August 18, 2016

Supreme Court of Canada: Federally Regulated Employees Protected From Most without Cause Terminations

The Supreme Court of Canada has recently resolved conflicting case law to hold that federally regulated employees cannot be dismissed without cause, absent a lay off due to “lack of work” or the “discontinuance of a function”.

Under the Canada Labour Code (the “Code”), which applies to federally regulated employers, a non-union employee in a non-management position with at least 12 months of service can bring a complaint under the Code alleging that their dismissal was “unjust”. For many years, most, but not all, case law applying these provisions held that, unless the employer has cause for dismissal or the employee is dismissed because of lack of work or discontinuance of a function, the employee enjoys job protection under the Code. Essentially, such employees were afforded rights similar to the rights enjoyed by unionized employees, including potential reinstatement to their positions.

The state of the law in this area was put in doubt however, in Wilson v. Atomic Energy of Canada Ltd. In that case, the Federal Court of Appeal reviewed an unjust dismissal complaint brought by an employee who was dismissed after four and a half years of service. Wilson was a procurement supervisor at Atomic Energy of Canada Limited (AECL), a nuclear technology and engineering company and a Crown corporation. AECL offered to pay Wilson statutory and common law severance when it terminated his employment. However, Wilson decided to pursue an unjust dismissal complaint under the Code. The adjudicator appointed to hear the dispute held that the employee’s complaint was made out because he had been dismissed without cause, and in circumstances where there was no shortage of work or discontinuance of a function.

AECL sought judicial review and the Federal Court overturned the adjudicator’s decision. The Federal Court of Appeal subsequently upheld the decision of the Federal Court, emphasizing that not all without cause terminations are presumptively unjust. The Court held that adjudicators must examine the specific facts of each case and then determine whether the dismissal was unjust in the circumstances. The Court stated that employees do not have a “right to the job in the sense that any dismissal without cause is automatically unjust.” This decision was a departure from the widely accepted interpretation of the unjust dismissal provisions and welcome news for federal employers.

The Supreme Court of Canada, however, recently overturned the Court of Appeal’s decision and confirmed that federally regulated employees in non-management positions with at least 12 months’ service may not be terminated without just cause unless they are laid off because of lack of work or the discontinuance of a function. The Supreme Court held that the intention of the unjust dismissal provisions of the Code are to provide certain federal employees with the protections afforded unionized workers in the case of dismissal.

When deciding an unjust dismissal complaint, an adjudicator may award a wide range of remedies, including reinstatement, if they find the dismissal was unjust. In light of the Supreme Court of Canada’s decision, adjudicators may be faced with a greater number of decisions in which they consider the possibility of reinstatement of an employee.

This decision establishes that federally regulated employers cannot rely on reasonable notice or payment in lieu thereof in dismissing a non-management employee with at least 12 months’ service. This likely will lead to fewer employees being dismissed once they have reached a year of employment with a federally regulated employer. In addition, employers likely will apply more scrutiny in assessing whether an employee is a good fit for the organization during the first year of employment, before the employee qualifies for job protection under the Code.

Joseph Wilson v Atomic Energy of Canada Limited, 2015 CanLII 39501 (SCC):


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