SCC Upholds that Just Cause Required in Unjust Dismissal Provisions under the Canada Labour Code

In Wilson v AECL ( 2016 SCC  29  ) the Supreme Court of Canada clearly set out that  an employer must prove just cause in order to avoid an order of reinstatement under the Unjust Dismissal provisions of the Canada Labour Code. This is from the headnote of the majority opinion.

Returning to this case, the issue is whether the Adjudicator’s interpretation of ss. 240 to 246 of the Code was reasonable. The text, the context, the statements of the Minister of Labour when the legislation was introduced, and the views of the overwhelming majority of arbitrators and labour law scholars, confirm that the entire purpose of the statutory scheme was to ensure that non‑unionized federal employees would be entitled to protection from being dismissed without cause under Part III of the Code. The alternative approach of severance pay in lieu falls outside the range of “possible, acceptable outcomes which are defensible in respect of the facts and law” because it completely undermines this purpose by permitting employers, at their option, to deprive employees of the full remedial package Parliament created for them. The rights of employees should be based on what Parliament intended, not on the idiosyncratic view of the individual employer or adjudicator. The Adjudicator’s decision was, therefore, reasonable.

When the provisions were introduced, the Minister referred to the right of employees to fundamental protection from arbitrary dismissal and to the fact that such protection was already a part of all collective agreements. These statements make it difficult to draw any inference other than that Parliament intended to expand the dismissal rights of non‑unionized federal employees in a way that, if not identically, at least analogously matched those held by unionized employees. This is how the new provisions have been interpreted by labour law scholars and almost all the adjudicators appointed to apply them, namely, that the purpose of the 1978 provisions in ss. 240 to 246 was to offer a statutory alternative to the common law of dismissals and to conceptually align the protections from unjust dismissals for non‑unionized federal employees with those available to unionized employees. The new Code regime was also a cost‑effective alternative to the civil court system for dismissed employees to obtain meaningful remedies which are far more expansive than those available at common law.

The most significant arbitral tutor for the new provisions came from the way the jurisprudence defined “Unjust Dismissal”. In the collective bargaining context, “unjust dismissal” has a specific and well understood meaning: that employees covered by collective agreements are protected from unjust dismissals and can only be dismissed for “just cause”. This includes an onus on employers to give reasons showing why the dismissal is justified, and carries with it a wide remedial package including reinstatement and progressive discipline. The foundational premise of the common law scheme — that there is a right to dismiss on reasonable notice without cause or reasons — has been completely replaced under the Code by a regime requiring reasons for dismissal. In addition, the galaxy of discretionary remedies, including, most notably, reinstatement, as well as the open‑ended equitable relief available, is also utterly inconsistent with the right to dismiss without cause. If an employer can continue to dismiss without cause under the Code simply by providing adequate severance pay, there is virtually no role for the plurality of remedies available to the adjudicator under the Unjust Dismissal scheme. Out of the over 1,740 adjudications and decisions since the Unjust Dismissal scheme was enacted, only 28 decisions have not followed this consensus approach.

The remedies newly available in 1978 to non‑unionized employees reflect those generally available in the collective bargaining context. This is what Parliament intended. To infer instead that Parliament intended to maintain the common law under the Code regime, creates an anomalous legal environment in which the protections given to employees by statute — reasons, reinstatement, equitable relief — can be superseded by the common law right of employers to dismiss whomever they want for whatever reason they want so long as they give reasonable notice or pay in lieu. This somersaults the accepted understanding of the relationship between the common law and statutes, especially in dealing with employment protections, by assuming the continuity of a more restrictive common law regime notwithstanding the legislative enactment of benefit‑granting provisions to the contrary.

The argument that employment can be terminated without cause so long as minimum notice or compensation is given, on the other hand, would have the effect of rendering many of the Unjust Dismissal remedies meaningless or redundant. Only by interpreting the Unjust Dismissal scheme as representing a displacement of the employer’s ability at common law to fire an employee without reasons if reasonable notice is given, does the scheme and its remedial package make sense. That is how the 1978 provisions have been almost universally applied. It is an outcome that is anchored in parliamentary intention, statutory language, arbitral jurisprudence, and labour relations practice. To decide otherwise would fundamentally undermine Parliament’s remedial purpose.

Per McLachlin C.J. and Karakatsanis, Wagner and Gascon JJ.: The standard of review in this case is reasonableness and the Adjudicator’s decision was reasonable and should be restored. Justice Abella’s disposition of the appeal on the merits and her analysis of the two conflicting interpretations of the Unjust Dismissal provisions of the Code are agreed with. 

It is wonderfully refreshing that our Supreme Court took a thoughtful review of this issue and actually got it right. This should put to rest a controversy that never should have happened in the first place.

Moreover this decision may well spark a renewed interest in this little known section of federal employment law that many employees and many lawyers are not aware of . The rights and remedies available to non-unionized federally regulated employees under the Code are far superior to those available under the common law.

Maybe one day the Supremes will have a chance to look at the confused state of the law on ESA only termination agreements and also provide some thoughtful law on that topic.

806 thoughts on “SCC Upholds that Just Cause Required in Unjust Dismissal Provisions under the Canada Labour Code”

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