The unjust dismissal provisions in the Canada Labour Code provide certain employees with protections similar to those protections given to unionized employees under collective agreements. For these protections to apply:
- the employment relationship must be federally regulated (such as most employees of Band councils and First Nations);
- the employee must not be subject to a collective agreement;
- the employee must not be a “Manager” (which for the purposes of the Canada Labour Code is a high threshold and depends on the work actually performed, not just a worker’s title);
- the employee must have been employed continuously for at least 12 months; and
- the worker must be an employee (rather than a contractor).
Employees who are covered by the unjust dismissal provisions have the ability to challenge a dismissal by filing a complaint with Labour Canada. However, the unjust dismissal provisions do not apply to:
- The non-renewal of a fixed term contract;
- A voluntary resignation or retirement;
- A bone fide layoff as a result of a lack of work or the discontinuance of a work function; and
- Termination for Cause.
An employee’s conduct provides Cause for dismissal when it breaches the employee’s fundamental obligations to the employer and fractures the employment relationship. In general, the Supreme Court of Canada has stated that an employer has the right to dismiss an employee “guilty of serious misconduct, habitual neglect of duty, incompetence or conduct incompatible with his duties, or prejudicial to the employer’s business.” The burden of proving Cause rests on the employer.
Keep in mind that the application of the unjust dismissal provisions of the Canada Labour Code does not exclude the common law, meaning that an employee can still choose to file a wrongful dismissal claim in court instead of a unjust dismissal claim under the Canada Labour Code.
Under the Canada Labour Code, an adjudicator that determines that an employee has been unjustly dismissed has the power to:
- require the employer to pay the employee compensation;
- order reinstatement of the employee; and
- do any other like thing that is equitable to remedy or counteract any consequence of the dismissal.
A dismissed employee has 90 days from the date of dismissal to file an unjust dismissal complaint.
First Nations Employer Takeaways
When planning a termination of a federally regulated employee, it is crucial to carefully consider whether the unjust dismissal provisions in the Canada Labour Code apply. If there is no Cause and none of the exceptions above apply, the employer’s only prudent options will be to consider other strategies such as discipline (but not termination of employment) or performance management. Accordingly, federally regulated employers must proceed cautiously when considering terminations of employment, lest they expose themselves unnecessarily to the risk of unjust dismissal complaints and orders for damages and/or reinstatement under the Canada Labour Code in addition to the usual risk of damages for wrongful dismissal actions in court.
Federally regulated employers should still use employment agreements with enforceable termination provisions to limit their liability arising from wrongful dismissal claims in court for those employees who do not fall within the unjust dismissal provisions of the Canada Labour Code.
