This article by Lumi Pungea was originally published by the Ontario Bar Association. Read the original here.

From time to time an employment law decision comes along that resonates beyond the specialized legal blogs and into the mainstream news. Take Wilson v. Atomic Energy of Canada Ltd., 2016 SCC 29. When the decision was released earlier this year it was presented on several evening news programs and clients contacted their lawyers asking how the Supreme Court decision affected their obligations and entitlements.

The rule in the typical wrongful dismissal is that an employee can be fired at any time for any reason, however arbitrary, as long as the employer does not discriminate against the employee and provides adequate notice or pay in lieu thereof. Not being the “right fit” or even not being provided with a reason at all leaves a departing employee with no recourse as long as the notice of termination is adequate. In contrast, Wilson stands for the proposition that non-unionized workers employed by banks, airline companies, telecoms, and other federally regulated enterprises can only be dismissed for “just cause” and no amount of notice can preclude the employer from having to justify the decision to dismiss someone.

Joseph Wilson worked as an administrator for his employer for four and a half years and had a clean disciplinary record. He nevertheless lost his job after filing a complaint of improper procurement practices on the part of his employer. The dismissal was on a “without-cause” basis and the employer provided Mr. Wilson with pay in lieu of notice. The Supreme Court, reversing the Federal Court of Appeal decision, affirmed that sections 240 to 246 of the Canada Labour Code, R.S.C., 1985, c. L-2 (the “Code”) protect non-unionized federal employees from “unjust dismissals.” In the context, the Supreme Court held that Mr. Wilson’s dismissal was in fact a reprisal in the guise of a “without-cause” termination and that he was entitled to apply for reinstatement.

The Supreme Court’s decision is significant because if affirms that the Code allows certain employees to challenge their termination and those employees have the right to request reasons for the dismissal. In other words, not even a relatively generous severance package can rectify an unjust dismissal and as a result certain employees are allowed to seek reinstatement. The decision favours employees because it expands the options available to them beyond monetary compensation.

Of note, although Wilson confirms that non-unionized federal workers are protected from arbitrary dismissals, an employee has no redress if he or she was laid off because of “lack of work” or “the discontinuance of a function.” Therefore, generic reasons such as a “reorganization” or “change in the operational needs” of a business trigger an employee’s termination entitlements but may preclude an application for reinstatement.

What Does Wilson Mean for Employers?

Wilson affirms that the ability of federally-regulated employers to terminate an employee is limited to the following circumstances:

  • The employee has been employed for less than 12 months;
  • The employee’s dismissal is due to a lack of work or a discontinuance of a business function; or
  • The employee’s dismissal is for just cause.

Just cause is a high legal threshold to meet and performance-based terminations for long service employees remain difficult for employers to defend. Federally-regulated employers need to provide reasons for dismissing their employees and should be able to connect their decision to the employee’s record or to legitimate business reasons. In the case of misconduct or incompetence employers need to undertake progressive discipline and provide employees with meaningful opportunities to improve their act before dismissing them. While it remains to be seen how Wilson is applied to other cases, dismissals for not being the “right fit” are more likely to be challenged by employees.

What Does Wilson Mean for Employees?

Employees who lose their job and suspect that the employer’s reason for the dismissal lacks legitimacy may have recourse and there seems to be general consensus in the employment bar that the Supreme Court’s decision in Wilson provides employees with added leverage in negotiations. While the requirement for adequate notice has a general application, non-unionized federally-regulated employees who can prove that they were dismissed arbitrarily now have access to a broader range of remedies, including potential reinstatement.