Up And Atom: Victory For Federally Regulated Employers As Court Okays Without Cause Dismissals

For decades, adjudicators appointed under the Canada Labour Code to consider unjust dismissal complaints under section 240 have differed on whether the statute permits federally regulated employers to dismiss employees without cause, absent a lay off due to a "lack of work" or the "discontinuance of a function". In Wilson v. Atomic Energy of Canada Limited, 2015 FCA 17, the Federal Court of Appeal has settled the dispute "once and for all", subject to a successful appeal to the Supreme Court of Canada. Its decision arrives as welcome news to employers.

Background

Atomic Energy of Canada Limited (AECL) is a Crown corporation, and one of Canada's largest nuclear science and technology laboratories. Wilson was a former procurement supervisor at AECL who was dismissed without cause following four and a half years of service. Despite AECL's offer to pay six months of pay representing both statutory and common law severance , Wilson opted to make an unjust dismissal complaint under Division XIV of the Code.

Specifically, Division XIV establishes a procedure for making complaints against dismissals that employees consider unjust. Where an adjudicator appointed under the Code agrees that an employee has been unjustly dismissed, the adjudicator has broad powers to require the employer to compensate the employee, reinstate the employee or grant any other suitable remedy in order to "counteract" the consequences of the dismissal.

While the correct interpretation of these provisions has been hotly debated since the late-1970s, popular belief held that employees could only be dismissed due to just cause, a lack of work or the elimination of the employee's position (or in a handful of other prescribed circumstances). This was the line of reasoning adopted by the adjudicator in the present case, who held that Wilson's complaint was made out because he had been dismissed by AECL without cause.

Without Cause Dismissals Not (Automatically) Unjust

In the Wilson decision, the Court of Appeal agreed with the Federal Court and held that without cause dismissals are not necessarily unjust under the Code. Rather, Division XIV requires adjudicators to examine the specific facts of each case and then determine whether the dismissal was unjust in the circumstances. In the words of the Court, employees do not have a "right to a job in the sense that any dismissal without cause is automatically unjust."

The Court concluded that Division XIV of the Code supplements (as...