Supreme Court of Canada Rules that Federal Employees are Protected from Arbitrary Dismissal

14.7.16

The Canada Labour Code (the “Code”), which applies to federally regulated employers, provides that non-union employees in non-management positions with 12 months or more service can bring complaints alleging that the termination of their employment was “unjust.” An adjudicator deciding an unjust dismissal complaint under the Code can award a wide range of remedies if they find the termination was unjust, including reinstatement of the employee.

In our previous release, we summarized the Federal Court of Appeal’s decision in Wilson v. Atomic Energy of Canada Ltd., 2015 FCA 17. The Court of Appeal held that not all without cause terminations are presumptively unjust which was a considerable shift from the established jurisprudence that federally regulated non-unionized employees’ in non-management positions could only be dismissed for just cause similar to the protection afforded to unionized employees.

Today, the Supreme Court of Canada overturned the Court of Appeal’s decision and ruled that the intention of the unjust dismissal provisions of the Code is to provide non-unionized federal employees in non-management positions with dismissal rights analogous to unionized employees. Because of today’s decision, it is now clear that federally regulated employees in non-management positions with more than 12 months’ service may not be terminated without just cause unless the employee is laid off because of lack of work or the discontinuance of a function.

This means that federal employers may not be able to rely on contractual severance clauses to dismiss employees with more than 12 months of service without cause (unless the dismissal is due to a lack of work or the discontinuance of a function), as employees cannot waive their rights under the Code in a contract. Providing common law notice or pay in lieu of notice of such a dismissal will also not suffice.

Practically speaking, the Supreme Court of Canada decision is a return to the state of the law prior to the brief employer-friendly reprise that the Court of Appeal decision provided. The established jurisprudence is that in the case of an unjust dismissal, adjudicators will typically award payment in lieu of notice slightly in excess of an employee’s common law notice entitlement and would rarely award reinstatement. However, in light of the SCC decision there is a risk that we may see more reinstatements. We will keep you apprised of further developments with respect to how the Supreme Court of Canada decision is applied by adjudicators.

For more information, please contact a member of our Labour and Employment Group.