On July 9th, the Supreme Court granted leave to appeal from the judgment rendered  by the Federal Court of Appeal in Wilson v. Atomic Energy Canada Ltd. See our previous thoughts on the Federal Court of Appeal’s ruling here.

This appeal raises fundamental questions concerning the interpretation to be given by arbitrators and ultimately the Courts to the unjust dismissal provisions contained in Part III of the Canada Labour Code.

Essentially, the provisions of section 240 and following of the Code enable a non-unionized employee with more than one year's service to file a complaint to challenge what is called an "unjust" dismissal. The Code does not define what is an unjust dismissal. If the complaint is not resolved through mediation, it is referred to an arbitrator.

Clearly , the provisions of the Code authorize the arbitrator to grant remedies which do not exist in Common Law, including reinstatement.

At issue in the Atomic Energy decision are two conflicting interpretations of what exactly is an "unjust" dismissal. A first group of arbitrators and some legal scholars have held that an "unjust" dismissal is a dismissal without cause meaning that federal employees dismissed without cause have rights similar to unionized employees challenging wrongful dismissal. According to this interpretation, giving reasonable notice or the payment in lieu of notice does not render a dismissal just if there is no cause to support the termination. 

The other school of thought supports the interpretation that a termination without cause can nevertheless be just if the employer has given reasonable notice or payment in lieu thereof. The arbitrators who hold this view are of the opinion that the provisions of Part III do not consist of a significant departure from the Common Law.

In the Atomic case, the employer clearly acknowledged that it had no cause to terminate Mr. Wilson's employment. However, Mr. Wilson was given working notice and received a severance payment when his employment ended. Mr. Wilson filed a complaint and the arbitrator found that the dismissal was unjust because there was no cause and that the notice and severance did not make the dismissal just. However, the arbitrator did not apply any remedies but suspended the proceedings and invited the complainant and the employer to agree on a  suitable remedy.

Atomic sought judicial review before the Federal court which quashed the arbitrator's decision. Mr. Wilson appealed to the Federal Court of Appeal. The Federal Court of Appeal sided with the view that a dismissal without cause is not automatically unjust provided that reasonable notice  was given or a payment in lieu thereof was made by the employer. The Court was of the opinion that the federal legislator did not intend to depart from the general principles of the Common Law concerning dismissals. 

Mr. Wilson sought leave to appeal from to Supreme Court and, as we previously mentioned, leave was granted on July 9, 2015.

It is to be noted that though the Federal Court of Appeal mentions the existence of  similar legislation adopted by the province of Nova Scotia it makes no mention of legislation adopted in Quebec almost at the same time as the provisions of Part III. In Quebec, the view that giving notice and / or payment of notice could render a dismissal without cause "just" was expressly rejected by the Courts more than thirty years ago.  Also, arbitrators in Quebec who have had to apply the provisions of Part III have  almost unanimously taken the view that the provisions of Part III were a mirror reflection of the wrongful dismissal provisions of the Quebec Labour Standards Act and should be interpreted accordingly.

Given the vast remedial powers given to the arbitrator under Part III which include not only reinstatement but the payment of all lost wages (thus far exceeding reasonable notice) the Federal Court's position that the federal legislator did not intend to depart from the Common Law is questionable.  It fails to acknowledge that the power to reinstate is incompatible with Common Law or Civil Law in matters of wrongful dismissal.

It is therefore not surprising that the Supreme Court granted leave to appeal in this very important case which will have serious repercussions for federally regulated employers and their non-unionized employees.