Thursday, July 14, 2016

Wilson v. AECL: Supreme Court Allows Appeal by Unjustly Dismissed Employee

This is a case that's been generating waves in the Labour and Employment bar across the country, and the Supreme Court just shot down what had been a bit of an earth-shattering decision by the Federal Court of Appeal.

First off, some mandatory constitutional law for context:  The vast majority of employment relationships in the country are regulated by the Provincial governments.  So when you see me writing about Ontario's Employment Standards Act, that's why.

However, organizations that fall under a Federal regulatory mandate, such as telecommunications, banking, and some finance, instead have their employment relationships governed by the Federal Canada Labour Code.  This is a relatively comprehensive statute, covering matters such as employment standards, labour relations, occupational health and safety, and others.

There are several differences between the Code and the various Provincial employment laws, but few differences are more stark than 'reinstatement' provisions in the Code.

Reinstatement Remedies versus the Entitlement to Fire

Outside of the non-union context, it's exceptionally rare that employees can get reinstatement remedies in Provincially regulated environments.  As the Ontario Court of Appeal recently upheld in Fair (I haven't posted a commentary on that decision yet, but I did when it came out of the Divisional Court), the Human Rights Tribunal of Ontario can reinstate an employee dismissed for reasons which contravene the Human Rights Code.  It's also well established that the Ontario Labour Relations Board can order reinstatement where employees were dismissed because of their union activities, and there are a handful of other 'statutory' reasons why termination is prohibited and reinstatement is available.

But those are the exception.  Outside of those few specific 'bad reasons' to fire an employee, at common law, you don't even need a reason to dismiss an employee.  I could walk into my office one morning and say to my employees, "Leafs lost; that means that you have to draw straws to see which one of you gets fired."  As an employer, I'm totally entitled to do that.  If I don't give the employee adequate notice of dismissal, it becomes a "wrongful" dismissal, and I'll be liable to provide the employee with pay in lieu of notice, but that doesn't detract from the fact that I'm entitled to terminate the employment relationship.

In Federally regulated environments, however, there's an additional framework - that of "unjust" dismissal:  The consensus view for a long time has been that, for non-managerial and non-union employers, termination by a Federally regulated employer must either be because of a lack of work or elimination of the position, or for 'cause' (which is similar, if not identical, to the high standard of 'just cause').

Procedural History

Mr. Wilson was hired by Atomic Energy of Canada Limited (AECL) in 2005.  He worked for over four years before he was dismissed, without cause, in 2009.  He filed an Unjust Dismissal complaint, and when the Ministry investigated, the employer took the position that he had been offered a "generous dismissal package", and therefore its obligations under the Code were satisfied.

Wilson also claimed that the dismissal was motivated by a reprisal - a whistleblower issue, of sorts.  This is not material to the case as it's currently before the courts, as the matter proceeded on the preliminary issue as to whether or not a 'without cause' dismissal, accompanied by a severance package, could be a 'just' one.

Stanley Schiff, a Professor Emeritus from the University of Toronto's Faculty of Law, was appointed to hear and determine the preliminary issue, and he concluded that a severance package simply could not render just an otherwise unjust dismissal - this being the consensus position among labour arbitrators up to that point, having been upheld at times at the Federal Court.

The employer brought an Application for Judicial Review to the Federal Court.  The Federal Court concluded that the adjudicator's decision was 'unreasonable', and the Federal Court of Appeal agreed.

With four sets of reasons (one of which, by Justices Moldaver, Cote, and Brown, dissented in the result), this turns out to be a complicated case, more about certain principles of administrative law than about substantive labour and employment law.

The case turns out to be about 'standard of review':  Should adjudicators such as Professor Schiff be afforded deference so long as their decisions are 'reasonable'?  Or, for decisions of this nature, must he be held to a standard of correctness?

Put more simply, is it enough to warrant judicial intervention that a judge might disagree with his conclusion, or must the conclusion be unreasonable on its face?

The dissenting judges regard the 'unjust dismissal' provisions of the Code as only creating a procedural option, without changing the substantive rights or obligations of the parties to the employment relationship.  I could spend a great deal of time parsing this argument, and examining its consequences, starting with the question of what rights it would protect, if we regarded it in those terms.

The standard of review, according to the dissent, should be correctness:  The question appears to be strictly one of law, of interpretation of the terms of the Canada Labour Code, and the dissent is deeply concerned about a trend toward deference to administrative decision-makers when interpreting their own governing statutes, undermining the principles of certainty and predictability - because adjudicators are left to their own devices in interpreting the Code, Federally regulated employers can't really know their own substantive rights and obligations, because it kind of depends on what adjudicator they draw...

There's a certain appeal to the dissent's viewpoint on the 'standard of review' question.  Yet I think they're overstating the uncertainty, to an extent.  There was a consensus viewpoint.  Yes, certain adjudicators might go another way, but they're a small minority - a tiny handful of adjudicators that have disagreed with the consensus over the course of decades.

The other six judges, however, considered the appropriate standard of review to be 'reasonableness' - and they considered the adjudicator's decision to be reasonable.  They reviewed the legislative history of the provisions in question, and Parliament's Hansard, showing clear indicia that the provisions were intended to bring in job security protections comparable (though not identical) to those of unionized employees.

The tendency of labour arbitrators to apply union-esque philosophies, in a modified way, is therefore consistent with Parliament's intention, and not unreasonable.

However, there's another split.  Justice Abella proposed that the 'correctness' standard be done away with altogether - that the standard of 'reasonableness' be applied in all cases, with due regard to the circumstances of the decision.

Justice Cromwell, while agreeing with Justice Abella's disposition of the case, rejected this approach.  He argued that the existing framework is fundamentally sound and simply needs some fine-tuning, rather than a full overhaul.

All the other judges - both in the concurring and dissenting reasons - said they "appreciate" Justice Abella's efforts to stimulate a discussion on the point, but consider unnecessary to redefine standard of review in the context of this particular case.


The takeaway here is actually fairly simple:  The consensus view, limiting Federal not-for-cause terminations, has been endorsed as reasonable by a majority of the Supreme Court of Canada, so Federally regulated employers should proceed very cautiously with not-for-cause dismissals moving forward.  Period.

But as to the finer legal points, there's more to be said.  There's a superficial appeal to Justice Abella's proposal to eliminate the 'correctness' standard.  Put all 'deference' issues on the sliding scale of reasonableness.

But, superficial appeal aside, I would have significant reservations about that approach.  I'm something of a legal intellectual purist:  I believe that all strictly legal questions should have one correct answer, based on consistent sets of common law principles and statutory interpretation principles.  Facts quickly muddy up the waters of any such discussions, but the law itself should be objective.

And this is what the 'correctness' standard is typically reserved for:  Questions of pure law.

Accordingly, I think the dissenting 'standard of review' analysis is solid:  The question "Does the Code prevent terminations on a without cause basis" is one that should have a fixed answer.  It's a legal question, a question of statutory interpretation, and there should be a right answer to it.  Not "It depends on which adjudicator you get".  Mind you, I'm not sure I agree with their substantive answer - I find it difficult to reconcile the availability of a reinstatement remedy with an unconstrained management right to fire - but I think that it's a question that the court can and should answer determinatively, rather than kicking it over to administrative decision-makers.

On a personal note, congratulations to my friend and colleague Lauren Wihak, whose 2014 paper "Whither the Correctness Standard of Review" was cited by both Justice Abella and the dissent.


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please contact him for information on available services and billing.

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