Attention All Federally Regulated Employers – Your World “Just” Got More Complicated
The Supreme Court of Canada recently issued a significant decision impacting federally regulated employers. In Wilson v. Atomic Energy of Canada Limited, the Supreme Court confirmed that employees covered by Division XIV of the Canada Labour Code (the “Code”) have job protection that is similar to that enjoyed by unionized employees.
The Code governs federally regulated employees – employees who are employed in connection with the operation of any federal work, undertaking or business (e.g. banks, airlines, railways, some First Nation activities, etc.). Division XIV of the Code applies to employees who:
- have completed more than twelve (12) consecutive months of continuous employment with the employer;
- are not subject to a collective agreement;
- have not been dismissed due to a lack of work or discontinuance of a function; and
- are not “managers” – a term narrowly defined by case law to be limited to those with significant managerial duties.
Employees covered by Division XIV of the Code can challenge a dismissal by filing a complaint within ninety (90) days of dismissal, alleging that it was “unjust”. The complaint is free and no lawyer is required.
If matters cannot be resolved the complaint can be referred for hearing before an independent adjudicator where the employer must establish that the termination was not “unjust”. If the employer fails, then the adjudicator has the right to order whatever remedy is appropriate to correct the effects of the dismissal, including:
- reinstatement of employment;
- full back pay for lost wages from the date of termination to the date of reinstatement;
- compensation for other damages and/or pay in lieu of reinstatement if appropriate;
- recovery of legal fees incurred by the employee, in whole or in part;
- a letter of reference; and/or
- a letter of apology.
If the employer succeeds, then the claim is dismissed. There is no authority for the adjudicator to order that the employer recover its costs.
In Wilson, the Supreme Court considered whether an employer had the right to dismiss an employee without just cause but with notice or pay in lieu. This can generally be done with employees who are not unionized. In contrast, unionized employees can generally only be dismissed for just cause and employers do not otherwise have the right to dismiss them even by providing notice or pay in lieu.
A majority of the Court concluded that Division XIV of the Code removes this common law right from employers, and requires that a dismissal covered by Division XIV must be “just”.
Unfortunately, the Supreme Court in Wilson did not specifically address whether an employer can dismiss an employee without just cause in accordance with an employment agreement that states the notice and/or payment owing. Earlier case law suggests that employees terminated without cause pursuant to a contractual notice or severance provision are not unjustly dismissed. Even if this exception to the just cause requirement remains, there is considerable case law addressing the requirements of a binding employment agreement. Many times and for many reasons, employers have received the unwelcome news that the written agreements they thought were binding, were not.
We suggest that you review your hiring processes and documents as well as discipline/dismissal issues with legal counsel, before acting, based on the significance of Wilson, and the consequences of an unjust dismissal under the Code.
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