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HOT OFF THE PRESS! Supreme Court of Canada restores requirement for just cause dismissal under the Canada Labour Code

The Supreme Court of Canada (“SCC”) has released its decision on Atomic Energy of Canada Ltd v Wilson. We first told you about this case in our August 2013 blog. In January, 2015 our blog on the Federal Court confirmed good news for federally-regulated employers. In that decision the Federal Court provided clarity for federally-regulated employers that the Canada Labour Code (“Code”) permitted an employee to be dismissed without cause under section 240. Prior to this decision there had been controversy and inconsistency from arbitrators applying section 240.

Unfortunately for employers looking for flexibility in dismissal for federal non-union and non-management employees, the SCC in a 6-3 decision has restored the arbitration decision and found that federal employers will require just cause to terminate a non-union and non-management employee. The decision is available here.

The SCC found the arbitrator’s decision to be reasonable and restored the decision that a federal employer must have reasons for dismissal. Justice Abella, writing for the majority, found that sections 240 to 246 in the Code were intended by the legislature to provide protection from arbitrary dismissal. The majority reasoned that the purpose of the statutory scheme was to ensure that non-unionized federal employees would be entitled to protection from being dismissed without cause. She noted that the wide variety of remedies, including reinstatement, would be rendered meaningless if the payment of a generous severance package was enough to satisfy the employer’s statutory obligations in s.240.