Recourse under the Canada Labour Code: An Option Worth Considering

By Fiona Anderson.Fiona Anderson

It’s been more than a year now since the Supreme Court of Canada clarified in Wilson v. Atomic Energy of Canada Ltd.  how the Canada Labour Code (the “Code”) works. Yet the possible application of the Code is still often overlooked.

Under provincial law, an employer can dismiss even the best employee if the employer wishes, so long as the employer provides the employee enough notice, or payment in lieu of that notice. The only exception is if the employee is dismissed for reasons that amount to discrimination, such as because of sex or age.

Before Wilson, tribunals often held that federally-regulated employers could do the same. In other words, if the employer wanted to dismiss an employee without cause it could do so provided it gave enough notice or money in lieu.

But the Supreme Court of Canada in Wilson said if that were the case, the Code would serve no purpose.

What Remedies Does the Code Offer?

In fact, under the Code, an employer can only dismiss a non-unionized employee if there is a lack of work or discontinuance of function. The employer may even have to show why this particular employee was the best choice for dismissal to ensure there were no ulterior motives behind the firing.

If the employer fails to prove there was a lack of work/discontinuance of function, the employee could be entitled to reinstatement. If reinstatement isn’t practically a viable option (which is often the case in small workplaces), then the employee is entitled to the actual damages suffered, including lost wages up to the hearing of the matter if the employee has been unable to find work.

Who Should Bring a Complaint under the Code?

For employees who are limited in their job prospects due to geography (or otherwise), bringing a complaint under the Code seeking reinstatement may be a good option.

Short-term employees may also be better off under the Code as their lost wages up to the hearing date could amount to significantly more than what the employee would be entitled to under the reasonable notice doctrine used at common law for provincially-regulated employees. For longer-term employees, actual damages under the Code may amount to the same or less than the common law would grant. Since the Supreme Court in Wilson confirmed that federally-regulated employees continue to have the option of going the common law route, a long-term employee may be better off choosing that option, since the only issue would be the appropriate notice period, a fairly straightforward argument to make compared to “lack of work/discontinuance of function”.

Who Can Bring a Complaint under the Code?

So in every case of dismissal, whether from the employer’s or employee’s perspective, one of the first questions to ask should be whether the Code applies. The answer is more complicated than one might think.

The Code expressly applies to employees “employed on or in connection with the operation of any federal work, undertaking or business.”  That makes it sound like it applies only to federal government employees. But that’s not the case. In practice, the Code has been held to apply to people working for Indian Bands, airlines, interprovincial railroads, telecommunications companies (including television and radio broadcasters), banks, shipping and interprovincial trucking companies. And this list is not exhaustive.

And there are two further conditions. For an employee to access remedies under the Code, he or she

  1. must have worked for the employer for at least 12 months, and
  2. cannot be a manager. Don’t be fooled by the term “manager”, however. Case law has interpreted manager very, very narrowly limiting it to someone at the very senior levels of the employer.

Despite these limitations, given the remedies available under the Code, it’s an option worth considering.

Have questions about whether the Code applies to your situation? Contact us!


NOT LEGAL ADVICE. Information made available on the Kent Employment Law website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action, based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. One of our lawyers would be pleased to discuss any specific legal concerns you may have.

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