legal words
THE SUPREME COURT CONFIRMED THAT
SIMPLY PROVIDING AN EMPLOYEE WITH AMPLE
NOTICE OF TERMINATION, OR A PACKAGE IN
LIEU THEREOF, WAS INSUFFICIENT TO AVOID
AN “UNJUST DISMISSAL” DETERMINATION.
to how to properly manage the dismissal process – particularly for
problematic employees.
This pivotal issue was put before the Supreme Court of
Canada in the 2016 case of Wilson v. Atomic Energy of Canada
Ltd. (“Wilson”). Although the Supreme Court’s interpretation
of the Unjust Dismissal provisions will not be welcomed by employers,
they ought to take note of this final and binding decision
as it will significantly limit the ways in which they can manage
their workforces.
In Wilson, the Supreme Court confirmed that simply providing
an employee with ample notice of termination, or a package
in lieu thereof, was insufficient to avoid an “unjust dismissal” determination
pursuant to the Code. The Supreme Court found
that Parliament’s intention, when introducing the Code in
1978, was to replace – not to co-exist with – the common law
right of employers to dismiss employees without cause or reasons
thereof, in a manner comparable to employees who worked
in unionized environments. Therefore, effective immediately, a
federally regulated employer’s ability to dismiss its employees is
significantly hampered – it can no longer terminate without just
cause. This will provide employees with obvious leverage during a
dismissal process.
However, federally regulated employers should note that there
are important limits to the unjust dismissal protections of the
Code that remain, despite the decision in Wilson. First, the provisions
do not apply to employees who are governed by a collective
agreement or who have completed less than 12 consecutive months
of employment. Therefore, employers would be wise to conduct
reviews prior to an employee’s first anniversary of employment.
Second, employees who are “managers” are not entitled to the
protections afforded by Division XIV of the Code. However, before
undergoing an organization-wide process of re-labelling job
titles in an attempt to squeeze as many positions into this managerial
exception – for example, changing the position of “sales
representative” to “account manager” – HR professionals must
know that adjudicators will look at many factors beyond just the
formal job title in determining whether a dismissed employee is a
“manager” or not. There are numerous cases where employees with
the title of supervisor, manager and even director have been found
to be subject to the protections of Division XIV of the Code.
Indeed, whether or not an employee is a “manager” has traditionally
been interpreted very narrowly pursuant to the Code.
Ultimately, the test for demonstrating that an employee is a
manager is whether that person had significant autonomy, discretion
and authority in the conduct of the employer’s business. This
requires satisfaction of two criteria: first, the employee must be engaged
in the administration of the employer’s affairs, and second,
the employee must have the power of independent action, autonomy
and discretion in a significant range of matters within her or
his area of responsibility.
The third limit to the application of the unjust dismissal provisions
is where an employee is dismissed due to lack of work, or
discontinuance of a function that they performed for their employer.
Similar to the managerial exception, this limit to the unjust
dismissal protections is also interpreted narrowly by adjudicators;
however, it can often be helpful to employers who are undergoing
major changes in their workforce, whether brought on by internal
or external factors. For example, if a particular set of activities
which form an office are merely handed over to another person,
or if the activity or duty is simply given a new name and different
title so as to fit another job description, there would be no “discontinuance
of a function.” On the other hand, if the employment
activities are disbursed, decentralized or spread amongst many
other employees or a third party provider, if done in good faith, a
discontinuance of a function has occurred and the unjust dismissal
protections do not apply.
In sum, considering the current uncertain economic climate
and the fact that a number of federal employers are currently (or
may soon be) in the process of downsizing or restructuring, the
Wilson decision should be front of mind for HR professionals in
their attempts to efficiently manage and organize their workforce;
otherwise, many of these efforts could be easily reversed by adjudicators
enforcing the now clearly defined import of the unjust
dismissal provisions of the Code. n
Mark Repath is an associate at Van Kralingen Law, a boutique firm
with a practice focused on employment litigation and all aspects of
workplace law.
14 ❚ MARCH 2017 ❚ HR PROFESSIONAL