While most employees across Canada fall under provincial labour legislation, a small percentage of employees are federally regulated under the Canada Labour Code (the “Code“). The Code has some unique provisions not typically found in provincial legislation. One of them allows a non-union employee in certain circumstances to challenge his or her termination of employment before a federal adjudicator.

Of interest to federally regulated employers is the Supreme Court of Canada’s July 14, 2016 decision in Wilson v Atomic Energy of Canada Ltd., 2016 SCC 29. The majority of the Supreme Court, in overturning the Federal Court of Appeal decision[1] and restoring the adjudicator’s decision, concluded that non-unionized federal employees could not be dismissed without cause under the Code and that a severance package, no matter how generous, is not an adequate replacement for the full remedial package granted to federal employees under the “Unjust Dismissal” scheme found at sections 240 to 246 of the Code.

The Unjust Dismissal scheme applies to any non-unionized, federally regulated employee who has completed 12 consecutive months of continuous employment. Pursuant to the scheme, the adjudicator charged with determining whether the dismissal was unjust is given a broad range of authority to grant an appropriate remedy, including monetary compensation or reinstatement of the employee.

In the opinion of the majority of the Supreme Court (spanning three different judgments), Parliament’s intent in amending the Code was to provide “expansive protections” to the dismissal rights of non-unionized employees much like those available to employees covered by a collective agreement. In its judgment, the Supreme Court closed the door on the interpretation of the Code that a federally non-union employee could be terminated without cause and with common law severance paid to avoid reinstatement under a section 240 hearing.

Applied to the specific case, Mr. Wilson had been terminated without notice, but offered six months’ pay as severance (far in excess of the 18 days he was entitled to under the Code), in exchange for Mr. Wilson releasing all claims he had against his employer. The Supreme Court found this was an unreasonable option offered by the employer, as the common law severance package was not equivalent to the wider remedial options Mr. Wilson might receive under the Code.