Rights of Federally Regulated Employees

Written on behalf of Peter McSherry
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Employees who are employed in industries covered by federal law have a unique remedy under the Canada Labour Code.

Federal law applies to persons working in businesses such as inter-provincial transportation, television or radio broadcasting, banks, public harbours, and the federal government, to name a few examples. Approximately 11% of Ontario’s work force is governed by federal as opposed to provincial statutes.

Who Qualifies?

Under the Canada Labour Code, a person who is not a “manager” and has been employed for longer than 12 months has been granted unusual rights under federal law. The title “manager” does not legally define whether the person is a “manager”. Rather, there is an analysis done as to the degree of independent decision making which the individual has been given. Many cases have concluded that a “bank manager” is not a “manager” in this context.

This law was created in the early 1980’s to offer the right of reinstatement to non-management employees on termination of employment, apparently to weaken the attempts being made to unionize the banking industry in particular. The theory was that by offering this remedy, it would eliminate one of the pro-union arguments.

Employer Defences

A recent Supreme Court of Canada case[1] has given added power to this remedy, known as “unjust dismissal”. The argument before the court was whether an employer could terminate an employee “without cause” and then avoid the “unjust dismissal” case. The Court concluded that this could not be done.

The only way now in which the employer could defend such as case is by showing “just cause” for termination or also by proving a good faith discontinuance of the function held by the employee.


“Just cause” is widely regarded as very difficult to prove. Also, unlike a wrongful dismissal case, in which the employer either proves cause or not, the adjudicator in this type of case has much more flexibility in fashioning a remedy. He or she could, for example, find that the employee did do something wrong, yet determine that this was not serious enough to justify termination of employment. In that example, the award may be to order reinstatement, yet not allow for full back pay and instead impose a financial penalty of six months upon the employee.

If there is an argument of discontinuance, it must be shown that the decision has been made in good faith and is not one intended to avoid this legal remedy.

Reinstatement under this process in not an automatic remedy, even where no just cause has been proven. The decision is discretionary which makes such an award different from the union context in which reinstatement is generally considered a reflexive remedy.

Absent cause arguments, usually success will mean an award of lost income from the date of termination to the date of hearing. An employment contract containing a set severance sum will not be relevant.

Costs are also usually awarded to the successful employee. Costs cannot be awarded against the unsuccessful employee in favour of the company.

The limitation period is set at 90 days which is very short. Many employees have no idea as to the existence of this remedy, which is why it is important to seek legal counsel quickly.

Wrongful Dismissal Action

The normal wrongful dismissal remedy is always an alternative to a Canada Labour Code application. Often there are issues often raised as to jurisdiction, such as whether the person is a non-manager or whether there is just cause or whether there was a genuine job discontinuance.

If these defences succeed, the adjudicator has no legal right to offer a remedy. For that reason, often legal counsel will initiate a wrongful dismissal remedy and agree to “stay” that case pending the result of the unjust dismissal case. In this manner, the limitation period is preserved and in the event the unjust dismissal case fails, there will be another remedy still available.

Federal Human Rights

While the issue of federal law is being examined, there are other differences between federal and Ontario law on the subject of human rights. The Canadian statute limits financial compensation for injured feelings to $20,000. It also allows for additional damages, known as “special damages” of up to $20,000 where the employer’s conduct is reckless or wilful. Such incremental damages are often ordered in sexual harassment cases. Generally speaking, the Canadian Human Rights Tribunal orders reinstatement as a remedy much more frequently than its Ontario counterpart.

What Does All This Mean?

If you work in a federally regulated industry and are facing termination decisions, it is important to obtain speedy and competent advice. Remember that 90 day limitation period?

Contact the offices of Guelph employment lawyer Peter McSherry. We regularly advise employees on their rights in the workplace. We review, advise on, and help employee negotiate the terms of their employment. Contact us online or by phone at 519-821-5465 to schedule a consultation.


[1] Wilson v Atomic Energy