The Supreme Court of Canada has confirmed in Wilson v. Atomic Energy of Canada Ltd., 2016 SCC 29, that for federal sector employers, employees may claim “unjust dismissal” under the Canada Labour Code (CLC) and obtain remedies including reinstatement with back pay even where the employer is not asserting just cause for “firing” the employee and has offered or paid contractual severance.
A limited number of businesses in Canada are covered by the federal CLC rather than provincial employment laws. Most are either federal Crown corporations or involved in aboriginal government, banking, telecommunications, television, aviation or inter-provincial or international communications or transportation. Since 1978 the CLC has included a right for dismissed non-union federally-regulated employees with at least 12 months of service to make a complaint of “unjust dismissal” within 90 days of the dismissal. If a complaint is successful, an adjudicator has broad discretion to order a variety of remedies, including monetary damages and reinstatement. A dismissal will not be found “unjust” where the employee was terminated for just cause and the remedy is not available in certain situations, such as where the termination is due to the discontinuance of a job or layoff for lack of work or where the employee has another remedy available (e.g. a discrimination complaint). In the original court decision in Wilson, the Federal Court had ruled that the unjust dismissal remedy should not be available where the employer terminated without cause and offered contractual severance.
The court confirmed that the intent of Parliament in enacting the unjust dismissal provisions of the CLC was to provide non-union federally-regulated employees with protection against dismissal without cause similar to that enjoyed by unionized employees. Accordingly, the offer or payment of severance, however generous and whether or not it satisfies common law contractual notice or severance entitlements, does not make a dismissal “just” and deprive a dismissed employee from seeking a remedy under the CLC.
While this case has attracted a lot of attention, the decision actually confirms a long line of adjudicator and federal court decisions prior to Wilson, and therefore the result is not surprising. It is important for employers to remember that a dismissed employee only has 90 days to make an unjust dismissal complaint. Also, an employer can (and should) insist on a release of all claims, including unjust dismissal, as part of a negotiated severance package. Further, a dismissal due to the discontinuance of a position or layoff cannot be challenged as “unjust” under the CLC.
The purpose of this update is to provide information as to developments in the law. It does not contain a full analysis of the law nor does it constitute an opinion of Roper Greyell LLP or any member of the firm on the points of law discussed. Interested parties are urged to seek specific advice on matters of concern and not to rely solely on the text of this bulletin.