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Supreme Court in Wilson v. Atomic Energy: Federal Employers Need a Reason to Fire Employees

July 14 2016

The Supreme Court of Canada did today what most employer lawyers expected they’d do when it ruled that the “unjust dismissal” provisions in the Canada Labour Code ousted the common law right of employers to terminate employees for no reason at all simply by providing notice of termination.

Here is the SCC decision in Wilson v. Atomic Energy.

Introduction

I explained the background of the decision in 2015 when the surprising decision from the Court of Appeal was released.  I won’t repeat all that here.  Very briefly, Wilson was terminated without cause and was offered a severance package by

Photo: Macleans

Photo: Macleans

his employer, which he did not accept.  Instead, he filed an application under Section 240 of the Canada Labour Code, which permits an employee in the federal sector to “make a complaint in writing… if the employee has been dismissed and considers the dismissal to be unjust.”

That provision was introduced in 1978.   The government at the time explained that the purpose of the section was to confer on non-union employees a minimal level of protection from arbitrary dismissal comparable to that already enjoyed by unionized workers through standard ‘just cause’ provisions found in collective agreements.   Not surprisingly, therefore, the vast majority of adjudicators appointed under Section 240 over the decades, and all major texts explaining Section 240, treated the section as having supplanted the common law right of federally regulated employers to terminate employees simply by providing notice of termination.

However, a very small strand of decisions and adjudicators, led by Adjudicator Wakeling, rejected the dominant line of reasoning and ruled that Section 240 had not in fact eliminated the right of employers to terminate for no reason at all simply by providing notice.  The Supreme Court, citing a paper written by one of my old LLM students (yay Reagan Ruslim!), noted that “at most, 18 cases (including 3 by Mr. Wakeling himself) out of over 1700″ (or about 1%) decided under Section 240 had applied this minority view.

So it came as a big surprise when the Court of Appeal overturned the decision of my old labour arbitration professor, Stanley Schiff, and ruled that the minority view was correct.  That Court decided that Schiff was wrong in ruling that the employer could not terminate Wilson for no reason simply by giving him a severance package.  In fact it could, said the Court of Appeal.   So Wilson lost his unfair dismissal case.  Onward to the SCC.

The Supreme Court of Canada Ruling

In a 6-3 ruling, the Court overturned the Court of Appeal and restored Adjudicator Schiff’s decision.

A large proportion of the ruling deals with important administrative law issues relating to the standard of deference to be given to expert adjudicators.   The case was likely prove to be far more important in Administrative Law courses than in Employment Law courses.   In fact, I will not even spend much time on the standard of review issue and I will leave that to our administrative law friends.  Suffice to say that the standard to be applied by the courts is reasonableness.  In the end, the SCC rules that Schiff’s decision was certainly reasonable given that it was consistent with the language of the statute, with the vast majority of academic and adjudicative reasoning, and with the statements of the government when Section 240 was introduced.

Justice Abella wrote:

Justice Abella Wrote the Majority Decision

Justice Abella Wrote the Majority Decision

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. Adjudicator Schiff’s decision was, therefore, reasonable.

As I explained in my posting about the Court of Appeal decision, I have never been persuaded by the minority argument.  I, like many other employment lawyers, correctly predicted the Supreme Court of Canada would overturn the Court of Appeal.  One peculiarity of the minority approach was that it would encourage employers to never provide any reason for termination, since providing a reason would open the door for the adjudicator to rule that the reason was “unjust”.   An employer would have been stupid to provide a reason if Section 240 permitted dismissal without a reason simply by providing notice.  Encouraging employers to be silent at the point of dismissal would be a curious public policy goal indeed, particularly in light of the Supreme Court of Canada’s jurisprudence imposing a duty of good faith and fair dealing in the manner of dismissal.

How Regulatory Regimes “Learn” from the Collective Bargaining Regime

The SCC decision is really quite useful for the approach I take in my book The Law of Work as well.  A central objective in my book is to demonstrate how the three regimes of Work Law (Common Law, Regulatory Law, and Collective Bargaining Law) interact and affect one another in a process of continuous learning.   We often divide up the regimes in the manner in which we teach them in law school, but that practice obscures the reality that legal rules produced within each regime frequently influence how rules develop in the other regimes.  I provide lots of examples of this interaction throughout the book.  The relationship is depicted by the ‘Internal Feedback Loop” in this rather complicated looking chart from Chapter 3, for those interested in this stuff.

Work Law Regime Interactions From D. Doorey, Law of Work

Work Law Regime Interactions From D. Doorey, Law of Work

Justice Abella, a former labour law adjudicator herself, spends considerable time in her decision explaining how Section 240 of the Canada Labour Code borrows from and was inspired by developments within the Collective Bargaining Regime.  In particular, statutory ‘unjust dismissal’ rules borrowed from collectively bargained ‘just cause’ provisions in collective agreements and the arbitral jurisprudence interpreting those clauses in termination cases.  The Regulatory Regime learned from then Collective Bargaining Regime.  There are many other examples I describe in the book of governments observing legal rules originally developed through collective bargaining between employers and unions and incorporating them into statutes to provide non-union workers with similar protections, including hours of work limitations, paid vacations, and notice of termination provisions, among others.

Questions for Discussion

1.   Did the Supreme Court of Canada get this decision right?

2.   Only the federal jurisdiction, Nova Scotia, and Quebec provide any sort of statutory “unjust termination” protections for non-union workers.   Should those jurisdictions drop those protections and permit termination without reasons provided notice is provided?  Or do you believe that statutory ‘unjust termination’ provisions should be introduced across Canada?

3.   Can you think of any other examples in which a legal rule developed in one of the three legal regimes of Work Law was later adopted in some form within another of the legal regimes?

Cross-Reference to Law of Work Book:

Statutory unjust termination, and the Court of Appeal decision in Wilson v. Atomic Energy specifically, are discussed in Chapter 23 Regulatory the End of Employment Contracts

The manner in which legal rules developed within the three regimes of work law interact and influence one another is considered throughout the book, but introduced specifically in Chapter 3 A Framework for Analyzing the Law of Work

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2 Responses to Supreme Court in Wilson v. Atomic Energy: Federal Employers Need a Reason to Fire Employees

  1. Thea Millard Reply

    December 12, 2016 at 12:04 pm

    As an answer to your second question: no, I don’t think the federal jurisdictions of Nova Scotia and Quebec should drop their protection for non-union workers and allow employee termination without reason, as this would create a very dangerous precedent and set the stage for many types of employer abuse. I strongly believe that further provisions regarding “unjust termination” should be made all across Canada.

  2. Starlene Michel Reply

    January 27, 2017 at 5:11 pm

    “Encouraging employers to be silent at the point of dismissal would be a curious public policy goal indeed, particularly in light of the Supreme Court of Canada’s jurisprudence imposing a duty of good faith and fair dealing in the manner of dismissal”.

    My answer is Yes, as the above comment states that employers have a duty to be honest, truthful, and must disclose reasons or causes of dismissal before, during and after a period of employment for any and all employees in Canada.

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