Unjust Dismissal Under the Canada Labour Code

In Canada, the common law permits an employer to terminate an employee without cause as long as the employee is given reasonable notice of termination or payment in lieu.

If an employee is not given reasonable notice or payment in lieu and claims a wrongful dismissal, a court will not concern itself about the “justness” of the dismissal. Instead, the court will determine what the reasonable notice should have been and will award damages accordingly.

In the case of federally regulated employees, the situation is different.

Canada Labour Code

Federally regulated employees are subject to the provisions of the Canada Labour Code (the “Code”) and section 240( 1) of the Code permits a federally regulated employee who is dismissed to make a written complaint to an inspector if the employee feels that the dismissal is unjust.

An employee who makes a complaint under section 240(1) must:

• have completed 12 consecutive months of employment;

• not be subject to a collective agreement; and

• must not be excluded due to managerial status.

Unjust Dismissal

The concept of unjust dismissal under the Code is different from, and broader than wrongful dismissal.

Under the Code, a person can make a written complaint regardless of whether he or she is paid severance or given notice in lieu. Consequently, a dismissal can still be “unjust”, even if an employer has given the dismissed employee notice or pay in lieu of notice. This is because the underlying purpose of unjust dismissal is to protect the personal dignity and autonomy of an employee in termination situations.

In order for a termination to be found to be “just”, an employer’s decision must be:

• rational;

• made in good faith;

• made in a non-arbitrary and non-discriminatory manner; and

• made in a procedurally fair manner

The unjust dismissal provision does not apply in situations where an employee is laid off as a result of shortage of work or a discontinuance of the job function. Nevertheless, a dismissed employee can challenge the elimination of the position itself i.e., an employee can allege that the real reason for the dismissal was simply to get rid of him or her.

Remedies for Unjust Dismissal

The remedies available to an adjudicator who concludes that a dismissal is unjust includes the authority to reinstate an employee. Other remedies include, ordering the employer to pay damages or making any other equitable order that will remedy the unjust dismissal and protect the personal dignity of the employee.

Employer Tips

While it may not be possible to prevent an employee from filing an unjust dismissal claim, employers can take steps to minimize a finding that a dismissal is unjust by:

• having a fair reason for the termination and telling the employee the reason or reasons for the termination, preferably in writing;

• acting reasonably and following a fair procedure when dismissing the employee;

• giving the employee as much notice as possible;

• not using lack of work as an excuse to get rid of an employee;

• not alleging just cause if not terminating for cause; and

• making a reasonable severance offer in return for a general release of all claims.

The above suggestions are not exhaustive and employers should seek legal advice before dismissing an employee if they think the employee is likely to file an unjust dismissal claim.