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Federal Court Says Employer Need Not Prove “Just Cause” Before Dismissing an Employee under s.240 of the Canada Labour Code

In what is being hailed throughout the labour community as a “game changing” decision, the Federal Court  recently broke with a 30 year line of arbitral authority that a federally-regulated employer could only dismiss non-union, non-management employees for “just cause” pursuant to s.240 of the Canada Labour Code.    For the last three decades, non-union, non-managerial employees in the federal sector have enjoyed similar job protection as unionized employees.  Adjudicators have repeatedly held that unless an employer has just cause (serious misconduct, incompetence, etc.) then it could not dismiss an employee that fell under the “unjust dismissal” provisions in s. 240 unless the employer could fit within that section’s very narrow exceptions that allowed for dismissal for a lack of work or where there is a permanent discontinuance of the employee’s position.   In Atomic Energy of Canada Limited v. Wilson, the Federal Court overturned an adjudicator’s decision that followed this long line of authority.    Wilson had been dismissed on a non-cause basis and was provided with six (6) months’ severance.  The federal court remitted the matter back to the adjudicator to determine whether the six months was “unjust”.   The court held that the adjudicator was not permitted to simply find the dismissal to be “unjust” because the employer did not have just cause.

This decision, if upheld by further appellate courts, will give federal employers greater flexibility in proceeding with non-cause dismissals.   The remedies for a breach of s.240 have been very onerous for employers over the years – including reinstatement and full back pay in some cases.   Counsel for Wilson has indicated that the Federal Court’s decision will be appealed to the Federal Court of Appeal and CCP will keep you posted on this important decision for federal employers.

Please Note: This blog has been prepared as an informational service for our clients and other interested parties. It is not intended to constitute legal advice, a complete statement of the law or opinion on any subject. Although we endeavour to ensure the accuracy of the content, no one should act upon the information provided without a thorough examination of the law after the facts of a specific situation are fully considered.



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