Two approaches for assessing damages in lieu of reinstatement for federal employees

In a recent decision of Hussey v. Bell Mobility Inc., 2022 FCA 95, the Federal Court of Appeal confirmed that there are two options for adjudicators when assessing damages in lieu of reinstatement in the context of unjust dismissal complaints.

For context, federally regulated employees are protected by the Canada Labour Code (the “Code”), instead of the Employment Standards Act or Code in their province.   Federally regulated businesses include:

• inter-provincial and international services such as: railways, road transport, telephone systems, pipelines, and shipping;  
• radio and television broadcasting;
• air transport;
• banks; and
• some First Nations communities and activities.

See here for more information regarding federally regulated activities. 

Most significantly, the Code includes “union-like” protections for most employees, such that they cannot be terminated on a without cause basis.  If they are terminated without cause, they have the option to make an “unjust dismissal” complaint.  If their complaint is substantiated, the adjudicator can order reinstatement to their position or payment of damages in lieu of reinstatement. 

In the Hussey decision, the Federal Court of Appeal confirmed there are two acceptable methods for considering damages in lieu of reinstatement. 

The “fixed term” approach involves considering how much the employee would have earned if they worked until retirement.  Then the adjudicator has to reduce that amount based on various contingencies, such as considering whether the employee would have been terminated for cause earlier. 

The “common law” approach involves considering what the employee would receive as pay in lieu of reasonable notice at common law.   

In either approach, employees could be entitled to significantly more compensation than they would be entitled to on termination without cause in a wrongful dismissal action. 

It is important to know whether your workplace is regulated by the Code because of the unjust dismissal provisions in the Code. 

The full text of the decision can be found here.

Still have questions about the Canada Labour Code? Contact Scott Marcinkow at [email protected] or anyone else from our team listed on the Authors page.