In the recent case of Wilson v. Atomic Energy of Canada Ltd. (“AECL”) 2013 FC 733, the Federal Court confirmed that companies subject to the Canada Labour Code (the “Code”) are permitted to dismiss non-union employees without just cause. The decision affects thousands of employees working in federally regulated industries, such as telecommunications, broadcasting, banking, and railways, as it reverses the view among many Code adjudicators that non-unionized employees in the federal jurisdiction could not be dismissed except for just cause.

Mr. Joseph Wilson had worked for the AECL for approximately 4 ½ years. In 2009, the AECL dismissed Mr. Wilson on a without cause basis and provided him with a six month severance package. Mr. Wilson subsequently filed a Code complaint against the AECL claiming that he was unjustly dismissed.  The AECL denied Mr. Wilson’s complaint because it dismissed Mr. Wilson without cause and provided him with a generous severance package greater than his statutory severance entitlements.

A Code adjudicator appointed to hear the case allowed Mr. Wilson’s complaint against the AECL on the basis that the AECL could not avoid an unjust dismissal complaint by providing  a sizable severance package. The adjudicator further held that the AECL was not lawfully permitted to terminate Mr. Wilson’s employment on a without cause basis.

Upon judicial review, the Court overturned the decision.  In the Court’s view, the decision was “unreasonable”, as the adjudicator failed to consider the termination and severance requirements under the Code.  The notice and severance pay provisions, which require employers to provide notice and severance pay to employees who are dismissed without cause, are inconsistent with the premise that employers are not permitted to dismiss without cause.  The Court further held that if Parliament had intended to preclude dismissals without cause, it would have expressly stated so in the legislation.

What does this decision mean for federally regulated employers?

Employers will not have to show just cause for all dismissals. Employers may dismiss non-union employees without cause, so long as notice or severance pay in accordance with the Canada Labour Code is provided.  The decision, while a positive development for employers, does not mean that the payment of a severance package will prevent an unjust dismissal complaint in all cases.  Employees may still bring a complaint if they believe the reasons for the dismissal or the terms of dismissal were unjust, for example, if an employer purports to terminate for cause and the evidence does not establish that the dismissal was just, or if the reasons for the termination were arbitrary or discriminatory.