Wilson v. Atomic Energy of Canada Ltd. (Employment law ― Unjust dismissal ― Dismissal without cause ― Non unionized employees) – Appeal allowed

On appeal from a judgment of the Federal Court of Appeal (2015 FCA 17), affirming a decision of O’Reilly J. (2013 FC 733).

W worked as an Administrator for his employer for four and a half years until his dismissal in November 2009. He had a clean disciplinary record. He filed an “Unjust Dismissal” complaint, claiming that his dismissal was in reprisal for having filed a complaint of improper procurement practices on the part of his employer. In response to a request from an inspector for the reasons for W’s dismissal, the employer said he was “terminated on a non cause basis and was provided a generous dismissal package.” A labour adjudicator was appointed to hear the complaint. The employer 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 concluded that an employer could not resort to severance payments, however generous, to avoid a determination under the Code about whether the dismissal was unjust. Because the employer did not rely on any cause to fire him, W’s complaint was allowed. The Application Judge found this decision to be unreasonable because, in his view, nothing in Part III of the Code precluded employers from dismissing non-unionized employees on a without cause basis. The Federal Court of Appeal agreed, but reviewed the issue on a standard of correctness.

Held (6-3): (Moldaver, Côté and Brown JJ. dissenting): The appeal should be allowed and the decision of the Adjudicator restored.

Per Abella J.:

At common law, a non-unionized employee could be dismissed without reasons if he or she was given reasonable notice or pay in lieu. In 1978, Parliament added a series of provisions to Part III of the Canada Labour Code under the heading “Unjust Dismissal,” now found at ss. 240 to 246. This Unjust Dismissal scheme consists of expansive protections like those available to employees covered by a collective agreement and applies to non-unionized employees who have completed 12 consecutive months of continuous employment. A dismissed employee or an inspector can ask the employer for a written statement setting out the reasons for the dismissal. The employer must then provide the statement within 15 days. If an adjudicator determines that the dismissal was unjust, he or she has broad authority to grant an appropriate remedy, including requiring the employer to pay the person compensation or reinstate the person. No complaint can be considered by an adjudicator if the employee was laid off because of lack of work or the discontinuance of a function.

Before this Court, as they had in the prior judicial proceedings, the parties accepted that the standard of review was reasonableness. The decisions of labour adjudicators or arbitrators interpreting statutes or agreements within their expertise attract a reasonableness standard. Applying that standard, the Adjudicator’s decision was reasonable and consistent with the approach overwhelmingly applied to these Unjust Dismissal provisions since they were enacted in 1978. The fact that a handful of adjudicators have taken a different approach to the interpretation of the Code does not justify deviating from a reasonableness standard. The Federal Court of Appeal’s position that even if a reasonableness review applied, the Adjudicator should be afforded “only a narrow margin of appreciation” because the statutory interpretation in this case “involves relatively little specialized labour insight,” is improper. The reasonableness standard must be applied in the specific context under review, but to attempt to calibrate reasonableness by applying a potentially indeterminate number of varying degrees of deference within it, unduly complicates an area of law in need of greater simplicity.

Some general comments on the need for greater simplicity may be worth airing. This obiter on streamlining the standard of review represents an attempt to start a conversation which will ultimately benefit in future cases from submissions from counsel. Collapsing the three standards of review into two has not proven to be the runway to simplicity the Court had hoped it would be in Dunsmuir. The terminological battles over which of the three standards of review should apply, have been replaced by those over the application of the remaining two. That leaves the merits waiting in the wings for their chance to be seen and reviewed. This complicated entry into judicial review is hard to justify, and directs us institutionally to think about whether there is a principled way to simplify the path to reviewing the merits. The goal is to build on the theories developed in Dunsmuir and apply them in a way that eliminates the need to sort cases into artificial categories.

The explanation in Dunsmuir for changing the framework then, remains a valid explanation for why it should be changed now. Most of the confusion in the jurisprudence has been over what to call the category of review in a particular case, reasonableness or correctness. The question is whether there is a way to move forward that respects the underlying principles of judicial review which were explained in Dunsmuir, while redesigning their implementation in a way that makes them easier to apply.

The most obvious and frequently proposed reform of the current system is a single reviewing standard of reasonableness. Nothing Dunsmuir says about the rule of law suggests that constitutional compliance dictates how many standards of review are required. The only requirement, in fact, is that there be judicial review in order to ensure, in particular, that decision makers do not exercise authority they do not have. There is nothing in its elaboration of rule of law principles that precludes the adoption of a single standard of review, so long as it accommodates the ability to continue to protect both deference and the possibility of a single answer where the rule of law demands it, as in the four categories singled out for correctness review in Dunsmuir.

A single standard of reasonableness still invites the approach outlined in Dunsmuir, namely that it is concerned with whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law. Approaching the analysis from the perspective of whether the outcome falls within a range of defensible outcomes has the advantage of being able to embrace comfortably the animating principles of both former categories of judicial review. Courts can apply a wider range for those kinds of issues and decision makers traditionally given a measure of deference, and a narrow one of only one “defensible” outcome for those which formerly attracted a correctness review. Most decisions will continue to attract deference, as they did in Dunsmuir.

Even if there proves to be little appetite for collapsing the two remaining standards of review, it would still be beneficial if the template developed in Dunsmuir were adhered to, including by applying the residual “correctness” standard only in those four circumstances Dunsmuir articulated.

Returning to this case, the issue is whether the Adjudicator’s interpretation of ss. 240 to 246 of the Code was reasonable. The text, the context, the statements of the Minister of Labour when the legislation was introduced, and the views of the overwhelming majority of arbitrators and labour law scholars, confirm that the entire purpose of the statutory scheme was to ensure that non-unionized federal employees would be entitled to protection from being dismissed without cause under Part III of the Code. The alternative approach of severance pay in lieu falls outside the range of “possible, acceptable outcomes which are defensible in respect of the facts and law” because it completely undermines this purpose by permitting employers, at their option, to deprive employees of the full remedial package Parliament created for them. The rights of employees should be based on what Parliament intended, not on the idiosyncratic view of the individual employer or adjudicator. The Adjudicator’s decision was, therefore, reasonable.

When the provisions were introduced, the Minister referred to the right of employees to fundamental protection from arbitrary dismissal and to the fact that such protection was already a part of all collective agreements. These statements make it difficult to draw any inference other than that Parliament intended to expand the dismissal rights of non-unionized federal employees in a way that, if not identically, at least analogously matched those held by unionized employees. This is how the new provisions have been interpreted by labour law scholars and almost all the adjudicators appointed to apply them, namely, that the purpose of the 1978 provisions in ss. 240 to 246 was to offer a statutory alternative to the common law of dismissals and to conceptually align the protections from unjust dismissals for non-unionized federal employees with those available to unionized employees. The new Code regime was also a cost effective alternative to the civil court system for dismissed employees to obtain meaningful remedies which are far more expansive than those available at common law.

The most significant arbitral tutor for the new provisions came from the way the jurisprudence defined “Unjust Dismissal.” In the collective bargaining context, “unjust dismissal” has a specific and well understood meaning: that employees covered by collective agreements are protected from unjust dismissals and can only be dismissed for “just cause.” This includes an onus on employers to give reasons showing why the dismissal is justified, and carries with it a wide remedial package including reinstatement and progressive discipline. The foundational premise of the common law scheme — that there is a right to dismiss on reasonable notice without cause or reasons — has been completely replaced under the Code by a regime requiring reasons for dismissal. In addition, the galaxy of discretionary remedies, including, most notably, reinstatement, as well as the open ended equitable relief available, is also utterly inconsistent with the right to dismiss without cause. If an employer can continue to dismiss without cause under the Code simply by providing adequate severance pay, there is virtually no role for the plurality of remedies available to the adjudicator under the Unjust Dismissal scheme. Out of the over 1,740 adjudications and decisions since the Unjust Dismissal scheme was enacted, only 28 decisions have not followed this consensus approach.

The remedies newly available in 1978 to non-unionized employees reflect those generally available in the collective bargaining context. This is what Parliament intended. To infer instead that Parliament intended to maintain the common law under the Code regime, creates an anomalous legal environment in which the protections given to employees by statute — reasons, reinstatement, equitable relief — can be superseded by the common law right of employers to dismiss whomever they want for whatever reason they want so long as they give reasonable notice or pay in lieu. This somersaults the accepted understanding of the relationship between the common law and statutes, especially in dealing with employment protections, by assuming the continuity of a more restrictive common law regime notwithstanding the legislative enactment of benefit granting provisions to the contrary.

The argument that employment can be terminated without cause so long as minimum notice or compensation is given, on the other hand, would have the effect of rendering many of the Unjust Dismissal remedies meaningless or redundant. Only by interpreting the Unjust Dismissal scheme as representing a displacement of the employer’s ability at common law to fire an employee without reasons if reasonable notice is given, does the scheme and its remedial package make sense. That is how the 1978 provisions have been almost universally applied. It is an outcome that is anchored in parliamentary intention, statutory language, arbitral jurisprudence, and labour relations practice. To decide otherwise would fundamentally undermine Parliament’s remedial purpose.

Per McLachlin C.J. and Karakatsanis, Wagner and Gascon JJ.:

The standard of review in this case is reasonableness and the Adjudicator’s decision was reasonable and should be restored. Justice Abella’s disposition of the appeal on the merits and her analysis of the two conflicting interpretations of the Unjust Dismissal provisions of the Code are agreed with. Although her efforts to stimulate a discussion on how to clarify or simplify the standard of review jurisprudence are appreciated, it is unnecessary to endorse any particular proposal to redraw the current standard of review framework at this time.

Per Cromwell J.:

The standard of review in this case is reasonableness and the Adjudicator’s decision was reasonable. The appeal should be allowed and the decision of the Adjudicator restored for the reasons given by Abella J. Reasonableness is a single standard and must be assessed in the context of the particular type of decision making involved and all relevant factors. Developing new and apparently unlimited numbers of gradations of reasonableness review ― the margins of appreciation approach created by the Federal Court of Appeal ― is not an appropriate development of the standard of review jurisprudence. However, the standard of review jurisprudence does not need yet another overhaul and the approach developed by Abella J. in obiter is disagreed with.

Per Moldaver, Côté and Brown JJ. (dissenting):

This case exposes a serious concern for the rule of law posed by presumptively deferential review of a decision maker’s interpretation of its home statute. In the specific context of this case, correctness review is justified. To conclude otherwise would abandon rule of law values in favour of indiscriminate deference to the administrative state.

For decades, labour adjudicators across the country have come to conflicting interpretations of the unjust dismissal provisions of Part III of the Canada Labour Code. These conflicting interpretations go to the heart of the federal employment law regime, and can in theory, persist indefinitely. The simultaneous existence of these conflicting interpretations undermines the rule of law by compromising the cardinal values of certainty and predictability. This state of affairs creates the risk that the very same federally-regulated employer might be subjected to conflicting legal interpretations regarding whether it can or cannot dismiss an employee without cause. The existence of lingering disagreements amongst decision makers also undermines the very basis for deference. Where there is lingering disagreement on a matter of statutory interpretation between administrative decision makers, and where it is clear that the legislature could only have intended the statute to bear one meaning, correctness review is appropriate.

While the constructive spirit in which Abella J.’s revisions to the standard of review are proposed in obiter dicta is appreciated, it is preferable to confine any statement regarding what is already the subject of a peripatetic body of jurisprudence to a judicial pronouncement.

Sections 240 to 245 of the Code create a mechanism for employees to challenge the lawfulness of their dismissal. Employees who are covered by a collective agreement have a similar procedural option to grieve the lawfulness of their dismissals. This procedure is more efficient than a civil action, since it involves less stringent evidentiary rules, an expert adjudicator who is well versed in the factual nuances of employment relationships, and a stricter timeline than a court action. It is a time- and cost-effective method of resolving employment disputes that provides an alternative to judicial determination. Additional remedies are available to employees who choose to use the unjust dismissal provisions. In this way, the unjust dismissal provisions of the Code increase access to justice for federal employees who are dismissed from their employment.

But a procedural mechanism that increases access to justice does not, in and of itself, fundamentally alter the legal basis of the federally-regulated employment relationship. This procedural mechanism — access to which is dependent on the discretion of the Minister — is not the exclusive means by which a federal employee may challenge the lawfulness of a dismissal. Parliament has expressly preserved the continuing jurisdiction of the civil courts to decide the lawfulness of the dismissal, though the civil courts apply the common law of wrongful dismissal rather than the unjust dismissal provisions of the Code. An employee is always entitled to challenge the lawfulness of a dismissal in the civil courts, irrespective of whether the employee first chooses to resort to the unjust dismissal procedure in the Code, though subject to the doctrine of issue estoppel. The unjust dismissal provisions are therefore simply a procedural option for federal employees.

The common law continues to define the federal employment relationship and federally regulated employers are entitled to dismiss employees without cause, but with payment of the appropriate notice and severance pay as prescribed by ss. 230 and 235 of the Code, the contract of employment, or the common law (whichever is greater). Adjudicators and courts possess concurrent jurisdiction to determine the adequacy of the notice and severance pay and to order any other remedies that may be warranted in the circumstances. The mere provision of a notice and a severance payment does not allow an employer to escape the scrutiny of an adjudicator any more than it would allow the employer to escape the scrutiny of a court.

Permitting federally-regulated employers to dismiss their employees without cause would not have the effect of rendering many of the unjust dismissal remedies meaningless or redundant. The remedy of reinstatement is consistent with a “without cause” regime. It is available in almost every provincial employment law regime irrespective of whether that regime permits an employer to dismiss an employee without cause. Under the Code, adjudicators currently order reinstatement based on their expert assessment of whether the employer and employee will be able to continue working together in a healthy and productive employment relationship in the future. If the adjudicator has reason to believe that the employer will simply dismiss the employee again, he or she will not order reinstatement. There is no reason to suppose that this practice would change were the continuing right of federally-regulated employers to dismiss their employees without cause to be affirmed, as long as the appropriate notice and severance pay is provided.

A dismissal without cause is not per se unjust, so long as adequate notice is provided. Because the Adjudicator’s interpretation of ss. 240 to 246 of the Code is inconsistent with the text, context and purpose of these provisions, it ought to be set aside and the appeal dismissed.

Reasons for judgment by Abella J.

Joint concurring reasons by McLachlin C.J. and Karakatsanis, Wagner and Gascon JJ.

Concurring reasons by Cromwell J.

Joint dissenting reasons by Côté and Brown JJ. (Moldaver J. concurring)

Neutral Citation: 2016 SCC 29

Docket Number: 36354

http://scc-csc.lexum.com/scc-csc/scc-csc/en/item/16062/index.do