Canada: Termination for Frustration May Constitute Unjust Dismissal Under the Canada Labour Code

In the recent decision of Lewis v Whiteline Trucking Ltd, 2018 CanLII 72555 (CA LA), an adjudicator ruled that the doctrine of frustration of employment did not apply to a determination of whether an employee was unjustly dismissed contrary to the Canada Labour Code.

The complainant worked as a transport driver for the employer. Pursuant to the employer’s policies, the complainant and other drivers were required to maintain clean driver abstracts and to not incur any driving infractions. A failure to meet these requirements could result in a driver having his/her coverage declined under the employer’s insurance policy.

In March 2017, the employer was notified by its insurer that the complainant no longer qualified for coverage as his driving record did not meet the necessary requirements. The employer subsequently placed the complainant on permanent lay-off for failing to qualify for insurance coverage.

The complainant argued that he was dismissed without just cause and, thus, was due statutory pay in lieu of notice of termination and severance pay. The employer defended against the complaint by arguing that the complainant was terminated for cause as a result of employment frustration.

The adjudicator reviewed the “unjust dismissal” provisions of the Canada Labour Code and held that, under the Code, termination for just cause was warranted only when an employee’s wrongdoing was so egregious as to justify immediate termination. Accordingly, the adjudicator held that employees who were dismissed for frustration would remain entitled to notice of termination (or pay in lieu thereof) and severance pay under the Code.

In the absence of any culpable conduct by the complainant that would justify discipline, the adjudicator concluded that the complainant had not been dismissed for just cause and, thus, ought to have received his statutorily entitlements to notice and severance pay. The employer’s failure to provide the complainant’s statutory entitlements resulted in the complainant being unjustly dismissed.

Following the outcome in Lewis v Whiteline Trucking Ltd, employers with federally-regulated operations in Canada should take extra precaution to ensure that employees receive any statutorily-entitled notice and severance pay if they are dismissed for reasons other than culpable conduct.