Public employees subject to regular contract law: Court

Supreme Court says employees contracted under public law aren’t entitled to extra dismissal rights

The Supreme Court of Canada has limited the rights of public employees to due process and changed the standard of review for fairness in the wrongful dismissal case of a New Brunswick government employee.

David Dunsmuir worked in the offices of the clerk of the New Brunswick Court of Queen’s Bench in Fredericton. After his hiring in February 2002, his original four-month probationary period was extended twice until it lasted 12 months, with a performance review at the end of each four-month period. By the end of the 12 months, he met expectations and was given a permanent position.

In July 2002, Dunsmuir was reprimanded for improperly e-mailing the chief justice of the Court of Queen’s Bench to complain about a judge. He was warned if he didn’t go through proper channels in the future, he would be disciplined and possibly dismissed. On June 3, 2004, Dunsmuir was suspended for one day with pay after advertising as a lecturer at private sector legal seminars, despite being told public service lawyers shouldn’t practice law in the private sector. He was also warned about the timeliness and organization of his work, which needed to improve.

On July 21, 2004, the regional director for the courts reprimanded Dunsmuir for job performance issues. Dunsmuir was warned again that failure to improve would result in disciplinary action up to and including dismissal. Dunsmuir said he would seek legal advice and not discuss it further. In August, the regional director decided Dunsmuir wasn’t right for the job and gave him a letter of termination, effective Dec. 31, 2004. On Feb. 3, 2005, an order-in-council officially removed him from the position.

Dunsmuir grieved his termination, claiming he wasn’t told of the reasons for the dissatisfaction with his performance, he didn’t get a chance to address the concerns and he didn’t receive proper notice, due process or fairness in his termination. An adjudicator reinstated him, ruling that because Dunsmuir was appointed by an order-in-council, or “at pleasure” by the government, he was entitled to procedural fairness by knowing why the government dismissed him and given a chance to defend himself. Alternatively, the adjudicator ruled without reinstatement Dunsmuir was entitled to eight months’ notice.

The New Brunswick Court of Queen’s Bench overturned the reinstatement, saying the grievance process gave Dunsmuir procedural fairness and the adjudicator did not have the authority to reinstate an order-in-council appointment. The New Brunswick Court of Appeal agreed with the trial decision.

Dunsmuir took his case to the Supreme Court of Canada, and the court used the appeal as a springboard to effect changes to the dismissal rights of public employees and the standards of evaluating them.

Standards of fairness and rights of public employees reviewed

The Supreme Court addressed the standards of judicial review, saying the three standards dealing with: “patent unreasonableness,” where the employer is clearly irrational or unfair; “reasonableness simpliciter,”where the unfairness is less obvious and may not be intentional; and correctness, should be reduced to two. It said the two reasonableness standards were often difficult for courts to distinguish and recommended combining the two into one standard of reasonableness to consider an employer’s decision-making process. The standard of correctness would continue to be used in purely legal situations.

The adjudicator erred in finding Dunsmuir was entitled to procedural fairness as an appointment, the Supreme Court found, because he was also contractually employed under public law. Most civil servants and public officers, the Supreme Court said, are employed under contracts, with a few exceptions.

“What matters is the nature of the employment relationship between the public employee and the public employer,” the Supreme Court said. “Where a public employee is employed under a contract of employment, regardless of her status as a public office holder, the applicable law governing her dismissal is the law of contract, not general principles arising out of public law.”

The Supreme Court found in such an employment relationship, the public employer acts very much like a private employer when it dismisses the employee and procedural fairness is dealt with in the contract. The New Brunswick government acted like any other employer in a normal contractual employment relationship by giving Dunsmuir four months’ notice — an effective date of Dec. 31 — when it dismissed him in August 2004. Had it dismissed him without notice or cause, Dunsmuir would have been entitled to claim damages for breach of contract.

“A public authority which dismisses an employee pursuant to a contract of employment should not be subject to any additional public law duty of fairness,” the court said. “Where the dismissal results in a breach of contract, the public employee will have access to ordinary contractual remedies.”

The Supreme Court felt there shouldn’t be a distinction between public office holders and regular employees under contract in terms of dismissal rights, with the exception of those who don’t have employment contracts such as judges, ministers and others who “fulfil constitutionally defined state roles” that can’t be changed by an agreement.

Under these standards, the Supreme Court found the New Brunswick government was within its rights to dismiss Dunsmuir under normal contract law and therefore had no duty of procedural fairness outside of the contractual obligations. By providing him with four months’ notice, which was increased to eight months in the grievance, the government met its contractual duty. The Supreme Court dismissed Dunsmuir’s appeal.

For more information see:

Dunsmuir v. New Brunswick, 2008 SCC 9 (S.C.C.).

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