The Canada Labour Code (CLC) covers all federally regulated employees, excluding managers. The CLC has provisions on the rights of unionized employees, but that is a topic for another day. The focus of this blog is what occurs when a non-management employee gets dismissed from a federally regulated job.

Statutory minimums under the Canada Labour Code

The Canada Labour Code (CLC) is designed to give similar protections to federally regulated employees that are given to unionized employees. Therefore, there are limited points when an employee can be dismissed without the employer needing to allege cause and provide the employee with only the statutory minimums.

To provide only the CLC statutory minimums, the employee must be under an enforceable employment contract with a legal termination provision that sets out the CLC minimums for a without cause termination. Under the CLC, an employer can terminate without alleging cause within the first three months of employment and not provide any notice or pay in lieu of notice. An employer can also terminate an employee without alleging cause under the CLC if the employee has worked for between three months to one year, so long as the employer provides the said employee with two weeks of notice or two weeks of pay in lieu of notice. After an employee works for over a year with the employer, the employer cannot terminate the employee unless there is just cause to do so, barring a couple of exceptions under the CLC. The need to have just cause to terminate an employee who has worked for at least one year was confirmed by the Supreme Court of Canada in Wilson v Atomic Energy of Canada Ltd. (2016 SCC 29).

Reinstatement of employment

The Canada Labour Code (CLC) allows the Canada Industrial Relations Board, when it finds that an employee has been unjustly dismissed, to reinstate that employee. Unless the Board finds that the behaviour of the employee does not justify it, the Board will also provide the employee with backpay, as if they were never dismissed. To get this remedy an employee needs to file an application to the Board within 90 days after being dismissed.

Since it is hard to justify a dismissal without evidence of progressive discipline or a serious breach of a term of employment, reinstatement is often a remedy offered in CLC cases. However, cases, such as Kouridakis v Canadian Imperial Bank of Commerce (2019 FC 1226), have made it clear that despite an unjust dismissal occurring, reinstatement is not a required remedy to every case.

Compensation in lieu of reinstatement

If it is found that reinstatement is not an appropriate remedy, the employee is entitled to compensation, as they were still unjustly dismissed. In Hussey v Bell Mobility Inc. (2022 FCA 95), the Federal Court of Appeal noted that there are two reasonable forms of compensation in lieu of reinstatement; the common law approach and the fixed-term approach.

The common law approach is the most common form of compensation in lieu of reinstatement. The common law approach considers the employee's age, their length of service, the character of their employment, and the availability of comparable employment. Unlike the common law in wrongful dismissals, the adjudicators add an additional amount to compensate for the loss of protection from the unjust dismissal. For example, in the Hussey v Bell Mobility Inc. (2022 FCA 95) decision, a seven-year employee was given 8 months of common law notice plus an additional 4 months for the loss of protection from the unjust dismissal, for a total of 12 months of pay in lieu of reinstatement.

The fixed-term approach calculates the amount of pay that an employee would have earned with continued employment until retirement. The decision maker then discounts this amount for various contingencies such as the likelihood of a subsequent dismissal, a change in the employee's health, technological changes, or employer insolvency to arrive at fair compensation. In the line of cases noted in the Hussey v Bell Mobility Inc. (2022 FCA 95) decision, the discount rate ranges between 80%-90%. There is controversy with this method of determining reasonable compensation in lieu of reinstatement. Determining how long an employee would have likely worked for if not for the unjust dismissal is highly speculative. There is also the possibility that a case comes where a major discount is not warranted, leading to extraordinary damages. For example, if a healthy 25-year-old who worked at a federally regulated workplace, like a bank, where she made it clear that she wanted to work the same position until she reached retirement age, gets unjustly dismissed, she could get 40 years of pay in lieu of reinstatement.

How Suzanne Desrosiers Professional Corporation can help

The purpose of this blog is to make you aware of the potential costs and consequences of a termination in federally regulated industries. Regardless of whether you are an employer or employee, when it comes to termination, you should call an employment lawyer. At Suzanne Desrosiers Professional Corporation, our employment lawyers can help employers minimize the risk of liability when terminating an employee. Our employment lawyers can also aid employees in getting their legal entitlements upon termination. To speak to one of our employment lawyers, please call us at 705-268-6492 or email us at info@sdlawtimmins.com.