The History Of Unjust Dismissal
The history of unjust dismissal is fascinating. For a hundred or so years, under the common law, non-unionized employees in Canada could be terminated without any reason if the termination was said to be “Without Cause”. The only remedy available was “Reasonable Notice” of the dismissal or “Pay in Lieu” of such Reasonable Notice (i.e. Severance). If “Reasonable Notice” was not provided, it was a “Wrongful Dismissal”. No employee had a right to reasons for his or her dismissal or reinstatement in case of “Wrongful Dismissal”.
However, in 1978, the Federal Government made new legislation under the Canada Labour Code called “Unjust Dismissal”. The Unjust Dismissal scheme made extraordinary new protections for non-unionized employees akin to a collective agreement. Primarily, under the Unjust Dismissal scheme, a dismissed non-unionized employee was entitled to a written statement setting out the reasons for his dismissal. Then, following a complaint, if an adjudicator determined that the dismissal was unjust, she was given the authority to reinstate the employee.
Who Can Claim Unjust Dismissal?
Nevertheless, the concept of “Unjust Dismissal” under the Canada Labour Code only applies to select, few employees in Canada. This is because the Canada Labour Code Unjust Dismissal scheme only protects employees working for a federally regulated employer, like an airline, bank or railroad. This is something like 5% of all employees in Canada.
Here is the full list of industries in which employees can recover “Unjust Dismissal”:
- Air transportation
- Grain elevators, feed and seed mills, feed warehouses and grain-seed cleaning plants
- First Nations Band Councils
- Most federal Crown corporations, for example, Canada Post Corporation
- Port services, marine shipping, ferries, tunnels, canals, bridges and pipelines (oil and gas) that cross international or provincial borders
- Radio and television broadcasting
- Railways that cross provincial or international borders and some short-line railways
- Road transportation services, including trucks and buses, that cross provincial or international borders
- Telecommunications, such as, telephone, internet, telegraph and cable systems
- Uranium mining and processing and atomic energy
For all other industries, employees have no right to Unjust Dismissal, meaning they have no right to reinstatement. Accordingly, for all other industries, the termination scheme is the concept of “Wrongful Dismissal”, and, therefore, those employees’ only remedy is Reasonable Notice or Pay In Lieu. To be clear, there is no “Unjust Dismissal” scheme in Ontario per se. Rather, unjust dismissal is for federally regulated employees, who may or may not work in Ontario. The sole remedy available to all other Ontario-based employees, generally, is some amount of Notice of Termination or Pay In Lieu (i.e. Severance).
Therefore, the rights of employees upon termination in Canada can be divided into two groups:
- Federally regulated employees who can make a complaint for “Unjust Dismissal”.
- KEY: Reinstatement is a remedy under “Unjust Dismissal”.
- All other employees who can make a complaint for “Wrongful Dismissal”.
- KEY: Reinstatement is not a remedy under “Wrongful Dismissal”.
For instance, Joe works for McDonald’s, so he can claim Wrongful Dismissal upon termination, seeking more severance. However, James works for Air Canada, so he can claim Unjust Dismissal, seeking severance or reinstatement.
What is Wrongful Dismissal? A dismissal without reasonable notice.
Unjust Dismissal vs Wrongful Dismissal
Essentially, an Unjust Dismissal is a claim, generally, for the extraordinary remedy of job reinstatement that is reserved only for federally regulated employees; whereas Wrongful Dismissal is a claim for additional notice of termination made by all other employees who are not regulated by the Federal Government.
Unjust Dismissal Eligibility (Canada Labour Code)
Under section 240 of the Canada Labour Code, generally, an employee is only eligible for a complaint of Unjust Dismissal when he is terminated without cause from federally regulated employment, and:
- a) he has completed 12 months of continuous employment employer (s. 240(1)(a));
- b) he is not subject to a collective agreement (s. 240(1)(a));
- c) he is not a manager (s. 167(3));
- d) the unjust dismissal complaint is filed within 90 days of the dismissal (s. 240(2));
- e) the dismissal was not the result of a “lack of work or discontinuance of a function” (242(3.1)).
In summary, Canada’s unjust dismissal scheme provides federally regulated non-unionized, non-managerial employees who are terminated Without Cause the ability to file a complaint to an adjudicator alleging that their dismissal is unjust. If the adjudicator finds that the dismissal was unjust, extraordinarily, the adjudicator may reinstate the employee back to his position.
So, What is an “Unjust” Dismissal
The Canada Labour Code does not define “Unjust Dismissal”. Rather, the definition of an “Unjust Dismissal” has been fleshed out by the common law. The common law definition of Unjust Dismissal is this:
Employees covered by the Unjust Dismissal scheme can only be dismissed for “cause“; however there is no Unjust Dismissal protection in the case of layoffs or discontinuance of a job.
Unjust Dismissal and Severance
Since the creation of the Unjust Dismissal scheme, there was some debate in terms of whether federally regulated employees were able to pay dismissed employees a severance instead of reinstatement. However, the Supreme Court of Canada’s 2016 decision in Wilson v. Atomic Energy of Canada Limited, 2016 SCC 29 clarified the issue.
The Supreme Court held that the provisions of the Canada Labour Code were intended to prevent federally regulated employers from terminating employees without cause, regardless of whether they have paid adequate severance pay. The purpose of the Unjust Dismissal scheme in the Canada Labour Code was to provide federally regulated, non-unionized employees with protection against arbitrary dismissal in a manner which essentially matched those held by unionized employees. The Unjust Dismissal scheme was a rejection of the common law of “Wrongful Dismissal”, and the approval of protections from “Unjust Dismissals” for non-unionized federal employees akin with those available to unionized employees.
Therefore, allowing employers to pay severance in lieu of reinstatement was contrary to the Canada Labour Code. As a result, where an employee is dismissed without cause, the employer providing the employee with adequate notice or payment in lieu thereof will not prevent the employee from subsequently pursuing a reinstatement remedy under the Unjust Dismissal provisions in the Canada Labour Code.
Is Reinstatement Required In Every Case?
It is a misconception that the Unjust Dismissal scheme sort of ensures an eligible federally regulated employee has a job for life. On the contrary, reinstatement is not required in every Unjust Dismissal case where there is found to be no Just Cause.
An arbitrator can order compensation instead of reinstatement if she is of the view, for example, that trust in the employer-employee relationship cannot be restored. In fact, an arbitrator has wide discretion as to what remedy is appropriate. In Kouridakis v. Canadian Imperial Bank of Commerce, 2019 FC 1226, the Federal Court emphasized this point:
The fact that reinstatement may have been determined to be the appropriate remedy more often than not does not mean that it becomes the norm or somehow becomes the standard to be deviated from only in exceptional circumstances. I do not accept that, as a matter of law, reinstatement is the default position which should be ordered unless the employer shows, on the balance of probabilities, that such reinstatement is inappropriate. Reinstatement is but one of a number of remedies which, like any other, is open to the arbitrator to order either on its own, in conjunction with other monetary compensation, or not at all, even where the dismissal is found to be unjust.
However, to be sure, despite the above, reinstatement is still very much a reasonably anticipated outcome where an Unjust Dismissal arbitration determines that no cause to dismiss exists.
Do Employees Have To Seek Reinstatement?
If a dismissed federally regulated employee does not want to seek reinstatement and instead seek severance, they are entitled to do so. However, an employer may not, generally, seek severance instead of reinstatement in case no cause, layoff or job discontinuance exists.
The Options Available To Federally Regulated Employees
In short, federally regulated employees have three choices upon termination:
- Accept the termination and settle with the employer;
- Accept the termination, but claim additional severance under the Canada Labour Code or the common law;
- Reject the termination, and claim Unjust Dismissal, seeking the remedy of reinstatement.
Unjust Dismissal Examples
Keeping in mind that reinstatement is a right where the is no just cause to terminate an employee, unjust dismissal reinstatement cases tend to hinge on whether the employer had just cause to terminate the employee.
The following cases are a good example of when reinstatement is and is not appropriate in an unjust dismissal complaint.
In Huron Commodities Inc v Alexander,  CLAD No 62, the central issue was whether the employer had cause to dismiss the complainant simply because the employer had “lost trust” in the complainant. At the time of his termination, the complainant had been employed by the employer for six years. The complainant had no discipline history prior to his dismissal. However, the employer alleged it had become concerned about the complainant’s work performance and about the amount of fuel he was using in his company car. In short, the employer argued it terminated the complainant because of “loss of trust”. In the result, the complainant’s unjust dismissal claim was successful and he was reinstated. The arbitration panel had this to say about “loss of trust” allegations:
I conclude that employer’s loss of trust cannot be the basis for dismissal (or even discipline) in the absence of employer proof of employee misconduct. Moreover, if loss of trust is based on employee misconduct an adjudicator should assess the misconduct and not the loss of trust. At some level “we lost trust” means nothing more than “we decided to dismiss”. Employer loss of trust is not cause for employee discipline.
In Wasty v Cardinal Couriers Ltd,  CLAD No 11, the employee, a warehouse sorter at a courier company, filed an unjust dismissal complaint under the Canada Labour Code after being dismissed for berating a co-worker and accusing his supervisor of bias, not to mention a prior incident of insubordination. The employee sought reinstatement. However, the arbitration panel found that the employee contravened a number of workplace policies in the employer’s employment policy manual against harassment. Furthermore, the complainant made no acknowledgement of any wrongdoing. He showed no remorse, made no apology and made no effort to mitigate his unprovoked reaction against his co-worker. Reinstatement was denied.
How To File An Unjust Dismissal Complaint
These are the steps to follow to file for Unjust Dismissal in Canada:
- Complete an Unjust Dismissal form.
- Gather and prepare copies of all your evidence documents.
- Send your complaint form and termination letter to the nearest Canada Labour Program office.
- Next, to confirm the admissibility of your complaint, the Labour Program will contact you to verify that the complaint meets the above-noted eligibility criteria.
- A Labour Program Inspector will inform the employer of the complaint and will ask for reasons for your dismissal if needed.
- An inspector will try to help you and the employer to settle the complaint. The majority of unjust dismissal complaints are resolved at this stage.
- If the complaint is not settled, you can request the appointment of an adjudicator by contacting the inspector assigned to your file.
- Once appointed, the adjudicator will hear the complaint to determine whether or not the dismissal is unjust.
At any point, you can hire a lawyer or you can represent yourself.
Jeff is a lawyer in Toronto who works for a technology startup. Jeff is a frequent lecturer on employment law and is the author of an employment law textbook and various trade journal articles. Jeff is interested in Canadian business, technology and law, and this blog is his platform to share his views and tips in those areas.