Coincidental with the push for more attention to be paid to performance management, the Supreme Court of Canada (SCC) has provided clarity and relief for public sector bodies dealing with the dismissal of senior staff. At the same time, such staff should be aware they might have lost an important procedural right.
In essence, the recent Dunsmuir v. New Brunswick decision abolishes the requirement for a fairness hearing before dismissing someone holding public office (such as a senior member of a provincial or municipal staff) where a contract of employment exists, unless that contract specifically stipulates a requirement for such a hearing.
In 2002 David Dunsmuir began employment as a legal officer and clerk for the New Brunswick Department of Justice. His appointment to the position was by Order-in-Council, so he was considered a senior public officer.
The employment relationship was problematic from the start. Dunsmuir’s probationary period was extended twice and he was reprimanded three times during his employment. On the third occasion, he was sent a formal letter warning him that failure to improve his performance would result in further disciplinary action – up to and including dismissal.
While preparing for a meeting to review Dunsmuir’s performance, the employer concluded Dunsmuir was no longer right for the job and he was terminated the next day. His employer did not allege cause and Dunsmuir was given four months’ pay in lieu of notice.
Dunsmuir filed a grievance under the province’s Public Service Labour Relations Act, which gives grievance rights to non-unionized employees. The arbitrator ordered Dunsmuir reinstated. Because a portion of his employment was as a public officer, the arbitrator concluded that at common law he was entitled to a fairness hearing prior to dismissal, even where no cause was alleged. The right to such a hearing has been a cornerstone of Canadian administrative law since a 1970s SCC decision.
The employer appealed the arbitrator’s award, and both the New Brunswick Court of Queen’s Bench and Court of Appeal quashed the reinstatement order. Dunsmuir then appealed to the SCC. His appeal was unanimously dismissed.
The SCC agreed with both lower courts and confirmed that contract law principles prevail over any public law duty to provide a fairness hearing. Two justices summed up the key findings as follows:
“…the distinction between office holder and contractual employee for the purposes of a public law duty of fairness is problematic and should be done away with. The distinction is difficult to apply in practice and does not correspond with the justifications for imposing public law procedural fairness requirements. What is important…is the nature of the employment relationship. Where the relationship is contractual, it should be viewed as any other private law employment relationship regardless of an employee’s status as an office holder.”
Prior to Dunsmuir, if a provincial or municipal body was considering dismissing a senior staff member, it had a duty to provide a fairness hearing, giving the employee an opportunity to persuade the employer not to proceed with the proposed dismissal. This duty applied to all staff deemed to be public officers, which includes all statutory positions (such as a municipal clerk, treasurer, and chief administrative officer), as well as other senior staff (such as municipal solicitors and, in some cases, department heads).
Now, as a result of Dunsmuir, if an individual has an employment contract with a provincial or municipal body, the employer has no obligation to provide procedural fairness prior to dismissal unless the contract itself imposes that obligation.
Government employers must still abide by statutory and common law notice standards for terminations that are without cause (where there is no strong, objective evidence of incompetence, negligence or misconduct).
The federal government and most provinces have specific legislation that sets out a minimum notice period (or pay in lieu of notice) for terminated employees. In addition, the common law for wrongful dismissal requires a notice period that is reasonable in the circumstances, which often results in a period of notice substantially greater than the statutory minimum. For these reasons, any time a government employer is considering a termination decision, seeking legal advice – whether from internal or external counsel – is strongly advisable.
Provincial and municipal bodies interested in benefiting from Dunsmuir should ensure that new senior staff are hired pursuant to a written employment contract that does not include any obligation for a fairness hearing. Conversely, staff members wishing to preserve the right to a fairness hearing prior to dismissal must now negotiate for that right and have it specifically included in their employment contract.
Barnet H. Kussner is a partner at WeirFoulds LLP in Toronto.