Further Update: Wilson v Atomic Energy – Unjust Dismissal Under the Canada Labour Code

Last year, we blogged about the Federal Court of Appeal’s decision in Wilson v Atomic Energy  here, and specifically its determination that a dismissal without cause under the Canada Labour Code (“Code”) was not an unjust dismissal pursuant to sections 240 to 246 of the Code. In July 2016, the Supreme Court weighed in (2016 SCC 29), reversing the Federal Court of Appeal in a landmark decision.

Sections 240 to 246 were enacted by amendment to the Code in 1978. These provisions, contained in Division XIV of Part III of the Code, introduced a complaints procedure for dismissed, non-managerial, federally regulated employees who:

  1. Are not covered by a collective agreement; and
  2. Have worked more than 12 consecutive months.

Similar to the language used in the unionized context, the Code offers a host of remedies to these employees when their dismissal is determined to be “unjust”.

In the union context, an unjust dismissal generally includes any termination without cause. On the contrary, in the non-unionized context, employees may be terminated without cause, so long as they are provided with reasonable notice or compensation in lieu thereof.

The dispute that arose with respect to the Code was whether sections 240-246 displaced the basic principle that employers may dismiss their non-unionized employees without cause.

Until the Federal Court of Appeal’s decision, the bulk of adjudicators under the Code concluded that any dismissal without cause is unjust pursuant to the Code. The Federal Court of Appeal disagreed, concluding that the Code created an alternative forum to the courts, but did not oust the traditional common law, from which dismissed employees may seek remedies.

The Supreme Court of Canada has now weighed in and confirmed that even non-unionized federally regulated employees may only be dismissed for just cause.

With Justice Abella writing for the majority (supported by5 concurring Justices), the Supreme Court concluded that Parliament’s intention in enacting the sections 240 to 246 of the Code was to offer “expansive protections much like those available to employees covered by a collective agreement” (paragraph 1). Justice Abella highlights that even the language of “unjust dismissal” presumes that an employee can only be dismissed for just cause, a term that is informed by years of dismissal decisions pursuant to collective agreements.

In addition to the government’s statements regarding the purpose of these provisions when they were introduced, Justice Abella states that the requirement in section 241 of the Code for employers to provide reasons for dismissal and the “open-ended equitable relief available under s.242(4)(c), are … utterly inconsistent with the right to dismiss without cause” (paragraph 63).

In reconciling her conclusion with the language of sections 230 and 235 of the Code, which mandate notice requirements and minimum severance obligations for federally regulated employees, Justice Abella states that sections 230 and 235 “apply only to those who do not or cannot avail themselves of [sections 240-246]” (paragraph 47).

As noted above, managers, unionized employees and persons who have been employed for less than a year do not benefit from the complaints procedure for unjust dismissals under the Code. These employees may still be terminated without cause, and are protected by the minimum standards set out in sections 230(1) and 235(1) of the Code. Moreover, nothing in the Supreme Court’s decision purports to prohibit federally regulated employees excluded from the unjust dismissal regime from commencing legal proceedings seeking reasonable notice or other common law remedies for without cause dismissals.

However, the Supreme Court’s decision has made it much more difficult for employers to adapt their personnel to the needs of their operations on an ongoing basis. Going forward, you can expect federally regulated employers to be more focused on determining the fit and appropriateness of a hire prior to their one year anniversary date.

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