Federal Employers: Just because you paid them, doesn't mean they can't complain about you

April 13, 2015

Earlier this year, the Federal Court of Appeal (FCA) settled the much debated question of whether part III of the Canada Labour Code (the Code) permits dismissals on a without cause basis. In February 2015, we discussed Joseph Wilson v. Atomic Energy of Canada Limited (Joseph Decision), wherein the FCA confirmed that federally regulated employers may dismiss non-union employees without just cause, despite the “unjust” dismissal provisions contained in the Code. Notably, the FCA also held that it is incorrect to assume that the dismissal of an employee who was dismissed without cause and who has been paid the required compensation is automatically just. There must be an evidentiary inquiry, whether cursory or extensive, into the circumstances of the dismissal.

Recently, in Filo Sigloy and DHL Express (Canada), LTD. the Federal Court (FC) dealt with an applicant (Filo Sigloy) that sought to set aside the decision of adjudicator Joseph B. Rose wherein adjudicator Rose dismissed Mr. Sigloy’s complaint of unjust dismissal without a hearing due to a lack of jurisdiction. The FC disagreed with adjudicator Rose’s holding.

Background:

Mr. Sigloy was a non-union employee of DHL Express Canada Ltd. (DHL). Subsequent to his dismissal, he filed a complaint under section 240 of the Code. The complaint alleged that there were no reasonable grounds to justify his dismissal. In accordance with procedure under the Code, DHL provided the Human Resources and Skills Development Canada reasons for Mr. Sigloy’s dismissal, which included: poor performance, attendance and attitude, quality of work, level of professionalism and a demonstrated inability to sustain the requirements of his position. Notably, the letter did not state that the dismissal was for cause, and in fact, DHL terminated Mr. Sigloy on a without cause basis.

Adjudicator Rose was appointed to hear Mr. Sigloy’s complaint. At the outset of the hearing, DHL brought forward a preliminary objection with respect to whether the Adjudicator had jurisdiction to hear Mr. Sigloy’s complaint. Effectively, the objection was that since the dismissal occurred on a without cause basis and in accordance with a contract of employment, the adjudicator lacks jurisdiction to conduct a hearing on the merits of the unjust dismissal complaint. Adjudicator Rose agreed with DHL.

In his reasons, Adjudicator Rose noted that: (i) there was no indication of impropriety surrounding Mr. Sigloy’s dismissal; (ii) there existed a valid and enforceable employment agreement between Mr. Sigloy and DHL, the terms of which were compliant with the Code; and (iii) the initial complaint did not allege discrimination, reprisal or bad faith.

The Federal Court’s Decision:

Notwithstanding its acknowledgement of the merits of the adjudicator’s findings, the FC followed the principle laid out in the Joseph Decision and held that an adjudicator errs in assuming that a dismissal of an employment without cause and with payment of the statutory or contractual amounts is necessarily just. The FC noted that an adjudicator could still consider the common law principles governing the law of dismissal and inquire into whether the compensation complied with the requirements of the Code or the employment contract.

The FC also held that the Joseph Decision clearly indicated that adjudicators have jurisdiction to hear complaints that stem from a dismissal without cause. The inquiry can be cursory or extensive, but at a minimum, the applicant should have the opportunity to make submissions in a hearing since procedural fairness trumps all other considerations.

Our Thoughts:

The lesson for employers from this decision is clear: a valid and enforceable employment contract that provides for severance in compliance with the Code will not preclude an employee from claiming his or her termination was unjust. Moreover, employers should be prepared to defend its position in adjudication in the context of an unjust dismissal as this decision clearly indicates that an adjudicator must hold a hearing for such claims, whether cursory or extensive.

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