Ruling reprieve for federal non-unionized employees, The Law Times (July 25, 2016, p. 7)

The question of whether it is ever lawful for federally regulated employers to dismiss non-unionized employees without just cause has been plaguing the federal employment sector with uncertainty for decades. It’s been the cause of widespread judicial controversy.

In Wilson v. Atomic Energy of Canada Ltd., 2016 SCC 29, the Supreme Court of Canada settled the controversy by resolving that the unjust dismissal scheme, which Parliament devised in Part III of the Canada Labour Code, was designed to ensure that non-unionized federal employees can only be dismissed for just cause. This statutory protection is analogous to that enjoyed by unionized workers under collective agreements.

In Wilson, Atomic Energy Canada Limited terminated Joseph Wilson’s 4.5-year employment without cause, but it provided him with a severance package of 24 weeks. Wilson filed an unjust dismissal complaint under the Code, asserting that AECL fired him in reprisal for complaining about its improper procurement practices.

At the outset of the unjust dismissal hearing, AECL sought a preliminary ruling on whether a dismissal without cause but with pay in lieu of notice meant that the dismissal was not “unjust.” The adjudicator ruled that dismissal without cause is automatically an unjust dismissal and that an employer could not resort to severance payments in order to avoid a determination under the Code about whether the dismissal was unjust.

Displeased, AECL applied for judicial review.

On judicial review, the Federal Court quashed the adjudicator’s decision, because, in its view, the Code did not preclude employers from dismissing non-unionized employees on a without-cause basis. The Federal Court of Appeal agreed, but it reviewed the issue on a standard of correctness.

On appeal, the SCC majority, under the pen of Justice Rosalie Abella, clarified that the decisions of labour adjudicators applying the unjust dismissal provisions of the Code attract a reasonableness standard, which is concerned with whether a decision falls within a range of possible, acceptable outcomes that are defensible in respect of the facts and law.

Justice Abella started the conversation about whether the reasonableness and correctness standards of review should be collapsed into a single more broadly conceived standard of reasonableness. Its impetus: simplification of the judicial review process. However, both concurring and dissenting justices expressed caution in the proposed revamping of the standards of review.

Applying a reasonableness standard, the SCC concluded that by permitting employers to dismiss employees without cause simply by providing adequate severance pay falls outside the range of acceptable outcomes, because it deprives non-unionized federal employees of plurality of protections and remedies available to them under the Code (e.g. requirement to provide reasons, reinstatement, equitable relief).

The SCC explained that the foundational premise of the common law scheme, which includes a right to dismiss on reasonable notice without cause or reasons, has been ousted by the Code, which includes a regime requiring reasons for dismissal. It added that the protections that the Code granted to employees cannot be superseded by a more restrictive common law regime. Consequently, the unjust dismissal provisions in the Code are not a mere procedural mechanism but a substantive labour standard.

The Code contemplates an option for dismissed employees to pursue their common law remedy of reasonable notice or pay in lieu in the civil courts instead of availing themselves of the unjust dismissal provisions and remedies under the Code. However, if they choose to pursue their rights under the unjust dismissal provisions of the Code, only those provisions apply. The Code imposes a 90-day limitation for complaints about unjust dismissal, after which the employee would lose his or her right to access the unjust dismissal procedure under the Code but retain an option to challenge the lawfulness of a dismissal in the civil court.

The two types of proceedings differ. The unjust dismissal procedure under the Code is more efficient than a civil action because it involves: less stringent evidentiary rules; an expert adjudicator who is well versed in the factual nuances of employment relationships; and a stricter timeline than a court action. Remedies under the Code are more extensive and expensive than those a court might award under the common law.

Wilson is a welcome reprieve for non-unionized federal employees, which restored the job security contemplated by the Code. Its practical implication is that all dismissals without just cause are unjust dismissals, unless they are related to layoffs or discontinuance of a job. Given that remedies under the Code are superior to those the civil courts can award, it is likely that, in the Wilson aftermath, there would be an increase in unjust dismissal complaints.

The Wilson effect on federally regulated employees is equally profound, albeit from different perspectives. Not only did it alter the nature of the employment relationship, it also significantly curtailed the employers’ ability to manage their workforces.

Employers should keep in mind that there is no unjust dismissal protection available to employees who are managers or employed for less than 12 consecutive months. Nor can the protection be invoked in cases of layoffs or discontinuance of a job.