When does state immunity apply in an employment law context?  Can a Canadian worker at a foreign embassy or consulate, located in Canada, bring a claim for wrongful dismissal?  Or will this type of claim be thrown out by Canadian courts under the State Immunity Act?  From a review of a number of different decisions, there is no clear answer to that question.

There is a general rule, under the State Immunity Act, that foreign states are immune from the jurisdiction of the Canadian courts.  However, there is an exception for proceedings that “relate to commercial activity.”  In cases that have involved employee claims for wrongful dismissal or other employment related claims, the focus of the litigation has been whether the employee’s activity should be considered “commercial activity” and therefore exempt from the State Immunity Act protection.  Some of these cases are quite interesting.

On July 17, 2013, the Ontario Superior Court released a decision in Roy v. South Africa.  This case involved a long service employee who had been working as a consular clerk for the South African High Commission.  After being dismissed, Ms Roy brought a wrongful dismissal claim against the South African High Commission.  One of the issues to be decided in the motion was whether the wrongful dismissal suit should be thrown out due to lack of jurisdiction.  The court rejected the submissions made by South Africa and accepted the plaintiff’s argument that her employment was “commercial activity.”  South Africa was therefore not immune from a wrongful dismissal lawsuit and the case was permitted to proceed.  This case was not a final determination of this issue.  It was only a preliminary motion to assess whether the case might have a chance of succeeding.  Nevertheless, the plaintiff was successful and the case was able to continue winding its way through the court system.

In 2012, in Zakhary v. United States of America, a Canada Labour Code adjudicator also held that employment was covered by the commercial activity exemption.  This decision involved a consular clerk at the U.S. consulate.  Ms Zakhary had more than 20 years of service with the United States.  After being dismissed, she filed a complaint with the Canadian Ministry of Labour and asked for reinstatement.  The United States submitted a letter but did not attend at the hearing.  After reviewing the case law, the adjudicator held that the Canada Labour Code applied to the proceeding, as opposed to provincial legislation.  The adjudicator also determined that Ms Zakhary’s work a the U.S. consulate had nothing to do with security.  There would be no interference in U.S. sovereignty if the adjudicator were to rule that this matter was covered by Canada Labour Code jurisdiction.   The adjudicator went on to find that Ms Zakhary had been unjustly dismissed.  She was reinstated to her position and awarded close to 1 1/2 years’ back pay plus $5,000 towards legal fees.

At least one Ontario Human Rights Tribunal decision has reached a different result.  In Bentley v. Barbados, a 2010 decision, an adjudicator held that type of inquiry that would be necessary to decide the case would “constitute an unacceptable interference with the sovereign right of the defendant state to control and regulate its own workforce.”   The case involved an employee who was dismissed after she indicated her intention to take maternity leave.  She filed a complaint with the Ontario Human Rights Tribunal alleging a violation of the Ontario Human Rights Code.  The adjudicator held that employment at a consulate was not  commercial activity and related more to the sovereign acts of the foreign state of Barbados.  Barbados was held to be immune from the Ontario Human Rights Tribunal’s jurisdiction.

In Morocco v. El Ansari, the Quebec Court of Appeal considered the case of an employee who had been working for the Government of Morocco for more than twenty years as a civil servant before being dismissed.  The Court of Appeal was asked to decide whether that State Immunity Act would immunize Morocco from a wrongful dismissal suit.  The Court of Appeal held that employment relationship was not “commercial activity” and was immune from the jurisdiction of the Quebec Courts.  In coming to that conclusion, it cited a number of key points:  the employee was treated as a civil servant by Moroccan law by Morocco; She had started working for Morocco in Morocco and had signed her employment contract there initially; She could not show that she had paid any taxes in Canada; and Morocco did not deducted or remit CPP or EI.  In these circumstances, Ms El Ansari could not be seen as simply carrying on “commerical activity.”  The Supreme Court of Canada refused to grant leave to hear this case.

Most of these state immunity decisions in the employment law context have referenced a 1992 case of the Canadian Supreme Court in Re: Canada Labour Code in which the Court held that the United States was immune from the “jurisdiction of any domestic labour tribunal” in respect of labour relations at a U.S. military base located in Canada  However, even in that decision, the Supreme Court of Canada had pointed out that “a bare contract for employment services…is in and of itself, generally a commercial activity” and that Canadian employees of foreign sovereign states should be able to turn to Canadian courts for enforcement of employment contract terms.

Looking at all of these decisions together, the picture is somewhat unclear.  Employees who are dismissed by foreign consulates or embassies may be able to commence wrongful dismissal lawsuits or file Canada Labour Code complaints.  They may face preliminary arguments that their case should be thrown out because of state immunity.  The determination will likely depend on the nature of the position, the nature of the employee’s relationship with the foreign government and the type of claim being made.  The court or tribunal hearing the case will need to determine whether the employment shall fall under the “commercial activity” exception to state immunity.  Based on the variety of cases decided to date, it is far from clear that foreign states will always be able to rely on immunity arguments.  But since the results can be unpredictable, these claims are likely to involve costly motions early in the proceedings.  Successful plaintiffs are likely to recover at least some of these costs if they can get past the state immunity arguments.