Supreme Court of Canada rules for federally regulated employee

On July 14, 2016, the Supreme Court of Canada rendered its highly anticipated decision interpreting the Canada Labour Code’s provisions prohibiting unjust dismissal of nonunionized federally regulated employees. Specifically, the Supreme Court found that 1978 amendments to the Canada Labour Code (the “Code“) require that when a federally regulated employer dismisses a nonunionized worker who has at least 12 continuous months of service, the employer is required to have just cause to do so. 

In the case of Wilson v. Atomic Energy of Canada Ltd., a four-year-plus employee with no disciplinary record of a federally regulated employer was dismissed without reason and given a severance package. The employee filed an administrative complaint alleging that he was dismissed unjustly in retaliation for complaining about his employer’s procurement practices.

The unjust dismissal complaint was heard by a labour adjudicator who found that the employer’s provision of a generous severance package while dismissing the employee without cause did not make the dismissal “just” and that the employer was required to provide a reason amounting to just cause for dismissal. On review, the Application Judge and then the Federal Court of Appeal disagreed with the adjudicator. 

The Supreme Court, however, agreed with the Adjudicator and restored its decision, finding the decision to have been reasonable, which was the standard of review the court found appropriate. The applicable standard of review was subject to a divisive debate by the Supreme Court justices in a number of concurring and dissenting opinions. This division is an unfortunate result that makes the standard of review argument in appellate cases challenging for counsel, particularly when trying to argue for a correctness standard, the standard of review vigourously advanced by the dissenting justices.

The Code does allow a federally regulated employer to dismiss an employee without another reason if there is “lack of work or the discontinuance of a function,” according to the decision. This is consistent with the wording of the Code.

The federal government provides definition and examples of federally regulated businesses and industrieshere.