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No one wants to be terminated from their employment, especially from a position they love and find rewarding. But terminated employees still have rights – what these rights are, however, will depend on who you work for.

Most workers fall under provincial laws. In Ontario, as in most provinces, an employee can be terminated without cause so long as they are provided with and/or paid the appropriate amount of notice and severance, either in accordance with their employment contract or at common law (and, at a minimum, those sums pursuant to the Employment Standards Act). Employees are also protected against discriminatory dismissals under human rights legislation.

In comparison, the Supreme Court of Canada has finally confirmed in the seminal case of Wilson v. Atomic Energy of Canada Ltd. (“Wilson”), released yesterday, that federal employees may not be dismissed without cause.

In the case, Joseph Wilson was dismissed by Atomic Energy Canada Limited (“Atomic Energy”) after 4.5 years of employment. He had a clean disciplinary record. Mr. Wilson filed an unjust dismissal complaint pursuant to s. 240(1) of the Canada Labour Code (“CLC”), claiming that his dismissal was in reprisal for having filed a complaint of improper procurement practices by his employer. When an inspector inquired into the reasons for Mr. Wilson’s termination, Atomic Energy wrote a letter stating that he was “terminated on a non-cause basis and was provided a generous dismissal package that well exceeded the statutory requirements. We trust you will find the above satisfactory.” After an Adjudicator was appointed to hear the complaint, Atomic Energy sought a preliminary ruling on whether a dismissal without cause together with a sizeable severance package meant that the dismissal was a just one. The Adjudicator determined that pay in lieu of notice did not make the termination just. As Atomic Energy did not rely on any cause to fire Mr. Wilson, the Adjudicator allowed his complaint.

The issue of whether an employer could avoid an unjust dismissal complaint under the CLC by providing pay in lieu of notice went all the way up to the Supreme Court. This Court agreed with the Adjudicator that an employer cannot dismiss a federally regulated employee without cause.

The unjust dismissal provisions found in the CLC (sections 240 to 246) were amended in 1978, and have almost universally been interpreted as to disallow terminations without cause. While a relatively small number of Adjudicators took a different view, the Supreme Court sided with the overwhelming majority of CLC Adjudicators on this issue.

The Supreme Court was concerned that the contrary view would undermine the purpose of the legislation. The purpose of the 1978 amendments was to offer a statutory alternative to the common law of dismissal, while providing non-unionized federal employees with some of the same protections afforded to their unionized counterparts. The new regime under the CLC was also a way by which dismissed employees could obtain meaningful remedies that are far more expansive than those available at common law.

There are still limits on unjust dismissal complaints in the CLC: employees may only file a complaint if they have completed 12 consecutive months of continuous employment; the CLC only applies to non-managerial employees; and the CLC is not available if an employee is laid off because of lack of work or the discontinuance of a function. However, this decision confirms that non-unionized federal employees are protected from being dismissed without cause.

One issue that the Supreme Court did not deal with explicitly is whether employees who have been unjustly dismissed should be reinstated into their positions. The Court acknowledged that reinstatement was part of “the galaxy of discretionary remedies” available to CLC Adjudicators; however, the Court did not opine on whether CLC Adjudicators should be routinely ordering reinstatement or whether monetary compensation was more appropriate. Ever since the Federal Court of Appeal’s decision in Atomic Energy of Canada Ltd. v. Sheikholeslami, where it was found that unjustly dismissed employees did not have an absolute right to reinstatement, CLC Adjudicators have only ordered reinstatement in less than 30% of successful cases. The Supreme Court, unfortunately, did not comment on whether CLC Adjudicators should return to a practice of regularly reinstating employees, and reserving monetary compensation for rare cases where reinstatement is doomed to failure.

Overall, the Supreme Court’s decision in Wilson has restored sanity to CLC unjust dismissal adjudications, and affirmed that pay in lieu of notice does not make a dismissal “just".


This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2021 Nelligan O’Brien Payne LLP.

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