Federal Court of Appeal Overhauls Unjust Dismissal Law under the Canada Labour Code

The Federal Court of Appeal recently issued a decision overhauling the state of federal employment law. In Wilson v Atomic Energy of Canada Ltd, 2015 FCA 17, the Court  rejected the generally accepted approach to unjust dismissal complaints under the Canada Labour Code (“Code”), which applies to workers who are employed in federally regulated industries. The decision in Wilson has profound implications for non-unionized federally regulated employees. Mr. Wilson is currently seeking leave to appeal the Federal Court of Appeal’s decision to the Supreme Court of Canada.

Background on termination of employment of unionized and non-unionized employees

Unionized workers can only be dismissed with just cause

For most unionized workers, terms and conditions of employment are governed by collective agreements which include a requirement that the employer only terminate an employee where there is just cause for dismissal. Just cause is a high threshold for an employer to meet and provides substantial protection for unionized workers.

Non-unionized federal workers cannot be dismissed “unjustly”

Section 240 of the Code provides non-unionized federal workers with the right to make “unjust dismissal” complaints, provided they have been employed for at least 12 months and they allege that they have been dismissed “unjustly”. The Code also provides statutory remedies for federal workers who are dismissed unjustly, including reinstatement to employment, which are not available to non-unionized provincial workers.

Non-unionized provincial workers can be dismissed without cause

At common law, non-unionized employees who work for provincially regulated employers – the vast majority of employers in Canada – can be dismissed without cause provided that employers provide reasonable notice of termination, or pay in lieu or reasonable notice. A dismissal that is both without cause and without reasonable notice is a wrongful dismissal. Read more about termination in the provincial sphere here.

The Pre-Wilson Approach to Unjust Dismissal Complaints under the Code

Prior to Wilson, there was an established line of cases holding that federal employers could only dismiss employees for cause, similar to the just cause protections provided for in collective agreements. Leading employment law scholars, Innis Christie and Geoffrey England, have explained that the Code’s unjust dismissal provisions were intended to:

“provide the non-unionized employee with substantially similar protections against unjust discharge as the unionized employee enjoys under a collective agreement.”

However, Code adjudicators have disagreed on this point and there are conflicting decisions on whether the Code permits dismissals on a without cause basis. As Code adjudicators are bound by decisions of the Federal Court of Appeal, Wilson settles the disagreement, unless the Supreme Court of Canada grants leave to appeal and weighs in on the issue.

Wilson v Atomic Energy of Canada Ltd

A Code adjudicator determined that AECL had violated the Code by terminating Wilson on a without cause basis. AECL applied for judicial review of this decision at the Federal Court, and the Federal Court overturned the adjudicator’s decision. Mr. Wilson appealed the Federal Court’s decision to the Federal Court of Appeal.

A dismissal without cause is not “unjust”

In Wilson, the Federal Court of Appeal concluded that:

  • a dismissal without cause is not automatically unjust under the Code;
  • this is consistent with the common law of employment, which allows for dismissal without cause so long as the reasonable notice requirement is met; and
  • the Code cannot be interpreted as giving non-unionized employees a “right to the job” or attempting to place unionized and non-unionized employees in the same position.

Code adjudicators must determine if a dismissal is “unjust” in all of the circumstances

The Court also explained the role of Code adjudicators in unjust dismissal complaints:

  • it is up to Code adjudicators to look into the circumstances of each case to determine if the dismissal was “unjust”; and
  • adjudicators do not have “free rein” to find a dismissal unjust on any basis, although the fact that an employer has paid an employee severance pay does not preclude a finding that the dismissal was unjust.

However, beyond commenting that “unjust” is a term that “sits alongside and gathers much, if not all, of its meaning from well-established common law and arbitral cases concerning dismissal”, the Court declined to interpret the meaning of “unjust”. It will now be up to Code adjudicators to determine the meaning of “unjust” through the development of case law.

Supreme Court will decide whether to weigh in on this dramatic change for federal employees

The Federal Court of Appeal’s decision marks a major departure from an established line of cases, and creates considerable uncertainty in the law going forward. The Federal Court of Appeal left open the meaning of “unjust”, the very basis for section 240 complaints, which may now make it more difficult for a worker to assess the merits of an unjust dismissal complaint. Mr. Wilson’s leave application will thus be closely followed by federal workers and their advocates, who undoubtedly hope the Supreme Court will intervene on this important issue.

Some of the questions that may be raised, if the appeal is heard by the Supreme Court, include:

  • What, if any, differences are there between a common law wrongful termination and an unjust dismissal under the Code?
  • Is it contrary to the policy reasons for section 240 of the Code to permit terminations “without cause”?
  • Will reinstatement remain available as a remedy for unjust dismissal complaints under the Code, if employers are now permitted to terminate without cause? If so, under what circumstances will it be ordered?

It is hoped that an appeal before the Supreme Court will bring clarity to these issues, and resolve them in a manner that is consistent with the protections Parliament intended to afford to federally regulated employees.

[This article is for informational purposes only and does not constitute legal advice, which cannot be given without consideration of your individual circumstances.]

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