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Dismissals Without Just Cause are Unjust under the Canada Labour Code: The Supreme Court of Canada’s Decision in Wilson v. Atomic Energy of Canada Ltd [2016] S.C.J. No. 29

After a long anticipated wait, on July 14, 2016, the Supreme Court of Canada (“SCC”), delivered decision affirming that non-unionized federal employees are entitled to comparable protections to those afforded to unionized employees.

Mr. Joseph Wilson (“Mr. Wilson”) worked for Atomic Energy of Canada Limited (“AECL”) for four and a half (4.5) years. Mr. Wilson was a non-unionized federal employee who in November 2009, was dismissed without cause, a clear disciplinary record and received six-months of severance pay. Mr. Wilson filed a complaint of “Unjust dismissal” under section 240(1) of the Canada Labour Code (“Code”).  As a result of the complaint, an investigation took place, and “AECL sent a letter in March 2010 saying that he was ‘terminated on a non-cause basis and was provided a generous dismissal package that well exceeded the statutory requirements.’” (para 9)
Mr. Wilson believed his dismissal was a result of previously filing a complaint of improper procurement practices by AECL.
It was at this point that an adjudicator was appointed to hear the complaint. AECL sought a preliminary ruling to determine “whether a dismissal without cause together with a sizeable severance package meant that the dismissal was a just one.” (para 11).
Relying on a previous federal court decision, the Adjudicator held that, having no reason to terminate Mr. Wilson, his complaint should be allowed. Essentially, an employer cannot avoid the Code’s unjust dismissal provisions by providing generous severance payments.
The Application Judge however, disagreed with the Adjudicator, finding the decision unreasonable. The Applicant Judge held that “nothing in Part III of the Code precluded employers from dismissing non-unionized employees on a without-cause basis” (para 14).
The Federal Court of Appeal, reviewing the matter on a standard of correctness agreed with the Application Judge and the proposition that federally regulated employees could be dismissed without just cause as long as they were given notice or severance pay required under the Code.

 The Supreme Court of Canada’s Decision

In a 6-3 decisions the majority affirmed that the appropriate standard of review is reasonableness. From this, the majority found the Adjudicator’s decision was reasonable. This decision emphasized that the purpose of the Part III of the Code was to afford non-unionized federal employees protections for the dismissal without just cause. Severance pay does not fall under one of these acceptable outcomes; rather it deprives an employee of the remedies made available by Parliament.   
Abella J. wrote an in-depth “analysis of the two conflicting interpretations of the Unjust Dismissal provisions of the Code are agreed with” (Headnote), which the remainder of the majority took note of but did not ultimately endorse. However, she correctly noted that the Code has effectively replaced the common-law doctrine of the right to dismiss without cause provided reasonable notice was given to the employee.  Instead, the Code requires a reason for dismissal.

Our Thoughts

The impact of this decision should not be overlooked. This decision will affect more than half a million non-unionized federal employees rights and remedies. Without the protection of the Code, such employees would not have access to the discretionary remedies contemplated by the Legislature. Instead, for example, similar to unionized employees, non-unionized federal employees have the protections of the Code including the right to seek reinstatement with back pay.
For Arthur Zeilikman’s earlier discussion with Advocate Daily on the significance of this case prior to the release of the SCC’s decision click here:
The above article is for general information purposes only and does not constitute legal advice. If you have concerns with regard to the foregoing issues, please make an appointment with one of our lawyers or a qualified legal practitioner elsewhere.