Supreme Court upholds just-cause requirement for federal workers

Code's intention is to protect non-unionized workers from arbitrary dismissal

On July 14, 2016, the Supreme Court of Canada released its landmark decision in Wilson v. Atomic Energy Canada Limited (AECL). James LeNoury acted as counsel to the successful appellant, Joseph Wilson. Below, he provides a brief personal account of the case.

Joe Wilson was dismissed after five-and-a-half years of service with AECL. He believed his dismissal was in reprisal for having reported unlawful practices in the corporation. AECL asserted no cause, offered no reasons for dismissal, and provided a severance package close to six months’ salary.

In order to assess Wilson’s case, I turned to the existing case law. At the time, the vast majority of adjudicators had interpreted the unjust dismissal provisions (ss. 240-246) to mean that, except in circumstances involving lack of work or elimination of the position, non-managerial employees could only be terminated for just cause. Absent just cause, dismissal was unjust and the employer typically had to make the employee “whole” for all losses incurred from the dismissal.

If AECL’s dismissal of Wilson was indeed motivated by his whistle-blowing, I anticipated his severance package was grossly inadequate. However, when I agreed to accept the case, I also based my decision on practical considerations.

As an experienced lawyer who predominantly represents employers, I concluded that if I were acting for AECL, I would have sought to resolve this case expeditiously to minimize my client’s costs. And I certainly wouldn’t look to attract unnecessary attention to a case that raised a scandal over workplace corruption. Accordingly, not only did I expect Wilson’s complaint to succeed, but I believed it would run its course quickly.

Instead, more than four years later, Wilson’s complaint is only just finally approaching its resolution.

What happened? Instead of acknowledging Wilson’s unjust dismissal, AECL argued that because the severance pay exceeded minimum statutory requirements for economic terminations, his dismissal without cause was not “unjust.” This argument — which had been raised and overwhelmingly denied in all but a small handful of other cases — was soundly rejected by the adjudicator. Yet, rather than proceed with the remedial portion of the hearing, AECL took their argument to the Federal Court.

Unfortunately, a modified version of AECL’s proposed interpretation gained some traction with the Federal Court. This time, it was our turn to appeal. Given its broad impact, affecting nearly 500,000 federal workers, it was not a surprise the case eventually made its way to Canada's top court.

Ultimately, in last month’s authoritative ruling, the Supreme Court of Canada affirmed the adjudicator’s decision and confirmed the interpretation that had been followed by the vast majority of adjudicators, lawyers and HR professionals since 1978.

While the court’s decision has attracted considerable attention because of its wide application federally, its practical effect has not always been properly explained. What is often lost in the discussion is that this decision restores an interpretation of the code that for decades was regarded as having benefited both employees and employers alike.

From the code's enactment in 1978 until AECL’s Federal Court challenge, the unjust dismissal complaint mechanism operated within everyone’s expectations and, generally, their satisfaction. Although AECL argued the “sky was falling,” and interveners railed against “jobs for life,” the Supreme Court could distinguish fact from fear-mongering.

One of the key points in persuading the Supreme Court that a just cause requirement was the proper interpretation of unjust dismissal was the federal government’s purpose in introducing the legislation. In 1978, then-Minister of Labour John Munro stated:

“The intention of this provision is to provide employees not represented by a union with the right to appeal against arbitrary dismissal — protection the government believes to be a fundamental right of workers and already a part of all collective agreements.”

Speaking for the majority of the Supreme Court, Justice Rosalie Abella found the labour minister’s comments unequivocal in their intention to protect unorganized federal workers from arbitrary or unjust dismissal in similar manner to their unionized counterparts. Comments by the minister that adjudicators would be expected to consider arbitral case law from collective bargaining law further underscored this intention.

But it wasn’t just these historical statements that swayed the court. Amongst more than 1,700 unjust dismissal cases decided prior to Wilson v. AECL, only 18 rejected a requirement for just cause. To the suggestion that such dissent amounted to a legitimate competing interpretation, Justice Abella wryly observed: “What we have here is a drop in the bucket which is being elevated to a jurisprudential parting of the waters. “

Though I produced further support in the opinions of legal scholars and the wording of the legislation, in my view, the final nail to AECL’s position was driven home by one of Canada’s most respected labour law authorities, Professor Harry Arthurs. Commissioned by the labour minister to evaluate whether the labour standards in the code effectively served its stakeholders, Professor Arthurs held extensive public hearings, studied more than 100 submissions and briefs, consulted labour experts and industry groups, and met with numerous employee and management representatives.

Professor Arthurs’ 2006 report identified areas for improvement but confirmed the interpretation given by the majority of adjudicators. He found the complaint mechanism and remedies constituted a cost-effective alternative to civil litigation for both parties. Reinstatement — the ballyhooed “job for life” — had been ordered in only 30 per cent of successful complaints, equating to about 10 per cent of all decisions on the merits.

In short, the system in place for 35 years continued to work. For this reason, it isn’t only employees, but also employers and HR professionals, who should applaud the Supreme Court’s decision. See Wilson v. AECL, 2016 CarswellNat 2998 (S.C.C.).

James LeNoury maintains a law practice in Toronto devoted exclusively to employment and labour law. He can be reached at (416) 926-1107 ext. 234 or [email protected]

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