Federally-regulated employers must have just cause to dismiss non-unionized employees
Canada Labour Code protects federally-regulated non-unionized employees
The Supreme Court of Canada has held that federally-regulated employers cannot dismiss non-unionized employees without just cause.
Joseph Wilson worked for Atomic Energy of Canada Limited (AECL), a federally regulated employer. AECL dismissed Wilson without cause and gave him a 6-month severance package. Wilson refused to sign a release and filed a complaint under the Canada Labour Code alleging that he had been unjustly dismissed.
Section 240(1) of the Code provides that a person who has completed twelve consecutive months of continuous employment by an employer, and who is not subject to a collective agreement, may file a complaint if he or she is dismissed and considers the dismissal to be unjust. An adjudicator who determines that a dismissal was unjust has broad remedial powers under the Code, including the power to reinstate the employee.
For decades, the vast majority of adjudicators have held that s. 240(1) and related provisions effectively import into the Code just cause protections similar to those enjoyed by unionized employees. The adjudicator hearing Wilson’s complaint agreed, and referred the issue of remedy to the parties.
AECL sought judicial review and the Federal Court overturned the adjudicator’s decision. The Federal Court of Appeal dismissed Wilson’s appeal. The Supreme Court of Canada granted Wilson permission to appeal.
The Supreme Court’s decision
On July 14, 2016, a majority of the Supreme Court of Canada granted Wilson’s appeal. It analyzed the language of the Code, the legislative history of s. 240 and related provisions, the 40 years of adjudicators’ decisions and the views of labour law scholars. It concluded that:
…[T]he entire purpose of the statutory scheme was to ensure that non-unionized federal employees would be entitled to protection from being dismissed without cause under Part III of the Code. The alternative approach of severance pay in lieu falls outside the range of “possible, acceptable outcomes which are defensible in respect of the facts and law” because it completely undermines this purpose by permitting employers, at their option, to deprive employees of the full remedial package Parliament created for them. The rights of employees should be based on what Parliament intended, not on the idiosyncratic view of the individual employer or adjudicator.
Of interest to administrative lawyers, the Supreme Court also made it clear that the Federal Court of Appeal had erred in reviewing the adjudicator’s decision on a standard of correctness.
Steven Barrett and Louis Century represented the Canadian Labour Congress, which intervened in the case in support of Wilson.