Canada Rules out the Right to a Job | DCR Workforce Blog

Canada Rules out the Right to a Job

Canada Rules out the Right to a JobEarly February saw a decision which radically alters the rights of non-unionized federal employees in Canada. The Federal Court of Appeal ruled that the Canadian Labor Code does not give employees in federally-regulated industries the right to a job. The court has determined that dismissals without cause are valid and just, even when there is no economic reason for the dismissal. A dismissal is considered “just” if it is related to the effective functioning of the business and if the worker is given proper notice and/or compensation. Of course, as in nearly every government law and ruling, there is ambiguity in the language – in this case the definition of “just”, to determine whether the employee has any recourse.

One would always have to look first at the specific terms and conditions of employment, or the contract of employment. If a written employment contract exists, it may specify terms under which termination can occur as well as compensation to be offered. This ruling of the Federal Court of Appeal reinforces the validity of employment contracts unless the contract conflicts with labor laws or rights protected under a collective bargaining agreement. However, in most cases a written employment agreement has not been established to provide clear guidance.

Deciding an Unjust Dismissal:

So, how is an unjust dismissal to be defined and corrected, if an employer can dismiss any worker without cause? Will a reasonable notice period constitute a just dismissal? Will failure to provide sufficient notice render the dismissal unjust? If so, can reinstatement be awarded as a remedy? If there is a just cause for termination, is the reasonable notice period under common law waived?

There are some main factors which guide courts in determining reasonable notice, known as the Bardal factors. They include the character of employment, the length of service, age, and the availability of similar employment in terms of experience, training and qualifications.

Employers need to follow the terms and conditions of their employment contracts scrupulously, if they wish to avoid expensive litigation and penalties. Let us look at some cases, where dismissal was contested by the worker:

  • In a recent decision of the Ontario Divisional Court in the case of Simpson vs. Global Warranty, The employee was laid off, and termination entitlements were not paid until several months later, when the layoff became permanent.  When the employee sued for additional amounts, the employer alleged just cause. The employer was held liable for violating a specific termination clause in the employment contract which required a week’s notice or more, or pay in lieu of notice. By delaying the severance pay, the employer gave the worker cause to believe that he would be recalled to work. As a result, the worker did not try to secure other employment. The court also clarified that calling termination by any other name, like layoff or dismissal, would still mean termination only.
  • In another interesting decision in United Steelworkers of America, Local 9548 v Tenaris Algoma Tubes Inc., the employee was dismissed for posting vicious and humiliating posts against a female colleague on Facebook during off-duty hours. The court ruled that a unionized employee’s social media behavior justified dismissal, even in the absence of a reference to social media in the company’s code of conduct, violence and harassment policies. This case reinforces the importance of covering all bases, when formulating workplace policies.
  • In the case of Wilson v. Atomic Energy of Canada Limited, the employee was terminated without cause after a service of more than four years and was offered a common law package equal to about six months of pay. This case raised the issue of whether any dismissal without cause is inherently “unjust”. The Court found that a dismissal without cause is not automatically unjust under the Code and that adjudicators must examine the circumstances of each particular case in order to decide whether or not a dismissal is unjust and to deserve any exceptional remedies like reinstatement.
  • In a recent record-setting ruling in Rodgers vs. CEVA, a senior executive with three years of service was offered two weeks’ notice and severance pay, raising the question of “reasonable notice”. The court agreed that senior positions during an economic downturn are in short supply, and that two weeks in not a reasonable period in which to find new employment. Rodgers received 14 months’ severance. The case also addressed the requirement to purchase company stock at time of employment, an investment equivalent to five months’ salary, which implied a long-term employment relationship.

Employers usually compare their situations to other cases. But, there is no mathematical formula to help employers work out a reasonable notice period or severance pay. The code which permits dismissals without a cause apply only to federally regulated employers like banks, railways, telecoms and other federal employers. Of course, this ruling is very recent and still open for review, as the Supreme Court of Canada is the next court of appeal.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.