Today, the Supreme Court of Canada allowed the appeal in Wilson v Atomic Energy of Canada
Limited, and ruled that federally regulated employers must
provide justification for dismissing a non-unionized employee or
risk facing the "galaxy of discretionary remedies, including,
most notably, reinstatement" provided for under the Canada
Labour Code (the “Code”). Unfortunately
for federally regulated employers, this decision overturns the
Federal Court of Appeal ruling we
wrote about early last year and confirms the notion that
federally regulated, non-unionized employees cannot be dismissed
without cause or reasons. In other words, a federal sector employer
cannot simply terminate the employment of an employee by providing
reasonable notice, whether measured by the statutory minimums
provided under the Code or the common law.
The facts in this case are straightforward. Joseph Wilson had
been employed by Atomic Energy of Canada Limited ("AECL")
for 4.5 years when he was dismissed without cause and without
reasons. AECL provided Wilson with a generous severance package of
6 months' pay in lieu of notice, well above the statutory
Wilson filed an "Unjust Dismissal" complaint claiming
he was unjustly dismissed contrary to section 240(1) of the
Code. The primary issue at the hearing was whether AECL
could lawfully terminate Wilson on a "without cause"
basis. At the original hearing, the adjudicator acknowledged that
decision makers were divided into "two camps" on the
issue. The first camp recognized a right to "without
cause" dismissal under Code, while the second camp
After reviewing the jurisprudence under the Code, the
adjudicator held that AECL could not avoid an Unjust Dismissal
determination by providing a sizable severance package. However, on
judicial review and appeal, both the Federal Court and the Federal
Court of Appeal disagreed with the adjudicator and decided that the
common law rule that an employee can be dismissed without cause if
provided with reasonable notice remains in place under the
Wilson appealed to the Supreme Court of Canada.
The Supreme Court of Canada's Decision
In a 6-3 decision, Justice Abella wrote for the majority and
restored the adjudicator's original decision. Ruling that the
adjudicator's decision was reasonable, the majority held that
sections 240 – 246 of the Code displace an
employer's ability at common law to fire an employee without
reasons if reasonable notice is given. The majority supported its
decision by reviewing the statutory language in the Code,
Parliament's intent when enacting the provisions, the arbitral
jurisprudence and labour relations practice.
Implications for Federally-Regulated Employers
With this ruling, the Supreme Court of Canada has confirmed that
the statutory scheme provided for under the Code offers
expansive protections to non-unionized federally-regulated
employees, much like the protections available to unionized
employees covered by a collective agreement. It sets the federal
sector apart from most Canadian provinces (other than
Québec, which offers similar protections to employees with
two years of continuous service, and Nova Scotia, for employees
with ten years of continuous service) by providing federal sector
employees with a much higher degree of employment protection, and
correspondingly higher limits on employer flexibility (while still
being fair to employees in terms of severance). It effectively
applies and results in an inconsistent approach to Canadian labour
laws that otherwise, particularly on the common law front, have
become more uniform over past years.
We are hopeful that in the current review of the federal
workplace, the Federal Government will review this ruling and
realize that the Code is out of step with the majority of
the rest of Canada. In the interim, however, federally regulated
employers must be careful to ensure they are able to and do justify
their dismissal decisions with reasons, such as demonstrating
"just cause", a layoff for lack of work or the
discontinuance of a function. Without proper justification, an
employee may be entitled to a host of remedies under the
Code including, but not limited to, reinstatement of
employment with back pay, which can be much costlier and more
problematic than pay in lieu of reasonable notice.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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