As noted above, the Code provides exceptions to the right of the employee to file an unjust dismissal complaint in the event the employee has been “laid off because of lack of work or because the discontinuance of a function”. ¹

Factual Underpinning

The leading case on this subject is a Supreme Court of Canada decision in 1993. ² This case confirmed that “the decentralization by assignment to others, of duties formerly done by the holder of a position that no longer exists can be a discontinuance of function”.

The first step in the analysis is to determine, on a factual basis, whether the job duties have been discontinued. This is essentially a fact driven review, as one conducted in one award which was conducted in a “pain-staking” manner: ³

  I am satisfied that, against a standard of review of correctness, the decision reached by the adjudicator in this matter that he had jurisdiction to consider Mr. Mathur’s complaint was reasonably open because Mr. Mathur had not been laid off “…. because of the discontinuation of a function”, that is to say, the function that he performed immediately before the reorganization took effect had not been discontinued. In arriving at the conclusions that the adjudicator did, he engaged in a lengthy and pain-staking analysis of the evidence that was before him, the greater part of which had been provided by witnesses brought forward by the Bank itself.

The issue being examined is not necessarily what the job description sets out, but rather, the reality of the job functions. ⁴

Principled View, Given a Factual Foundation

Presuming that a functional discontinuance has taken place, if the “dominant, essential and operative” reason is one motivated by a legitimate business concern, then there will be no jurisdiction to hear the case. ⁵

First, I agree with many of the fundamental legal principles upon which the Bank relies. It is clear that if a function is discontinued and the dominant, essential and operative reason for the discontinuance is motivated by legitimate business considerations, an adjudicator under a s. 240  complaint is without jurisdiction.

 Two Steps of the Test

The employer must pass two tests, presuming that the facts do show a discontinuance of a function. It must first show that there is a economic justification for the lay-off and secondly, it must provide a reasoned explanation as to the choice of employees whom have been selected for this purpose. ⁶ The employee may then introduce evidence to rebut this position.

This second step differs from the earlier view expressed in a 2001 adjudicative award: ⁷

As well, I agree that the identity of the person selected to fill a new position, where there is a contest between the complainant and a successful candidate, is, generally speaking, irrelevant in assessing the bona fides of the employer, unless the successful candidate is manifestly lacking in relative qualifications.

The law today is that the employer must show a good faith selection process to show why it was that the complainant had been selected from termination. This then goes beyond the genuineness of the business decision to cut back certain functions resulting in the fact of discontinuance. The employer must then show a good faith selection process to show why this person was chosen: ⁸

They do have, however, the burden on the balance of probability to show that their decision to specifically terminate the Complainant in the manner they did was applied in good faith.  As stated in Carlick v. Taku, supra:

14  In summary, if a function is discontinued and the dominant, essential, and operative reason for the discontinuance is motivated by legitimate business considerations, an adjudicator is without jurisdiction. The rationale for the business decision and the context in which it is developed and applied must constitute a seamless continuum. As such, although an employer may be able to establish a sound business rationale for reorganization, the evidentiary onus remains with the employer to show it acted in good faith throughout the process: Mathur v. Bank of Nova Scotia (2001), 12 C.C.E.L. (3d) 280 (Can. Adjud.) [emphasis added]

The issue of two tests was reviewed by the Federal Court of Appeal in 2005. ⁹ The first test was met, after which the Federal Court of Appeal reviewed the adjudicator’s analysis of the second step, that is, to show why it was that the employer had selected this person or persons.

With respect to this issue, the adjudicator started that “we have no knowledge of how they ultimately came to their decision to lay off Ms. Thomas”. For that reason, the decision was found to have been unreasonable. The case was remitted to a new adjudicator.

In essence, the review is one intended to insure that the termination decision was made in good faith and was not a sham intended to get rid of a troublesome employee. ¹⁰ Rouleau-Halpin v. Bell Solutions FCA June 2023]

1. subsection 242(3.1) CLC
2. Fleiger v New Brunswick
3. Mathur v Bank of Nova Scotia FC
4. Carmona v Bank of Nova Scotia April 2017 adjudicator reasons
5. Nihal Mathur v Bank of Nova Scotia, decision of Adjudicator Armstrong in 2001. Case is not on CanLII. This passage comes from Robert Q Airbus Inc. v Ferri
6. Clements v Bearskin Lake Air Services, cited in par 4 Enoch Cree Nation Band v. Thomas FCA 2005
7. Nihal Mathur v Bank of Nova Scotia, decision of Adjudicator Armstrong in 2001. Case is not on CanLII. This passage comes from Robert Q Airbus Inc. v Ferri
8. Rattray-Bennett v Bank of Nova Scotia April 2020 Adjudicator Marvy
9. Enoch Cree Nation Band v. Thomas FCA 2005