Canada: Court Protects Non-Union Employees Against Dismissal Without Cause

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By Peter Menyasz

Sept. 22—The Supreme Court of Canada ruled recently that non-union employees in federally regulated industries have the same protections against dismissal without cause as unionized workers ( Wilson v. Atomic Energy of Canada Ltd., Supreme Court of Canada, No. 36354, 07/14/16).

The finding by an adjudicator that Atomic Energy of Canada Ltd. violated the Canada Labour Code by dismissing supervisor Joseph Wilson was reasonable because the statute was specifically designed to ensure that non-unionized employees under federal jurisdiction be protected against dismissal without cause, Justice Rosalie Abella said in writing the 6-3 ruling.

Employee Suspicious of Dismissal

Wilson was dismissed in November 2009 after four years working with Atomic Energy of Canada, a federal crown corporation that promotes nuclear science and technology and is responsible for managing Canada's radioactive waste liabilities. Wilson, who was provided six months' severance pay, requested written reasons for the dismissal because he suspected it was related to allegations he had made about corruption in the department in which he worked.

The employer refused to provide reasons for the termination, indicating in a letter that Wilson was fired on a non-cause basis. The labor adjudicator's ruling in favor of Wilson's claim that he was unjustly dismissed was overturned by a Federal Court of Canada in a decision later upheld by the Federal Court of Appeal.

Canadian common law provides that non-union employees may be dismissed without reasons if given reasonable notice or pay in lieu, but 1978 amendments to Part III of the Canada Labour Code empower non-union employees with 12 consecutive months of continuous employment to ask for a written statement of the reasons for dismissal, which the employer must provide within 15 days.

If an adjudicator subsequently finds the dismissal unjust, he or she has broad authority to order compensation or reinstatement.

‘Extremely Important' Ruling

The court majority held that severance pay is not an acceptable alternative as it “completely undermines” the protections guaranteed by the Canada Labour Code by permitting employers to deprive employees of the full range of remedies the Canadian Parliament intended.

“The rights of employees should be based on what Parliament intended, not on the idiosyncratic view of the individual employer or adjudicator,” the ruling said. “The adjudicator's decision was, therefore, reasonable.”

This “extremely important” ruling confirms that employees of federally regulated corporations and agencies can only be terminated with just cause, according to Toronto employment lawyer James LeNoury, who represented Wilson in the case. “It brings the meaning of ‘unjust dismissal’ under the Canada Labour Code in line with the accepted interpretation that had been followed by the vast majority of adjudicators since the law's introduction in 1978.”

Legal Experts Split on Ruling's Impact

Canadian employment law experts are split on the ruling's potential impact.

According to Russell Groves, an associate with Toronto law firm Filion Wakely Thorup Angeletti LLP, the ruling brings some clarity to the ongoing confusion over past adjudication results that concluded that the notice and severance provisions in the Canada Labour Code supported dismissal without cause.

“There's a lot of ambiguity in the arbitral jurisprudence and the lower court jurisprudence,” Groves told Bloomberg BNA.

The key implication for federally regulated employers in Canada is to ensure that they fully assess a new employee's performance in the first 12 months, when dismissal without cause is still possible.

“After that, employers are going to potentially have their hands tied,” Groves said.

The court majority's conclusions are extremely broad and some elements are “very confusing,” Christopher D. Pigott, an associate in the Toronto office of Fasken Martineau DuMoulin LLP said, so it is difficult to assess what practical consequences the ruling will have for federally regulated employers.

“Unfortunately, the [court] majority's reasons do not provide clear guidance on a variety of practical questions that arise from these principles,” Pigott said in an analysis “[F]or example, are there circumstances under which an employee can pursue both an unjust dismissal complaint and a civil claim for reasonable notice? It is hoped that these issues will be clarified as the Supreme Court's decision is interpreted and applied.”

To contact the reporter on this story: Peter Menyasz in Ottawa at correspondents@bna.com

To contact the editor responsible for this story: Rick Vollmar at rvollmar@bna.com

For More Information

The Supreme Court ruling is available here.

For more information on Canadian HR law and regulation, see the Canada primer.

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