No Termination Without Cause for Federally-Regulated Employees

In a recent decision, the Supreme Court of Canada ruled 6-3 that employees of federally regulated industries, such as banks, telecommunications, and airlines, are now assured of a job for life unless there is just cause for termination or their position becomes redundant. Wilson v Atomic Energy of Canada Ltd., 2016 SCC 29.

At common law, non-unionized employees may be dismissed without cause if they are given reasonable notice or pay in lieu. The primary issue in this case was whether federally regulated employers could dismiss employees without cause.

In this case, Joseph Wilson was employed by Atomic Energy Canada Limited (AECL), a federally regulated company, for four and a half years until he was dismissed without cause in November 2009. Although he was provided with severance pay, he filed an “Unjust Dismissal” complaint claiming that he was unjustly dismissed contrary to section 240 (1) of the Canada Labour Code and asked for written reasons from AECL. AECL wrote a letter to Mr. Wilson stating that he was terminated without cause and refused to provide reasons. The labour Adjudicator concluded that an employer could not resort to severance payments to avoid a determination about whether a dismissal is unjust under the Code. The case was appealed to the Federal Court of Appeal which ultimately upheld AECL’s decision.

The Supreme Court found that under the Code, an adjudicator has a right to review every dismissal. In common law dismissal cases, an adjudicator does not have this right and can only determine whether the amount of severance was appropriate. The Supreme Court found that the purpose of the regime set out in the Code is to require reasons for dismissal for federally regulated employees, which replaces the common law scheme which allows for dismissal without cause.

The Supreme Court found that AECL’s main argument, that employment can be terminated without cause so long as notice or compensation is given, would have the effect of rendering many of the Unjust Dismissal remedies in the Code meaningless or redundant. The appeal was allowed and the decision of the Adjudicator was restored.

To find out more about termination with or without cause, contact employment lawyer Peter McSherry online or at 519-821-5465.

To read the full decision, click here.