SCC Clarifies Dismissal Standard For Federally Regulated Employers

On July 14, 2016, the Supreme Court of Canada confirmed that a federally regulated employer requires just cause in order to dismiss a non-unionized employee who has completed twelve consecutive months of service (to read the full decision, see the web link below).

The confusion over the appropriate dismissal standard had been building for years, as adjudicators grappled with specific provisions in the Canada Labour Code and whether the just cause requirement for the dismissal of the employee was the applicable federal employment standard.

The statutory provision underlying the case is set out in Section 240 of the Canada Labour Code, which states: 

“any person…who has completed twelve consecutive months of continuous employment by an employer…may make a complaint in writing to an inspector if the employee has been dismissed and considers the dismissal to be unjust.”

Thereafter, Section 242 requires the adjudicator dealing with the complaint to determine whether or not the dismissal is unjust and, if unjust, to determine the appropriate remedy. Subsection 242(3.1) grants the adjudicator the explicit power to reinstate the employee with full back pay to the date of dismissal, as well as any other remedy which may be appropriate in the circumstances.

The Court adopted the analysis of Prof. Harry Arthurs in his 2006 review of the Canada Labour Code, Part III entitled “Fairness at Work: Federal Labour Standards for the 21st Century”:

“By contrast, if successful before an Adjudicator under Part III, an employee is entitled both to reinstatement and to compensation, not only for the duration of the notice period, but for all losses attributable to the discharge. These are potentially more extensive and expensive remedies than those a court might award.”

In addition, the Supreme Court of Canada confirmed that employees are not confined to the arbitration process to challenge and unjust dismissal. It recognized that “dismissed employees may 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.”

Finally, the Court firmly rejected the approach from a number of cases that suggested adjudicators had the option to follow the common law approach of providing reasonable notice or pay in lieu thereof to employees who had been dismissed without just cause. The cases which had adopted this approach were referred to as a “drop in the bucket” when compared to the total number of cases that adjudicated unjust dismissals for federally regulated employees who had worked for more than twelve consecutive months.

This important decision settles any question about federally regulated employees and their rights upon dismissal. The Supreme Court of Canada has confirmed that federally regulated non-union employees will have comparable protection from unjust dismissal as unionized employees have under a collective agreement regime.

Anyone wishing to read the full decision may find it at the following link:

Wilson v. Atomic Energy of Canada Ltd., 2016 SCC 29 at http://scc-csc.lexum.com/scc-csc/scc-csc/en/item/16062/index.do.

If you have any questions about this ruling or any other Labour and Employment law issue, please feel free to contact Gordon D. Hamilton.