On July 14, 2016, the Supreme Court of Canada confirmed that most federally-regulated, non-union employees can only be dismissed for “just cause” after 12 consecutive months of service (Wilson v. Atomic Energy, 2016 SCC 29). As a result of this decision, it is now clear that employees who are regulated under Part III of the Canada Labour Code cannot, following their first year of employment, simply be provided with termination notice or pay in lieu, absent a compelling reason for terminating the employment relationship.

Due to widespread legal uncertainty that existed prior to 2015, many federally regulated employers will already understand the consequences of this case, but the administrative and financial implications are far-reaching. In most cases, federally-regulated employers who dismiss their employees for poor performance and/or misconduct will face a significant risk that an adjudicator will order reinstatement and “back pay”. Furthermore, in cases where reinstatement is determined to be inappropriate, damages awarded to employees for “unjust dismissal” are likely to increase.

Federally-regulated employers who have embraced “without cause dismissals” as a result of the Federal Court of Appeal’s decision in Wilson v. Atomic Energy of Canada Limited, 2015 FCA 17 must re-adjust. It is now more important than ever for federal employers to implement rigorous and well-documented performance management processes–processes which are crucial for proving just cause if litigation ensues. Practically speaking, the Supreme Court of Canada’s decision also increases the importance of establishing carefully-crafted written employment agreements for all non-union employees, implementing an effective probationary period, and administering redeployment policies where appropriate.

For background on this case, see our previous post (here) where we outline the facts and describe the Federal Court of Appeal’s decision (which the Supreme Court of Canada has now overturned).