Dismissal of An Employee by a Federally Regulated Employer Only Allowed For Cause.

Dismissal of an employee by a federally regulated employer only allowed for cause.

If your business is federally regulated (herein ”fed reg”) then the Supreme Court of Canada has recently and finally clarified in the Wilson v Atomic Energy decision of July 14,2016  that, unlike provincially regulated employers, you cannot dismiss an employee who has been with you for more than 12 months and is not in a managerial role unless you can establish just cause for the dismissal after engaging in a proper progressive discipline process. There are two further exceptions that allow termination without cause if the termination is due to a lack of work or discontinuance of a position.

This significantly limits the ability of a fed reg employer to just fire an employee by giving them pay in lieu of notice and asking them to leave their job without explaining any cause for doing so.

Fed reg businesses are generally banks, marine operations, air transport and airports, railways, road transport that crosses provincial or international boundaries, tunnels and bridges, phone and cable systems, radio and TV, grain elevators and feed mills, fisheries protection, first nations, federal crown corporations and any private business necessary for the operation of a federal act. So for instance, if you have a trucking or bus business operating inside and outside of Ontario you are caught and subject to this restricted right to dismiss an employee.

Essentially these fed reg businesses have to treat their employees as if they were unionized and had a collective agreement limiting dismissal except for cause.  The common law regarding when and how an employee can be let go is not applicable to fed reg employers and their rights are totally found in the Canada Labour Code. 

Even if a fed reg employer provides notice and severance pay on a common law scale when dismissing an employee that will not overcome or prevent the employee’s right to challenge the dismissal as being unjust by making a complaint under the Canada Labour Code within 90 days to set aside the dismissal and obtain a broad array of remedies including reinstatement and loss of income while contesting the dismissal and punitive damages for the dismissal. An adjudicator under the Canada Labour Code has a broad discretion to order whatever remedy they believe is fair for the employee who has been unjustly and illegally dismissed without cause.

So it is now even more important for an employer in the federal regime to be very aware of the distinction between a without cause and a just cause dismissal of an employee.  The employer has to be able to assess which type of dismissal is contemplated as the much more onerous and paper intensive just cause dismissal is the only one allowed for and in your business.  Lawyers for an employee will make use of this decision to pressure employers for greater severance packages in order to get a full and final release or face a Canada Labour Code investigation and adjudicator.