atomic Energy of Canada Ltd. (“Atomic Energy”), in which the Supreme Court of Canada ruled that the intention of this part of the Code is to provide non-unionized federal employees in non-management positions with dismissal rights analogous to unionized employees.

Because of the Supreme Court of Canada’s ruling in Atomic Energy, federal employers may not be able to rely on contractual severance clauses to dismiss employees with more than 12 months of service without cause (unless the dismissal is due to a lack of work or the discontinuance of a function), as employees cannot waive their rights under the Code in a contract. Further, common law notice or payment in lieu of notice of such a dismissal would no longer suffice.

Since Atomic Energy, adjudicators have made clear that the presumptive remedy for employees making a complaint for unjust dismissal is reinstatement to their position before the dismissal. However in some circumstances, such as the following, reinstatement may not be ordered:

1. The complainant does not ask for reinstatement.
2. The complainant shows dishonesty such that the trust inherent in the employment relationship is destroyed.
3. The role to which the complainant asks to be reinstated no longer exists.

Monetary damages can also be significant where unjust dismissal is found. Employees may be awarded full back pay from the date of dismissal to the adjudicator’s decision. Additionally, if the employee is not reinstated, damages for loss of position may be awarded, which usually equals an amount greater than reasonable notice under common law.  

Federal sector employers should carefully monitor new employees and take corrective action as required during the employee’s first year of employment. By doing so, employees who fail to improve despite appropriate performance management will be identified early on and can be dismissed prior to their first anniversary either with cause or without cause either on reasonable notice or under an enforceable termination clause in an employment agreement.