On July 14, 2016, the Supreme Court of Canada released Wilson v Atomic Energy of Canada Ltd, 2016 SCC 29, in which the majority of the Court concluded that federally-regulated employees cannot be terminated without just cause.[1] The majority found that the “Unjust Dismissal” provisions under Part III of the Canada Labour Code (“Code”) are intended “to expand the dismissal rights of non-unionized federal employees in a way that, if not identically, then certainly analogously matched those held by unionized employees.”
“Sizeable Severance Package” Does Not Deprive Employee of Right to Reinstatement
In November 2009, Atomic Energy Canada Limited (“AECL”) terminated Mr. Joseph Wilson’s employment as a Procurement Supervisor, and offered a severance payment in lieu of notice. Mr. Wilson had been employed with AECL for four and a half years, and had a clean disciplinary record. Mr. Wilson filed a complaint under subsection 240(1) of the Code, alleging his dismissal was unjust because it was in reprisal for filing a complaint of improper procurement practices. Under the Code, an inspector may request reasons for the employee’s dismissal. In response to this request, AECL sent a letter stating Mr. Wilson was “terminated on a non-cause basis and was provided a generous dismissal package that well exceeded the statutory requirements.”
An arbitrator was appointed to hear the complaint. Before the arbitrator, AECL requested a preliminary ruling on the issue of whether a dismissal without cause and with a “sizeable severance package” meant the dismissal was just. The arbitrator concluded that an employer cannot avoid a determination under the Code of whether the dismissal was unjust by paying a severance package. The complaint of unjust dismissal was allowed since the employer did not rely on cause to fire Mr. Wilson.
The decision of the arbitrator was ultimately upheld by the Supreme Court of Canada. The majority of the Court found that the Code displaced the common law. Under the common law, an employer may dismiss a non-unionized employee without reason as long as reasonable notice or payment in lieu thereof is provided. The Court also confirmed that the remedies available under the Code reflect those generally available in unionized workplaces.
Employers Should Have a Progressive Discipline Policy
The standard of just cause is likely to be determined by reference to labour arbitration decisions. As briefly noted by Justice Abella, progressive discipline is a concept related to just cause in unionized workplaces.
Under a system of progressive discipline, employers impose disciplinary sanctions in a manner that gradually increases in severity. This system of discipline is viewed as a fair and effective way for an employer to convey the seriousness of misconduct to employees, prior to dismissal.[2]
Employers should adopt progressive discipline as a best practice. Progressive discipline requires the following:
- making employees aware of performance problems;
- working with employees to rectify them; and
- a gradual increase in the severity of discipline.
The penalty must be proportional to the misconduct.
Note that the “Unjust Dismissal” provisions under the Code are not applicable where the employee is dismissed because of a lack of work, where there is a discontinuance of a function or where an alternative statutory remedy is available.
Employee May Choose Civil Action or Complaint under the Code
Employees are entitled to choose between a court action or a complaint under the Code. The Courts continue to have jurisdiction to decide whether an employee was wrongfully dismissed. However, the only available remedies in Court are monetary. The remedies available under the Code are more extensive. An employee proceeding under the Code may be entitled both to reinstatement and to compensation for losses attributable to the discharge. Employees should be aware of the applicable limitation periods. Under the Code, a complaint must be filed within ninety days from the date of dismissal.
For more information about appropriate employment policies and practices as well as unjust dismissal claims, contact Pink Larkin.
[1] The “Unjust Dismissal” provisions only apply to non-unionized and non-manager employees who have completed 12 months of consecutive months of continuous employment.
[2] Brown & Beatty, Canadian Labour Arbitration