On July 14, 2016, the Supreme Court of Canada ruled in Wilson v. Atomic Energy that the “unjust dismissal” provisions contained in Part III of the Canada Labour Code ensure that non-unionized employees of federally regulated employers are protected from termination of their employment without cause and that federally regulated employers cannot avoid this protection by providing an employee with termination notice and/or severance pay in lieu of notice.
Victory for Federally Regulated Employees
This landmark decision confirms that non-unionized employees working in federally-regulated businesses enjoy the similar protection that unionized employees have managed to collectively bargained in collective agreements with their employers. Wilson also means that, with some exceptions, a federally regulated employer must prove “just cause” to lawfully terminate an employee.
The common law permits an employer to dismiss a non-unionized employee without cause if it provides the employee with proper notice or pay in lieu of such notice. However, in the federal sector, employers and employees are subject to the Canada Labour Code. Subsection 240(1) of the Code allows certain non-unionized employees to lodge a complaint if a dismissal was “unjust”.
There has been a longstanding debate whether subsection 240(1) of the Code alters an employer’s legal right to dismiss a non-unionized employee without cause but with proper notice or severance pay. Adjudicators hearing such complaints have interpreted the Code in different ways. Some adjudicators have ruled that an “unjust” dismissal is the same as a dismissal “without cause”. By this, an employee has a “right to the job”, unless the employer had just cause to terminate the employment relationship. Other adjudicators have taken the view the Code doesn’t affect an employer’s general right to dismiss a non-unionized employee without cause, so long as it provides proper notice of termination or pay in lieu of notice.
The SCC decision
The Supreme Court of Canada’s decision in Wilson unequivocally states that the Code‘s provisions concerning “unjust dismissal” provides “just cause” protection to a large number of non-unionized federally-regulated employees that employers cannot avoid by providing notice of termination or pay in lieu of notice. Furthermore, in the absence of just cause, an employer is exposed to statutory remedies that are more significant than those available in a wrongful dismissal action in court. Wilson appears to have significantly tipped the scales in favour of employees in the federal sector, and it remains to be seen how federally regulated employers and employees will respond.