Federally Regulated Employers Cannot Terminate “Without Cause”

July 15, 2016 | Amal Garzouzi

The Supreme Court of Canada has rendered the decision employment experts have been waiting for in Wilson v. Atomic Energy of Canada, reinforcing the views of the overwhelming majority of arbitrators and labour law scholars that the purpose of Part III of the Canada Labour Code (“Code”) was to ensure that non-unionized federal employees would be entitled to protection from being dismissed “without cause”.

The Code applies to federally regulated employers primarily in the banking, broadcasting, telecommunications, interprovincial transportation and aeronautics sectors. In Part III of the Code, the unjust dismissal provisions create a mechanism to protect non-unionized, non-managerial employees with twelve (12) consecutive months of service from being dismissed “without cause” or for reasons other than lack of work or discontinuance of a function.

Mr. Wilson was terminated “without cause” after four and a half years of service and provided with six (6) months of termination pay. Mr. Wilson filed a complaint claiming his dismissal was unjust and a reprisal for having filed a complaint of improper procurement practices on the part of his employer. The employer responded to the complaint by confirming that the termination was conducted on a “without cause” basis but that it provided Mr. Wilson with a generous dismissal package, rendering the dismissal a just one.

The Adjudicator assigned to the complaint allowed it, concluding that an employer could not resort to severance payments, however generous, to avoid a determination under the Code about whether the dismissal was unjust. The employer applied to the Federal Court for judicial review of the Adjudicator’s award, which decision the Federal Court found to be unreasonable. Mr. Wilson appealed to the Federal Court of Appeal which agreed that there is nothing in the Code precluding employers from dismissing non-unionized employees on a “without cause” basis but reviewed the issue on the standard of correctness.

Mr. Wilson appealed to the Supreme Court of Canada. The appeal was granted by a majority applying the standard of review of “reasonableness” and confirming that the Adjudicator’s decision was reasonable. The highest court confirmed that “the purpose of the unjust dismissal provisions was to offer a statutory alternative to the common law of dismissals and to conceptually align the protections from unjust dismissals for non-unionized federal employees with those available to unionized employees.” According to Justice Abella’s reasoning writing on behalf of the majority, the discretionary remedies available to unjust dismissal complainants under the Code, including reinstatement, are inconsistent with the right to dismiss “without cause”.

The decision was to be expected and is anchored on parliamentary intention, statutory language, arbitral jurisprudence and labour relations practice. The practical implication for employers is to ensure that, other than reasons related to the discontinuance of a function or lack of work, there is just cause to dismiss an employee. This framework is identical to the Quebec Labour Standards Act which offers similar protection to non-unionized employees having two (2) consecutive years of service with the employer.       


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