In our Labour and Employment Communiqué of February 4, 2015 titled “Unjust Dismissal Clarified: Without Cause Terminations Not Prohibited by the Canada Labour Code,” we reported on the Federal Court of Appeal’s decision in Wilson v. Atomic Energy of Canada. In that judgment, the court determined that federally regulated employers can, without violating the relevant provisions of the Canada Labour Code (the “Code”), terminate employees without cause. In particular, the court concluded, “a dismissal without cause is not automatically ‘unjust’ under Part III of the Code. An adjudicator must examine the circumstances of the particular case to see whether the dismissal is ‘unjust’”. Later, the Court of Appeal commented that the reasons for termination had to “entail action taken exclusively to ensure the effective operation of the business and had to be something other than caprice, convenience or purely personal disputes”. It is also clear from the court’s decision in Wilson that the reasons for termination cannot include discrimination or a reprisal which would contravene the Canadian Human Rights Act or other legislation.

In our February 4th Communiqué, we also mentioned the decision of Adjudicator Rose in Sigloy and DHL Express (Canada). In Sigloy, the adjudicator applied the lower court decision in Wilson and dismissed the complaint because the complainant did not advance any basis to support his claim that the dismissal was unjust. The adjudicator did not hear any evidence from either the complainant or the respondent employer in making that decision. Mr. Sigloy applied for judicial review of the decision of Adjudicator Rose. On March 17, 2015, the Federal Court Trial Division released its decision concerning the application for judicial review. The court quashed the decision of Adjudicator Rose. The Trial Division found that the Court of Appeal decision inWilson required the adjudicator to conduct a hearing where evidence would be submitted. Justice Rennie stated: 

In sum, the adjudicator was required to hold a hearing. The form, shape and duration of that hearing is, although framed by legal principle, within the discretion of the adjudicator. The crux of the Court of Appeal decision [in Wilson] lies, in my view, in paragraph 97 which instructs that it is incorrect to assume that the dismissal of an employee dismissed without cause and who has been paid the required compensation is automatically just. There must be an evidentiary inquiry, whether cursory or extensive, into the circumstances of the dismissal.

The exact nature of the hearing to be conducted is within the discretion of the adjudicator. Justice Rennie suggested the nature of the evidence required at such a hearing would be determined after hearing submissions from the parties and, specifically, from the applicant. Justice Rennie stated, “procedural fairness requires, at minimum, that the applicant have the opportunity of making submissions as to the form and content of the hearing that the adjudicator is required, in light of the Court of Appeal decision, to hold”.

Comment and Practical Implications

The decision of the Court of Appeal in Wilson confirms that, contrary to some previous jurisprudence, federally regulated employers do not have to establish cause for the termination of an employee who is entitled to the protection of the unjust dismissal provisions of the Code. It is sufficient if the employer has a legitimate business reason for making the decision. The Court of Appeal accepted that the terminated employee could still file a complaint alleging unjust dismissal. However, it appeared from the Court of Appeal decision in Wilson that the employee had to at least allege that the employer’s decision was improperly motivated. InSigloy, the complainant did not allege the decision to terminate was improperly motivated and the employer complied with its employment contract with Mr. Sigloy and with the minimum termination and severance provisions of the Code. It is, therefore, unclear as to exactly what evidence might be called at the hearing required by the judgment of the Federal Court Trial Division in Sigloy.

The Court of Appeal’s decision in Wilson was a positive development for federally regulated employers because it reduced the burden placed on those employers when terminating certain employees. However, the Trial Division’s decision in Sigloy creates procedural hurdles which, with respect, appear unnecessary based on the circumstances before Adjudicator Rose and the court.

We will continue to monitor the evolution of the law in this area and will update you concerning any further developments.