On July 14, 2016, the Supreme Court of Canada rendered its
decision in Wilson v. Atomic Energy of Canada
Limited, where the 6-3 majority concluded that
federally regulated employers subject to the Canada
Labour Code (the Code) cannot dismiss their
employees on a without cause basis. The Supreme Court restored the
initial decision by the adjudicator assigned to the complaint,
overturning the decision by the Federal Court of Appeal on judicial
As you may recall from our previous post on the Federal Court decision in
this case, Joseph Wilson had been an employee of Atomic Energy of
Canada Ltd. (AECL) for four and a half years when he was terminated
without cause and provided with a severance package of six
months' pay. Mr. Wilson made an unjust dismissal complaint
under the Code.
The labour adjudicator who heard Mr. Wilson's complaint at
first instance concluded that the Code does not permit the
termination of an employee's employment without just cause;
therefore, AECL could not resort to severance payments, however
generous, to avoid a determination under the Code about whether the
dismissal was unjust. The complaint was therefore allowed. On
judicial review at the Federal Court, Justice O'Reilly
overturned the adjudicator's decision on the basis that the
Code had been improperly interpreted. Justice O'Reilly held
that nothing in Part III of the Code precluded federally regulated
employers from dismissing non-unionized employees on a without
cause basis, and that employment can be terminated without cause so
long as minimum notice or compensation is given. The Federal Court
agreed, but reviewed the issue on a standard of correctness.
Supreme Court of Canada Decision
Mr. Wilson appealed the Federal Court decision to the Supreme
Court, and the adjudicator's decision was restored. Applying
the reasonable standard (as agreed by the parties themselves), the
Supreme Court held that the adjudicator's decision was
reasonable given the common interpretation of the unjust dismissal
provisions of the Code. Justice Abella, writing for the majority,
stated that "[t]he text, the context, the statements of the
Minister when the legislation was introduced, and the views of the
overwhelming majority of arbitrators and labour law scholars"
confirmed that the purpose of Part III of the Code was to entitle
non-unionized employees in the federal sector to protection from
being dismissed without cause. Justice Abella concluded that to
allow federally regulated employers to provide severance pay rather
than abide by the unjust dismissal provisions of the Code would
undermine the intention of Parliament to protect employees'
rights against arbitrary dismissal.
In her decision, Justice Abella highlighted the fact that, of
the 1,740+ adjudications and decisions since the unjust dismissal
scheme in the Code was enacted, only 28 (10 having been rendered
post the Federal Court decision) have gone against the principle
that employers subject to the Code cannot dismiss their employees
without cause. Accordingly, this decision arguably restores the
status quo on this issue. However, we note that three of the
Justices who dissented from the outcome agreed with the Federal
Court's finding that the adjudicator had misinterpreted the
Code, and that the context of this case justified a correctness
standard of review of the adjudicator's decision.
Note that this legislative scheme applies to non-unionized
employees employed by a federally regulated employer who have
completed twelve consecutive months of continuous employment, and
to any termination without cause, unless it is the result of lack
of work or the discontinuance of a function. The range of remedies
under the Code are broad and include reinstatement to employment
and making the employee "whole" for the losses arising as
a result of the dismissal. The provisions of the Code do not,
however, limit an employee's right to bring a civil claim for
wrongful dismissal against their employer.
Moving forward, employers should turn their minds to the
documentation of progressive discipline and enhancing their
performance management programs, given the Court's emphasis on
these measures. Additionally, employers will want to assess new
employees within the first year of their employment to ensure they
are suitable for employment with the company, as employees must
have completed twelve months' service in order to make a
complaint under the Code.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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