July 15, 2016

SCC Reaffirms “Just Cause” Requirement for Termination Under the Canada Labour Code

Further to our In A Flash dated July 9, 2015, the Supreme Court of Canada (“SCC”) has overturned the Federal Court of Appeal’s 2015 decision in Wilson v. Atomic Energy of Canada Limited (“Wilson”).
In so doing, the Court extinguished the hope that “common law” termination was available to federally regulated employers for the majority of their workers.
In this case the appellant, Wilson, was dismissed from AECL “without cause” and offered six months’ severance pay in exchange for a release. Wilson refused to sign the release and alleged that he was “unjustly dismissed” under section 240 of the Canada Labour Code (“Code”).
Section 240 protects federally regulated non-union non-managerial employees against “unjust dismissal”, and empowers adjudicators who hear “unjust dismissal” cases to reinstate these employees if they were terminated without just cause, in a manner similar to arbitration in a unionized workplace.
In Wilson, AECL argued that firing an employee without cause was not an “unjust dismissal” under the Code, if the employee received a fair severance package. The first-level adjudicator disagreed, deciding that employers could not use severance, even generous severance, to avoid “unjust dismissal” adjudications.
The case eventually made its way to the Federal Court of Appeal, which decided in favour of the employer and found that “just cause” was not needed to terminate an employee under the Code.
Wilson appealed this decision to the SCC and won. Though disappointing, the outcome is not a surprise.
The SCC found that the text, the legislative intent, and the views of the overwhelming majority of arbitrators and labour law scholars all pointed to the conclusion that the purpose of section 240 was to protect non-unionized non-managerial federal employees against dismissal without cause. To conclude otherwise “would have the effect of rendering many of the Unjust Dismissal remedies meaningless or redundant.”
The SCC confirmed that employees covered by the Code may also “choose to pursue their common law remedy of reasonable notice or pay in lieu in the civil courts instead of availing themselves of the dismissal provisions and remedies in the Code.”
In practice, just cause adjudications under the Code are often the exception not the rule.  Employees often don’t want to return, and make either make a deal or start a civil action.  Still, this decision will force federally-regulated employers to keep an eye on the “just cause” standard when they assess the risks of termination. Too bad.
If you have any questions about this topic or any other questions relating to workplace law, please do not hesitate to contact a Mathews Dinsdale lawyer.
For more information on new developments in Workplace Law, please refer to our website at:  https://mathewsdinsdale.com/news-events/in-a-flash/
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