Major Blow to Federal Employers’ Right to Terminate Employees18-Jul-16
By David Foster
On July 14, 2016, the Supreme Court of Canada released its decision in the case of Wilson v. AECL. The court’s ruling effectively removed the common law right of employers to dismiss non-unionized employees that are federally regulated under the Canada Labour Code (the “Code”) with notice or pay in lieu. Previously there had been a conflicting line of case law over the past few years that said that employers in federally regulated industries retained this common law right. This new decision brings an end to this thought. It overturned the Federal Court of Appeal’s ruling on this particular matter, which until now had been the last word on the subject.
Wilson was employed as an administrator for Atomic Energy of Canada Ltd. for four and a half years, with no disciplinary record. The employer’s position was that, although it was “without just cause”, he had been given a generous (six-month) severance package. The adjudicator ruled that under Part III of the Code, no amount of notice or pay in lieu would amount to making an unjust dismissal just. The adjudicator’s decision was overturned at the Federal Court level and then Wilson’s appeal was dismissed by the Federal Court of Appeal.
In her majority reasons, Justice Abella held that, with the 1978 amendments to the Code, it was Parliament’s intention to offer this class of employees the same or analogous protections to those enjoyed by unionized employees in the collective bargaining context. In her view, sections 240-246 of the Code were meant to protect these employees from arbitrary dismissal. These sections provide broad remedies to an adjudicator in cases where the dismissal is found to be “unjust”. They include compensation for the employee, possible reinstatement or the ability to grant any other suitable remedy. These remedies are in addition to any civil court remedies that might be available to the employee.
The takeaway from this case for employers in the few industries that are federally regulated (such as broadcasting, banking, aviation, inter-provincial trucking etc.) is that as the law currently stands, dismissal without cause with notice or pay in lieu is no longer an option. Dismissals are still allowed for just cause, lack of work or discontinuance of function.