SCC: Unjust Dismissal: Big Win for Employees

The Supreme Court of Canada has issued a landmark employment law decision.  The case of Wilson v. Atomic Energy of Canada focused on the definition of “unjust dismissal” under Part III of the Canada Labour Code.  In a nutshell, the Supreme Court has held that the vast majority of federally regulated employees can access the unjust dismissal provisions of the Code.  These employees can seek reinstatement or significant compensation on dismissal.

In other words, a Federally regulated employer, for example a bank or cable company, cannot simply dismiss an employee on a “without cause” basis and provide severance arrangements.  Dismissed employees in these circumstances can file unjust dismissal complaints and seek reinstatement.

The Wilson v. Atomic Energy decision considered the circumstances of a four and a half year employee with a clean disciplinary record.  The employee was dismissed on a “without cause” basis and provided with a severance package.  He challenged the decision and filed an unjust dismissal complaint.  Although successful at adjudication, the decision was overturned at the Federal Court and Federal Court of Appeal levels and worked its way up to the Supreme Court of Canada.

Writing for herself and five other Supreme Court justices, Abella J reviewed the history of the Canada Labour Code’s unjust dismissal provisions, which were enacted in 1978.  She concluded that the purpose of these enactments was to ensure that non-unionized Federally regulated employees would be entitled to protection from dismissal without cause.  Federally regulated employees, she concluded, enjoy “fundamental protection from arbitrary dismissal” even with pay.

Although there are certain exceptions including situations involving the “discontinuance of a function” or a “lack of work,” this Supreme Court decision makes it abundantly clear that employers in the Federally regulated sector cannot simply terminate the employment of most employees.

This decision could greatly increase the number of unjust dismissal complaints in Federally regulated workplaces.  For example, any non-managerial employee, with one year or more of service, working for a Canadian bank can seek reinstatement if the employee is dismissed on a “without cause” basis, even if a severance package is provided.  This would, of course, invalidate the minimum type severance provisions that some Canadian banks have tried to use in their employment contracts with employees.

Employees who have been dismissed by a Federally regulated employer must file the unjust dismissal complaint within 90 days of the dismissal.  If not, it appears from the decision that the employee loses the right to this statutory framework and is left with common law remedies alone.

Three of the Supreme Court justices endorsed a vigorous dissent in which they would have held that the Canada Labour Code is, essentially, procedural and does not override Canadian common law.  The minority interpretation would have gutted the Code of any real meaning for Federal employees.

The dissenting justices correctly highlighted the fact that a Federally regulated employee can lose his or her protection if the employee misses the 90 day timeline.  Perhaps a future court decision will enable employees to use the civil courts, if necessary, to enforce the unjust dismissal provisions if the deadline has been missed.  However, for now, dismissed employees and their counsel should ensure that they file an unjust dismissal complaint within the 90 day time period.

It is interesting that the Supreme Court, in both the minority and majority reasons, chose to comment on the common law standards of dismissal by way of obiter.  The court noted that, at common law, employers can dismiss employees “for whatever reason they want so long as they give reasonable notice or pay in lieu of notice.”  This suggests that, for the time being, the court is not about to add in a “good faith” obligation as a requirement for dismissing a non-federally regulated employee.

This decision reinforces the wide gap between employees in the Federal sector and employees in most other provincial jurisdictions.  An employee dismissed on a without cause basis in Ontario can file a wrongful dismissal complaint and sue for dismissal damages in the court system.  In some cases, the employee may also have a valid claim for other damages or remedies.  But reinstatement is not an option, nor is the court required to consider why the employee was dismissed, if the dismissal was on a “without cause” basis.

But in the federal sector, it is now clear that the vast majority of dismissed employees enjoy “union-like” protection.  They can file unjust dismissal complaints and seek reinstatement or significantly increased damages.  Non-managerial employees with more than one year of service who have been dismissed from Canadian banks, telephone and cable companies, radio stations and other industries have significant negotiating leverage and may demand reinstatement or negotiate significantly higher severance packages.

Damages under the Canada Labour Code can be exponentially higher since employees can be awarded reinstatement and compensated for the time that they were out work.  Overall, this is an extremely helpful decision for federally regulated employees.






Fairness and Job Security Towards the New Millenium

Published in The Toronto Star – December 18, 1999

Just in time for the new millennium, Canadians have received some encouraging economic news that will undoubtedly boost perceptions of job security. Unemployment in Canada has reached a low of 6.9%, the lowest jobless rate in decades. The Canadian economy has been booming, leading to the creation of almost 400,000 new jobs over the past year. Many employers have begun hiring for new full-time positions after years of cutbacks.

The U.S. economy has been fueling much of this growth. In the U.S., the jobless rate hit 4.1%, a remarkable low. Although these figures are calculated differently in the U.S., the low unemployment rate is quite impressive.

The recent unemployment rates sound promising but they do not provide the complete picture. Even in times of relative prosperity, more than one million Canadians are still without work. For those out of work, fewer are eligible to collect Employment Insurance benefits as a result of the 1997 changes enacted by the federal government.

For those who are working, signs are encouraging. Canadians are far more optimistic about their jobs than they were in the mid-90s. Although some Canadians feel that their skills are underutilized, recent studies show that Canadians have a greater sense of security about their jobs than do their American neighbours.

One of the primary reasons for the higher job morale in Canada is the legal system. Canadians in non-unionized jobs know they will be given reasonable notice of termination unless their employer can show “just cause” for dismissal. Although there is no set formula to calculate the amount of notice required, the law provides some assurance of fair treatment.

U.S. employment law is completely different. In most U.S. States, employees are employed “at will.” They can be let go at any time without notice or pay, for any reason. Although there are many ways around this general rule, the end result is that American employees can usually be dismissed with much less notice or pay than their Canadian counterparts.

While Canadian employment law appears far more compassionate than U.S. law, other countries provide even greater protection for employees. Many Canadians do not realize that, even at the end of the twentieth century, an employer does not need a reason for firing an employee, as long as proper notice is provided. This comes as a great surprise to many who have been terminated. Even though they have been offered a package, and maybe a reference letter, they cannot understand why they must suddenly begin a job search.

Jack Wallace faced this difficult life experience. He worked for the United Grain Growers for 14 years. He was the top sales person in the company. Without any justification, the company fired him and then refused to provide him with a fair settlement. Wallace’s case went all the way to Supreme Court of Canada and has become one of the most important decisions of the 1990s.

The Supreme Court of Canada rejected the idea that Canadians have an unconditional right to be treated fairly by their employers. Companies may make the decision to terminate for any reason. As long as there has been no discrimination, the decision cannot be questioned. The only requirement is that the company pays the employee the proper amount and treats the employee fairly during the dismissal process.

Canadians can take some comfort in having a greater sense of job security than Americans but many still feel that the system falls short. For example, the United Nation’s Universal Declaration of Human Rights includes the right to work and the right to protection against unemployment.

Some Canadians have legal protection that approaches this U.N. standard. Unionized workers can only be fired for just cause. Otherwise, job security increases over time with seniority. Although Unionized employees face difficulties such as strikes and labour disputes, a unionized job includes a higher measure of protection.

Canadians who work in federally regulated industries such as banks or airlines also have special protection. They can file an unjust dismissal complaint under the Canada Labour Code. After a hearing, they can even be returned to their old positions. In some ways, this also approaches the U.N. standard.

For the majority of Canadians, there is no right to a job. Job security depends on many factors such as performance, the economy and the good faith of the employer. Canadians are still vulnerable. After years of loyal service, employees may still be dismissed suddenly for no reason other than “reorganization.” This uncertainty leads to ever increasing workplace stress.

The level of legal protection we enjoy greatly affects our sense of job security and our stress levels. As we move into the new millennium, legal protection of job security will evolve. Fairness and good faith must become part of every employment relationship. This dramatic change will enhance our job security and elevate our overall sense of self-worth.

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