Unjust Dismissal Under Canada Labour Code

Remedy of Reinstatement



The broad purpose of the remedy is one intended to place the innocent party into the position of “not suffering an employment related disadvantage as a result of his unjustified dismissal”. 1 This is the “make whole” concept, as found also in human rights jurisprudence on this same issue of remedy.


Provided that the statutory discretion has been exercised in good faith and has followed the principles of natural justice and presuming no reliance has been put upon irrelevant or extraneous evidence, then courts will not interfere in the remedy provided, including reinstatement or not. 2

The balancing of factors supporting or denying reinstatement, is not one for the court. This is a function of the first decision maker and should not be reversed, save for the exceptions noted above. 3

Presumptive Remedy ?

There has been much debate as to whether reinstatement is a presumptive remedy or but one issue to be considered when fashioning the remedy.

Letourneau J.A. was one of two sets of reasons delivered in the Federal Court of Appeal in 1998. He was of the view that reinstatement is considered the presumptive remedy. As noted by the Federal Court of Appeal: 4

It is true that reinstatement is not a right even after a finding of unjust dismissal, but, as I. Christie et al. properly point out, the exception to reinstatement should be applied very cautiously otherwise the risk exists that an unjustly dismissed employee will be penalized by losing his job.19 Indeed, a finding of unjust dismissal is a finding that the work relationship should not have been severed in the first place. In such cases, the presumption is, in my view, clearly in favour of reinstatement unless there is clear evidence to the contrary.

Although not a right, is the remedy favoured by adjudicators, save exceptional circumstances, and when not awarded, the exception should be applied cautiously. 5

However, this was not the majority decision. Two decisions were provided. Letourneau J.A., in concurring reasons, saw reinstatement as the presumptive right. Marceau J.A. saw reinstatement as one alternative remedy to which no presumptive right attached. Strayer J.A. concurred with Marceau J.A.

Marceau J.A. noted:

... Reinstatement, in my understanding, is not a right that a wrongfully dismissed employee possesses as he may possess human rights. It is a long-established common law, as well as civil law, rule that the courts will not order specific performance of a contract of personal service whose execution requires the constant personal dedication and willingness of one or both parties. ...

And continued:

The unfair dismissal provisions for non-unionized employees in the Canada Labour Code no doubt represent a statutory modification of the traditional rule that an employment contract will never be specifically enforced. But they certainly do not, and even could not, go so far as to create a right in the person of the wrongfully dismissed employee. ... They simply provide for reinstatement as a possible remedy that may be resorted to in proper situations. ... It is undisputable, however, on a mere reading of subsection 242(4) of the Code, ... that an adjudicator is given full discretion to order compensation in lieu of reinstatement, if, in his opinion, the relationship of trust between the parties could not be restored.

This being said, the Federal Court of Appeal in the case above, upheld the decision of the adjudicator not to award reinstatement, noting that  considerable discretion has been given to the adjudicator to fashion the remedy:

It is undisputable, however, on a mere reading of subsection 242(4) of the Code, ... that an adjudicator is given full discretion to order compensation in lieu of reinstatement, if, in his opinion, the relationship of trust between the parties could not be restored.

In a 2012 decision, the Federal Court of Appeal reviewed allegations of just cause and the remedy allowed by the adjudicator in its decision, discussed above on the question of just cause. [/efn_note] Payne v Bank of Montreal FCA Feb 2013; First review FC April 2012 ]/efn_note]

Mark Payne had been the manager of the bank branch in Woodstock, Ontario. The events leading to his dismissal for just cause centered on a sexual relationship he had with his assistant branch manager.

The adjudicator had found no cause for dismissal and ordered his reinstatement.

A differing view was taken of the reinstatement award, albeit one accompanied by a four month suspension. The remedy award was found to have been unreasonable and the case was remitted to a new adjudicator for determination.

The adjudicator found that reinstatement was the preferred remedy following an unjust dismissal, barring “exceptional circumstances”, as noted above.

The fundamental question to be posed in the assessment of reinstatement as the correct remedy is whether the employer may have confidence in the future of the working relationship.  [/efn_note] Payne v Bank of Montreal FCA Feb 2013 [/efn_note] In this instance, the adjudicator asked the question as to whether the ongoing relationship was “unrealistic”. The Court of Appeal drew a fine line on this question and concluded that the adjudicator had not applied the right test.

Even had the right question been posed, the Federal Court of Appeal concluded that the adjudicator also failed to consider the impact of reinstatement upon the incumbent in this position. This court also noted that the adjudicator failed to consider, in the remedy decision, the fact that Payne continued the sexual relationship after his level 3 discipline notice. This defied the conclusion that the bank could trust him in an ongoing relationship.

Given a roughly five year work history, the absence of a clean track record, the Court of Appeal saw the award of reinstatement as unreasonable.

The present status of the law is clearly that the remedy of reinstatement is not a right, but rather one of the available remedies, which an adjudicator has full discretion to use. 6

There is no burden upon the employer to demonstrate why reinstatement is not appropriate, 7 rather, the adjudicator should weigh the evidence to determine the proper remedy.

In assessing whether reinstatement should be ordered, adjudicators have considered many factors. A list of some such influencing factors, not intended to be exhaustive was made by the Federal Court in 2012. 8

  1. The deterioration of personal relations between the complainant and management or other employees. …
  2. The disappearance of the relationship of trust which must exist in particular when the complainant is high up in the company hierarchy. …
  3. Contributory fault on the part of the complainant justifying the reduction of her dismissal to a lesser sanction. …
  4. An attitude on the part of the complainant leading to the belief that reinstatement would bring no improvement. …
  5. The complainant’s physical inability to start work again immediately. …
  6. The abolition of the post held by the complainant at the time of [their] dismissal. …
  7. Other events subsequent to the dismissal making reinstatement impossible, such as bankruptcy or lay-offs. …

A fundamental precept of reinstatement, where cause has been alleged or even proven, yet short of termination grade, is that the complainant must demonstrate a rehabilitative intent to show that reinstatement is worthy: 9

The complainant was guilty of misconduct worthy of discipline short of dismissal, but at the hearing she was completely unwilling to accept that she had been at fault in any way. In these circumstances, reinstatement is not, in my opinion, appropriate.

The essential issue being examined is the likelihood of a productive ongoing working relationship.

Review Where No Presumptive Remedy

In a 2018 adjudicative decision, one which was not reviewed, the adjudicator stated that even if it so that there is no legal presumption, adjudicators still require “strong evidence that reinstatement is unsuitable and the work relationship is irretrievably damaged”. 10

Reinstatement to an Alternate Position

The current state of the law is that the adjudicator is not empowered to reinstate to an alternative position. 11

This principle came from a Federal Court of Appeal decision in 1985. 12

Conditions Attached

The Federal Court of Appeal in 1993 considered the authority of the adjudicator to attach conditions to the order of reinstatement, as was done in this case by the adjudicator. The contested order was that reinstatement by accompanied by conditions for a three-year period: following any absence of more than three days, the appellant was required to submit to a medical, if so requested. Should the employer decide that the employee’s back could not handle the stress of the job, the employer could apply for an order discharging him. The order also stated that the adjudicator would remain seized to consider any issues which may arise. 13

The Federal Court of Appeal took solace in the views of the Supreme Court of Canada in Slaight v Davidson in which the power of the adjudicator to order a reference letter was upheld. This decision spoke to a broad interpretation of the remedial power under the Code.

A submission was also made that the adjudicator could not reserve jurisdiction as he was functus upon making of the first order. This was rejected based on the theory that the adjudicator was at liberty to design his order in the context of the case before him.

A similar order was made in a 1981 case also reviewed in the Federal Court of Appeal. In this instance, the adjudicator had ordered reinstatement for a four month period, after which the remedy would again be reviewed by the same decision maker. This event followed at which time the order was made that the employee was permanently restored and also set out his reclassification and salary increase. This second order also raised the remaining need to consider Employment Insurance deductions and repayment by the adjudicator. It was this latter issue that led to a successful functus argument. 14 While this issue was made as to the second order, there was no debate as to the propriety of the first.

Impact on Non-Parties

In one case, several bank managers from the respondent gave evidence that there was no comparable position available for the requested reinstatement. The adjudicator, nonetheless, found that he did not believe any harm would have resulted to a non-party. The Bank had argued that reinstatement would lead to the termination of such an innocent party. The Federal Court of Appeal had previously held that this should prevent the remedy of reinstatement: [/efn_note] Royal Bank of Canada v Cliche, [1985] FCJ No 424 at p 3 (FCA) [Cliche]. This case is not reported. It is cited in Bank of Montreal v Sherman [/efn_note]

To carry [the order] out, the employer must either create a new position or free up an existing position by dismissing or transferring the employee already occupying it. The wrongful nature of such a remedy is immediately apparent: either the employer is being required to increase or reorganize its staff, or it will have to infringe the rights of an innocent third party.

In Sherman, the Federal Court reversed the adjudicator’s award of reinstatement, for several reasons, one of which was the order to reinstate to a lesser position in this context.