By granting the application for leave to appeal of a dismissed employee1, the Supreme Court of Canada has elected to resolve the long-running debate in the case law between two schools of thought. The Court’s decision will confirm whether or not section 240 of the Canada Labour Code2 (the “Code”) allows dismissal without cause where it is not unjust for the employee concerned.

This dispute to be heard by the country’s highest court originated with Mr. Joseph Wilson (“Wilson”), an employee of Atomic Energy of Canada Ltd. (“AECL”), refusing to sign a release in exchange for a severance package after AECL terminated his employment without citing any cause, and offered him six months’ severance (whereas sections 230 and 235 of the Code entitled him to 18 days severance). Wilson refused the offer and proceeded to file a complaint for wrongful dismissal pursuant to section 240 of the Code.

The adjudicator of the complaint sided with Wilson, ruling that dismissal without cause was tantamount to wrongful dismissal. In the adjudicator’s view, the Code only allows employers to dismiss an employee if it can show reasonable grounds for doing so.

On judicial review the Federal Court quashed the adjudicator’s ruling, finding that dismissals without cause are not necessarily unjust, as the Code appears to allow them (sections 230, 235, 240 and 242 of the Code). Consequently, the Court sent the matter back to the adjudicator to determine whether Wilson’s dismissal could, in light of the surrounding circumstances, be considered unjust.

This judgment was ultimately upheld by the Federal Court of Appeal, following its determination that the application for judicial review was not premature, and an analysis of the two conflicting lines of decided cases. According to the Court of Appeal, a dismissal without cause cannot automatically be considered unjust, and it is up to the adjudicator hearing the complaint to analyze the facts surrounding the dismissal in order to determine if it was unjust.

The essence of the Court of Appeal’s analysis is based on two separate legal concepts.

First of all, the Court expressed the view that common law case law, which allows dismissal without cause provided reasonable prior notice is given or severance in lieu thereof was paid, must continue to coexist with the Code. As the common law was not expressly set aside by Parliament, it is presumed to continue to apply, with the Code merely supplementing it. In other words, adjudicators must assume that the concept of reasonable prior notice is implicit in the Code and they must take it into account in their analysis.

Secondly, the Court found that no “right to employment” for non-unionized employees was provided for in the Code. Adjudicators consequently cannot put them on a par with unionized employees by shielding them from dismissal without cause. The Code, in effect, does not limit the employer’s prerogative to dismiss non-unionized employees without cause.

In addition, the Court rejected Wilson’s arguments based on the Sheikholeslami and Boisvert decisions, holding that they cannot be construed as prohibiting dismissals without cause or as guaranteeing the right of non-unionized employees to continued employment.

Moreover, the Court disagreed with Wilson’s position that the remedy under section 240 of the Code risked being rendered illusory by a decision in favour of AECL. Even if an employer chooses to dismiss an employee without cause but with severance, the employee can always apply to an adjudicator to determine whether the surrounding circumstances indicate that the dismissal was unjust.

The Supreme Court of Canada will thus shortly put an end to this judicial seesaw. In addition to learning which school of thought the Court endorses, it will be equally interesting to witness the effects of the Court’s decision on the subsequent interpretation of the Code by courts and tribunals.