Flieger v. New Brunswick, [1993] 2 S.C.R. 651

Gary Flieger and Terry McNutt Appellants

v.

The Province of New Brunswick Respondent

Indexed as: Flieger v. New Brunswick

File No.: 22875.

1993: April 26; 1993: June 30.

Present: Lamer C.J. and La Forest, L'Heureux‑Dubé, Sopinka, Cory, McLachlin and Iacobucci JJ.

on appeal from the court of appeal for new brunswick

Labour relations ‑‑ Civil service ‑‑ Discontinuance of function ‑‑ Contracting out of work ‑‑ Province disbanding highway patrol and contracting out patrol's duties to RCMP ‑‑ Whether patrolmen laid off because of "discontinuance of function" ‑‑ Whether patrolmen given reasonable notice of termination -- Civil Service Act, S.N.B. 1984, c. C‑5.1, ss. 20, 26 ‑‑ Board of Management General Regulation ‑ Civil Service Act, N.B. Reg. 84‑229, s. 9(1).

The appellants, members of the New Brunswick Highway Patrol, were laid off when the province decided to disband the patrol and contract its duties out to the RCMP. The appellants then accepted alternative employment as corrections officers and, over a period of one year, their salary was supplemented by $5,000. They later sued the province for wrongful dismissal. They claimed that the contracting out of the duties formerly carried out by the highway patrol to the RCMP did not constitute a "discontinuance of a function" within the meaning of s. 26(1) of the New Brunswick Civil Service Act. Accordingly, they should have received reasonable notice when they were laid off rather than the 30 days notice required by s. 9(1) of N.B. Reg. 84-229 in the event of a discontinuance of function. The trial judge found that there was a discontinuance of function and dismissed their claims. This decision was upheld by the Court of Appeal. This appeal is to determine (1) whether the contracting out by the province of the work formerly done by the New Brunswick Highway Patrol to the RCMP constituted a "discontinuance of a function", and (2) whether the appellants received reasonable notice of termination.

Held (L'Heureux‑Dubé J. dissenting): The appeal should be dismissed.

Per Lamer C.J. and La Forest, Sopinka, Cory, McLachlin and Iacobucci JJ.: A "discontinuance of a function" will occur under s. 26(1) of the Civil Service Act when a set of duties or activities which form an office is no longer carried out as a result of a decision of the employer acting in good faith. Here, the province's decision to terminate its own highway patrol and to enter into a contract with the RCMP to provide the service was a legitimate management decision which resulted in the "discontinuance of a function" within the meaning of s. 26(1). The appellants carried out the set of activities and duties of highway patrolmen in the New Brunswick Highway Patrol and when the patrol was disbanded, their "function" or "office" ceased to exist. It is now the RCMP that is obliged to patrol the highways and to provide all that is required to comply with the terms of the contract.

The appellants were not entitled to more than 30 days notice.

Section 20 of the Civil Service Act, which provides that the "termination of the employment of . . . an employee shall be governed by the ordinary rules of contract", clearly indicates that it is subject to the provisions of the Act. Under s. 9(1) of the regulations made under the Act, 30 days notice is all that the employer is required to give the employee when his services are no longer required because of the discontinuance of a function. This is in effect a condition of his employment.

Per L'Heureux‑Dubé J. (dissenting): The right of the province of New Brunswick to contract out the policing of highways to the RCMP is not an issue in this case. In the absence of a collective agreement or statutory provision to the contrary, the province, as an employer, is free to terminate an employment contract by giving reasonable notice, even if the termination is done to facilitate the contracting out of the same work. Section 26 of the Act and s. 9(1) of the regulations simply provide that, where the termination is necessitated by lack of work or the discontinuance of a function, additional rules come into play.

The contracting out of the policing of the highways in this case was not a "discontinuance of a function" within the meaning of s. 26(1). A "discontinuance of a function" under that section occurs when the employer decides to abolish a service or function in its entirety. A function relates to the work being performed by the laid off employee and not to an "office". While the set of tasks performed by the employee must be considered, the appropriate focus must also account for the larger context in which the individual contract is situated and for the work in which the employer is engaged. Here, the function formerly performed by the appellants has not been discontinued. It is now being performed, although on a contract basis, by the RCMP on the same premises and with the same equipment. Despite having administrative control, the RCMP do not have the power to alter the function itself as they are bound under their contract to fulfil a specific function. Since the appellants were not laid off because of a "discontinuance of a function", s. 26(1) of the Act and s. 9 of the regulations have no application in this case. The termination of the appellants was governed by the ordinary rules of contract as imported under s. 20 of the Act. Consequently, they were entitled to reasonable notice of termination.

Even if the function had been discontinued, s. 9(1)(b) of the regulations does not provide for summary termination without compensation. This section extends rather than limits the protection that would normally be available to an employee and requires only that employees being laid off pursuant to s. 26(1) of the Act receive at least 30 days actual notice of the impending termination. Such employees still have the normal remedies to which they are entitled under the ordinary law of contract. Accordingly, the 30 days notice given in this case would not deprive the appellants of their right to compensation upon termination.

Cases Cited

By Cory J.

Distinguished: Canada (Attorney General) v. Public Service Alliance of Canada, 1993 125 (SCC), [1993] 1 S.C.R. 941, aff'g 1990 12972 (FCA), [1991] 1 F.C. 428 (C.A.); referred to: Transport Guilbault Inc. v. Scott, F.C.A., No. A‑618‑85, May 21, 1986, unreported, leave to appeal refused, [1987] 1 S.C.R. xiii; Gonthier v. Canada (1986), 77 N.R. 386; Mudarth v. Canada (Minister of Public Works) (1990), 113 N.R. 159 (F.C.A.), aff'g 1988 9351 (FC), [1989] 3 F.C. 371 (T.D.); Coulombe v. The Queen, F.C.T.D., No. T‑390‑84, April 5, 1984, unreported.

By L'Heureux‑Dubé J. (dissenting)

Transport Guilbault Inc. v. Scott, F.C.A., No. A‑618‑85, May 21, 1986, unreported; Mudarth v. Canada (Minister of Public Works) (1990), 113 N.R. 159 (F.C.A.), aff'g 1988 9351 (FC), [1989] 3 F.C. 371 (T.D.); Gallagher v. New Brunswick (Board of Management) (1990), 1990 5381 (NB BR), 105 N.B.R. (2d) 181; Canada (Attorney General) v. Public Service Alliance of Canada, 1993 125 (SCC), [1993] 1 S.C.R. 941.

Statutes and Regulations Cited

Board of Management General Regulation ‑ Civil Service Act, N.B. Reg. 84‑229, s. 9(1).

Canada Labour Code, R.S.C., 1985, c. L‑2, s. 242(3.1) [en. c. 9 (1st Supp.), s. 16].

Civil Service Act, S.N.B. 1984, c. C‑5.1, ss. 20, 26.

Employment Standards Act, S.N.B. 1982, c. E‑7.2, s. 30(1) [mod. 1988, c. 59, s. 10], 34(1) [idem, s. 12].

Human Rights Act, R.S.N.B. 1973, c. H‑11.

Public Service Employment Act, R.S.C., 1985, c. P‑33, s. 29(1).

Public Service Labour Relations Act, R.S.N.B. 1973, c. P‑25, ss. 6(2), 63(2).

Authors Cited

Black's Law Dictionary, 6th ed. St. Paul, Minn.: West Publishing Co., 1990, "function".

Christie, Innis, Geoffrey England and Brent Cotter. Employment Law in Canada, 2nd ed. Toronto: Butterworths, 1993.

Concise Oxford Dictionary, 8th ed. Oxford: Clarendon Press, 1990, "function".

Dictionary of Canadian Law. By Daphne A. Dukelow and Betsy Nuse. Scarborough, Ont.: Thomson Professional Publishing Canada, 1991, "function".

Random House Dictionary of the English Language, 2nd ed. Toronto: Random House of Canada Ltd., 1987, "function".

Sweet & Maxwell's Encyclopedia of Employment Law, vol. 1. London: Sweet & Maxwell, 1992 (loose‑leaf).

APPEAL from a judgment of the New Brunswick Court of Appeal (1991), 1991 2711 (NB CA), 125 N.B.R. (2d) 228, 316 A.P.R. 228, 87 D.L.R. (4th) 191, affirming a judgment of Stevenson J. (1991), 1991 5654 (NB KB), 117 N.B.R. (2d) 239, 295 A.P.R. 239, dismissing appellants' actions for wrongful dismissal. Appeal dismissed, L'Heureux‑Dubé J. dissenting.

J. Gordon Petrie, Q.C., and Thomas Christie, for the appellants.

Richard C. Speight, for the respondent.

//Cory J.//

The judgment of Lamer C.J. and La Forest, Sopinka, Cory, McLachlin and Iacobucci JJ. was delivered by

Cory J. -- There are two paramount issues raised in this appeal. The first is whether the contracting out by the province of the work formerly done by the New Brunswick Highway Patrol to the Royal Canadian Mounted Police ("RCMP"), constituted a "discontinuance of a function" as that term is used in s. 26 of the New Brunswick Civil Service Act, S.N.B. 1984, c. C-5.1. The second is whether the appellants received reasonable notice of the termination of their employment as sergeants in the New Brunswick Highway Patrol.

1. Factual Background

The appellants joined the New Brunswick Highway Patrol in 1981 as constables. By 1988, both held the rank of sergeant. In July of that year, the province announced its decision to disband the patrol and the duties of the patrol were contracted out to the RCMP. On December 21, 1988, the appellants received formal notice of lay-off. These notices cited s. 26 of the Civil Service Act and s. 9(1)(b) of N.B. Reg. 84-229 and stated that the appellants' services would no longer be required as of February 8, 1989 as a result of the discontinuance and disbandment of the New Brunswick Highway Patrol. The appellants continued to receive their full salary until April of 1989. The province of New Brunswick offered them alternative employment with the public service of New Brunswick as corrections officers and the appellants accepted this offer. As well for one year beginning in April of 1989, they received the sum of $5,000 over and above the regular salary for corrections officers.

The appellants brought separate actions, which were tried together, claiming damages for wrongful dismissal. It was their position that since the duties formerly carried out by the Highway Patrol were now being performed by members of the RCMP, pursuant to a contract with the province, there was not a "discontinuance of a function" as that term is used in s. 26. Accordingly, the appellants claimed that they should have received reasonable notice when they were laid off rather than the 30 days notice that was required to be given by provincial regulation in the event of a discontinuance of function. The trial judge found that there was a "discontinuance of a function" and dismissed their claims: (1991), 1991 5654 (NB KB), 117 N.B.R. (2d) 239, 295 A.P.R. 239. This decision was upheld by the Court of Appeal for New Brunswick: (1991), 1991 2711 (NB CA), 125 N.B.R. (2d) 228, 316 A.P.R. 228, 87 D.L.R. (4th) 191.

2. Judgments Below

Court of Queen's Bench

Stevenson J. noted that there was no "lack of work" as the duties were now being performed by another police force. However, relying upon several decisions of the Federal Court which had considered similarly worded federal legislation, he held that there had been a "discontinuance of a function" and dismissed the claims. He held that the appellants' common law rights to notice had been abolished by the provincial legislation (the Civil Service Act) which authorized the lay-offs.

Court of Appeal

Stratton C.J.N.B. noted that there was no question of a "lack of work" since the work continued to be done although by another police force. For him the primary question was whether there had been a "discontinuance of a function". He distinguished Canada (Attorney General) v. Public Service Alliance of Canada, 1990 12972 (FCA), [1991] 1 F.C. 428 (C.A.), later affirmed on appeal to the Supreme Court of Canada, 1993 125 (SCC), [1993] 1 S.C.R. 941 ("PSAC"). He did so on the basis that PSAC turned on the question of whether there had been a breach of a collective agreement while there was no collective agreement in this case.

He held that the word "function" in the Civil Service Act referred to the holder of an office. The appellants who held the office of sergeant in the Highway Patrol, ceased to hold that office once the Patrol was disbanded. There was therefore a "discontinuance of a function". To hold otherwise, would, in his opinion, unduly restrict employers in planning their affairs.

In any event, he was of the view that the appellants had received reasonable notice. He observed that they had been given compensation ($5,000) and had accepted alternate employment in corrections services. In these circumstances he found that they had been adequately compensated.

Hoyt J.A. (as he then was), in dissent, expressed the view that there had not been a "discontinuance of a function" within the meaning of the Act. He agreed with the remarks of Mahoney J.A. in PSAC concerning the impact of contracting out. He thought that these remarks, although made in the context of a case which was considering a collective agreement, were applicable because (at p. 246 N.B.R.):

... they correctly point out that when the work that was formerly being performed by the laid off employee is still being performed, although on a contract basis, there cannot be said to be a discontinuance of that employee's function.

In the view of Hoyt J.A., as a result of the provisions of s. 20 of the Civil Service Act, the common law rules apply. He would have remitted the case to the trial judge for an assessment of the damages arising for failure to give reasonable notice.

3. Applicable Legislation

Civil Service Act, S.N.B. 1984, c. C-5.1

20 Subject to the provisions of this Act or any other Act, termination of the employment of a deputy head or an employee shall be governed by the ordinary rules of contract.

26(1) When the services of an employee are no longer required because of lack of work or because of the discontinuance of a function, the deputy head, in accordance with regulations made by the Board, may lay off the employee.

26(2) An employee ceases to be an employee when he is laid off pursuant to subsection (1).

26(3) Notwithstanding anything in this Act, an employee who has been laid off may be placed by the Secretary of the Board on those eligibility lists for which in the opinion of the Secretary of the Board the employee is qualified.

26(4) Notwithstanding subsection (2), an employee who is laid off is entitled during such period as the Secretary of the Board may determine for any case or class of cases, to enter any closed competition for which he would have been eligible had he not been laid off.

Board of Management General Regulation - Civil Service Act, N.B. Reg. 84-229

9(1) When the services of an employee are no longer required because of lack of work or because of the discontinuance of a function, the deputy head shall

(a) before the employee is laid off, consider the qualifications and work performance of the employee and determine whether or not the employee could be retained on staff in another appropriate position within his department; and

(b) if the employee cannot be retained in another appropriate position in the department, give the employee and the Secretary of the Board thirty days notice that the services of the employee are no longer required.

Public Service Labour Relations Act, R.S.N.B. 1973, c. P-25

6(2) Subject to paragraph 102(3)(a), nothing in this Act affects the right of the employer to engage private contractors or contract work out for any purpose whatsoever.

63(2) No collective agreement shall provide, directly or indirectly, for the alteration or elimination of any existing term or condition of employment or the establishment of any new term or condition of employment,

(a) the alteration or elimination of which or the establishment of which, as the case may be, would require or have the effect of requiring the enactment or amendment of any legislation by the Legislature, except for the purpose of appropriating money required for its implementation, or

(b) that has been or may be, as the case may be, established pursuant to any Act specified in the Second Schedule.

4. Analysis

(a) Discontinuance of Function

The first issue to be resolved is whether the decision by the province to contract out highway patrol functions to the RCMP constituted a "discontinuance of a function". Neither the New Brunswick Civil Service Act nor its regulations define this term. As a result it may be helpful to see if any satisfactory definition of this term has evolved in the case law. The same phrase "discontinuance of a function" appears in the Public Service Employment Act, R.S.C., 1985, c. P-33, s. 29(1), and the Canada Labour Code, R.S.C., 1985, c. L-2, s. 242(3.1), and the courts have considered the meaning of the phrase as it is used in those Acts. A review of this case law demonstrates that there are two different approaches: one based on the notion of an "office" and the other on "activities".

In Transport Guilbault Inc. v. Scott, an unreported decision of the Federal Court of Appeal, No. A-618-85, May 21, 1986 (leave to appeal refused, January 29, 1987, [1987] 1 S.C.R. xiii), Pratte J.A. wrote at p. 2:

The discontinuance of a function within the meaning of s. 61.5(3)(a) [of the Canada Labour Code (now s. 242(3.1))] is discontinuance of a function within a given employer's business. Such discontinuance may result from a decision made by the employer to give work done till then by its employees to a contractor. Provided that decision is genuine and there is nothing artificial about it, s. 61.5(3)(a) cannot be interpreted otherwise without unduly limiting the employer's freedom to plan and organize its business as it wishes.

This case is one of the few that deals specifically with contracting out. A key phrase within this judgment is "within an employer's business". The implication is that it is not necessary that the function cease to be performed altogether, but that within its business the employer had terminated that particular function.

Gonthier v. Canada (1986), 77 N.R. 386 (F.C.A.), is of somewhat limited application since it deals more with the question of what constitutes a "lack of work" than "discontinuance of a function". In that case the employees were language teachers who were laid off due to budget constraints. No other employees were engaged to do their jobs nor was their work contracted out. Instead, the remaining employees in the branch assumed a greater proportion of the same tasks which they were already required to perform and the entire Language Training Branch had to reduce its activities. The Federal Court of Appeal held that in these circumstances there was a valid lay-off due to a "lack of work".

In Mudarth v. Canada (Minister of Public Works), 1988 9351 (FC), [1989] 3 F.C. 371 (T.D.), the plaintiff had furnished secretarial services to a specific project team composed of engineers and architects. Her position was terminated and the work that she had been doing was parcelled out to what amounted to a secretarial pool. No other secretary was engaged to perform the duties she had performed nor was there a position created elsewhere so that another secretary would undertake her duties. In fact, faced with budget cuts, the head of the special team decided to discontinue the plaintiff's job in order to provide an extra "person-year" which would permit the hiring of another architect or engineer. The court held that this constituted a "discontinuance of a function". The defendant employer argued that the function related to the employee herself. Once the tasks done by her had been redistributed to others, then in the defendant's submission, her "function" no longer existed. In determining the meaning to be given to "function" the trial judge looked at a number of dictionary definitions and the case law. Addy J., whose reasons were adopted by the Court of Appeal (1990), 113 N.R. 159, then stated (at p. 378):

To give effect to the argument of the plaintiff regarding the meaning to be attributed to the word function would preclude the Government from abolishing any position and discharging the employee unless some part of the tasks or work performed by that employee was completely discontinued and no longer performed by any other person or group in the Civil Service. This would of course greatly preclude reorganization of the departments and branches of the service by the redistribution of tasks and would, to a large extent, paralyse any updating of the administrative procedures. Such a radical interpretation of subsection 29(1) of the Public Service Employment Act is not at all required in order to give full effect to the scheme and spirit of the legislation. The Act, of course, does encroach on and limit the general powers of management which are given to the Government of Canada and its various departments but the encroachment should be limited to the extent required to give effect to its objects and provisions.

The approach taken in Mudarth relates the word "function" to the "office" held by the plaintiff. Her office consisted of the bundle of tasks and responsibilities which had been undertaken and performed by her as a secretary. This bundle of tasks was no longer being performed. Thus her office had ceased to exist and there was accordingly a "discontinuance of a function".

One decision of the Federal Court Trial Division is particularly helpful. In Coulombe v. The Queen, F.C.T.D., No. T-390-84, April 5, 1984, unreported, the plaintiff was the Registrar and Executive Director of the Canada Labour Relations Board. While there was disagreement between the parties as to why the position held by the plaintiff was abolished, it was common ground that the activities that he had performed were transferred to the directors of the six regions across Canada and to the Chairman. The court held that this constituted a "discontinuance of a function".

In coming to this conclusion Cattanach J. defined function in this way (at p. 5):

Function is the act of performing and is defined as the kind of action belonging to the holder of an office, hence the function is the performance of the duties of that office. By the performance of the duties of an office the holder thereof can be said to fulfil his function. Functions are therefore the powers and duties of an office.

Thus it seems to me that when the functions of an office are transferred elsewhere in the course of a reorganization and the office is abolished while the functions are continued the function of the holder of the office is discontinued from which it follows that the services of an employee who held that office are no longer required because of the discontinuance of the function formerly performed by him....

It should be noted that in Coulombe the activities that had been undertaken by the plaintiff were parcelled out among a number of people within the organization. No single person continued to undertake the entire group of activities that had formerly been performed by the plaintiff. While each of the activities continued to be done, the categorization of them as done by one person, that is the "office" that the plaintiff had carried out, had indeed been discontinued. Therefore, the court found that the "function" of the plaintiff had been discontinued.

The dictionary definitions add little as they permit an approach to function which is either "office" based or "activities" based. The specialized law dictionaries offer the following definitions of "function":

In Black's Law Dictionary (6th ed. 1990), "function" is defined as:

The nature and proper action of anything; activity appropriate to any business or profession.... Office; duty; fulfillment of a definite end or set of ends by the correct adjustment of means. The occupation of an office. By the performance of its duties, the officer is said to fill his function....

Similarly, The Dictionary of Canadian Law (1991), defines "function" as follows:

n. 1. An object, power or duty or group of them.... 4. Employment; carrying out an office.

The definitions offered by more general dictionaries are no more helpful. The Concise Oxford Dictionary (8th ed. 1990), defines "function" as:

n. 1 a an activity proper to a person or institution. b a mode of action or activity by which a thing fulfils its purpose. c an official or professional duty; an employment, profession, or calling.... 4 ... v. intr. fulfil a function, operate;

The Random House Dictionary of the English Language (2nd ed. 1987), defines "function" as:

n. 1. the kind of action or activity proper to a person, thing, or institution; the purpose for which something is designed or exists; role. ... v.i. 8. to perform a specified action or activity; work; operate: The computer isn't functioning now.... 9. to have or exercise a function; serve: ...

How then should "discontinuance of a function" be defined? "Discontinuance" obviously refers to the termination of something that is termed a function. A "function" must be the "office" that is to say the bundle of responsibilities, duties and activities that are carried out by a particular employee or group of employees.

It is this definition of "function", in the sense of "office" which best comports with the environment of the work place. The very word "employment" indicates the existence of an employee and an employer. A term such as "function" or "office" must have a meaning for both these parties. For example, a person may have the "office" of plant superintendent. A person functioning as a plant superintendent carries out a regime or set of activities and duties that forms the office of plant superintendent. Both the employer and the employee understand what is required in order to perform or to carry out that particular office. Similarly the "office" of secretary or punch press operator carries with it a particular set of activities and duties. A particular bundle of skills is required to perform the duties and activities required by each of these offices. Once again both the employer and employee will know exactly what is required to perform the activities of the particular office.

Therefore, a "discontinuance of a function" will occur when that set of activities which form an office is no longer carried out as a result of a decision of an employer acting in good faith. For example, if a particular set of activities is merely handed over in its entirely to another person, or, if the activity or duty is simply given a new and different title so as to fit another job description then there would be no "discontinuance of a function". On the other hand, if the activities that form part of the set or bundle are divided among other people such as occurred in Mudarth, supra, there would be a "discontinuance of a function". Similarly, if the responsibilities are decentralized, as happened in Coulombe, supra, there would also be a "discontinuance of a function".

(b) Application of these Definitions to the Facts of this Case

The appellants carried out the set of activities and duties of highway patrolmen in the New Brunswick Highway Patrol. When the New Brunswick Highway Patrol was disbanded, the "function" or "office" of New Brunswick Highway Patrolman ceased to exist. Obviously, the province could not abandon the policing of highways. New Brunswick quite properly contracted out this activity to the RCMP. This the province was specifically permitted to do pursuant to the provisions of s. 6(2) of the Public Service Labour Relations Act. The province was entitled to contract with the RCMP to perform whatever activities were necessary in order to patrol the highway. The manner in which these activities were carried out would be determined by the RCMP subject to whatever conditions were imposed by the province as the terms of its contract.

Thereafter, the patrol work would be done by RCMP officers in RCMP vehicles, using RCMP equipment. From the moment it began to perform its contractual duties the RCMP would be responsible for all that this police work entailed. It would be the RCMP that would be responsible for the hiring, training, discipline and promotion of officers. It would be the RCMP that would fix their place of work and hours of work, their pay and pensions, provide the necessary equipment and arrange for its maintenance. It would be the RCMP that would be obliged to provide all that was required to comply with the terms of the contract. The way in which the patrolling was carried out might well be different from the methods followed by the New Brunswick Highway Patrol. Yet the province no doubt determined that it would be preferable, and in its best interests, to have the RCMP carry out the patrolling of the highways. This decision may have been reached for a number of valid reasons. Certainly the bona fides of the decision is not challenged.

The decision of the province to terminate its own highway patrol and enter into a contract with the RCMP to provide the service was a legitimate management decision. That decision terminated the "office" of the New Brunswick Highway Patrol personnel. It meant that the "function", that is to say the set of duties and activities, of the appellants as sergeants in New Brunswick Highway Patrol had been discontinued. Their office had ceased to exist.

It was vigorously argued on behalf of the appellants that this Court's recent decision in PSAC, supra, indicates that the contracting out of the work performed by employees cannot constitute a "discontinuance of a function". I cannot accept that argument. That decision is simply not applicable to the case at bar. First, I would observe that in PSAC it was specifically noted that some instances of contracting out would legitimately constitute a "discontinuance of a function". At page 974 I stated:

Section 29 will undoubtedly apply to some instances of contracting out. However, in the present case the so-called contracted employees engaged in exactly the same work, on the same premises, with the same equipment, and carried out the very same instructions as had the indeterminate employees prior to the contracting out. The only change was that the new employer was now the contractor rather than the Public Service. This, in my opinion cannot, constitute a discontinuance of function. This however does not mean that there could not be cases of contracting out that would legitimately comprise a discontinuance of function and which would therefore permit lay-offs under s. 29. [Emphasis added.]

It is to be seen that the facts are very different from the contracting out which occurred in the case at bar. Here the RCMP could perform the contract duties in any manner which it deemed to be appropriate pursuant to the directions and orders of their senior officers. The RCMP would use its own personnel, vehicles and equipment. More importantly, in PSAC there had not been a termination of the very "office" or "function" as occurred in this case with the disbandment of the New Brunswick Highway Patrol.

Secondly, and perhaps most importantly, in PSAC there was a specific provision in the collective agreement that placed certain duties and obligations on the employer in circumstances where there was a contracting out of work. It was the failure to comply with these duties and obligations contained in the collective agreement that determined the result in the case. At page 975 the following appears:

What must be remembered is that in this case the Policy imposes an obligation on the employer in the event of contracting out. This obligation was correctly articulated by the Board:

The employer had an obligation under the Policy to review and when possible terminate contracting out arrangements in order to ensure the continued employment of indeterminate employees within the Public Service. (Emphasis added.)

In my opinion the Board's finding that the employer failed to carry out this obligation in the instant case can certainly not be characterized as patently unreasonable.

In the case at bar there is no such obligation resting upon the employer. Thus the very factor that determined the result in the PSAC case is not present here. Indeed I would observe that s. 63(2) of the Public Service Labour Relations Act of New Brunswick specifically prohibits a collective agreement from derogating from the 30 days notice requirement set out in s. 9(1) of N.B. Reg. 84-229. The PSAC case is therefore readily distinguishable and certainly not determinative of this case.

In conclusion, there was a bona fide decision by the employer province to disband the Highway Patrol. This decision resulted in the discontinuance of the function of the appellants as sergeants in the Patrol. It remains to be determined what notice ought to have been given to the appellants upon the termination of their employment.

(c) Notice upon Termination of Employment

On this aspect of the case the appellants rely upon the dissenting reasons of Hoyt J.A. In essence it was his view that s. 26 of the Civil Service Act did not take away an employee's right to have his or her termination governed by the ordinary rules of contract as provided by s. 20 of the same Act. In his view, it followed that the appellants were entitled to reasonable notice of the termination of their contract of employment.

Unfortunately, I cannot agree with this position. Section 20 provides as follows:

20 Subject to the provisions of this Act or any other Act, termination of the employment of a deputy head or an employee shall be governed by the ordinary rules of contract.

It will be noted that the section provides that it is "[s]ubject to the provisions of this Act ...". Section 26(1) of the Act reads as follows:

26(1) When the services of an employee are no longer required because of lack of work or because of the discontinuance of a function, the deputy head, in accordance with regulations made by the Board, may lay off the employee.

Section 9(1) of N.B. Reg. 84-229 passed pursuant to the Civil Service Act reads:

9(1) When the services of an employee are no longer required because of lack of work or because of the discontinuance of a function, the deputy head shall

(b) if the employee cannot be retained in another appropriate position in the department, give the employee and the Secretary of the Board thirty days notice that the services of the employee are no longer required.

Thus it can be seen that s. 20 makes it clear that it is subject to the provisions of s. 26 of the Act. Section 9(1) of the regulations passed pursuant to the Act indicates that when the services of an employee are no longer required because of the discontinuance of a function then the 30 days notice is all that the employer is required to give the employee. This is in effect a condition of the employment of the civil servant by the province of New Brunswick. By that condition of employment the employees need not be given anything more than 30 days notice.

It seems unduly harsh that a loyal, able and dedicated civil servant of many years standing can be dismissed with but 30 days notice. The consequences of such short notice for a long serving employee whether police sergeant or deputy minister could well be distressing to say the least.

The inequity is compounded by the provision that a collective bargaining agreement cannot by its terms vary the 30 days notice requirement. Yet this is valid legislation. There is no Charter right to reasonable notice of termination of employment. Indeed at common law servants of the Crown held office at pleasure with the result that they could be terminated without notice. It follows that the appellants were not entitled to more than 30 days notice.

Despite the harshness of the statutory provision it should be observed that the appellants were treated with fairness. They were aware that their jobs would disappear some months before they received the formal 30 days notice of termination. They were offered and accepted jobs as corrections officers and received $5,000 over and above their pay as corrections officers.

5. Disposition

The appeal must be dismissed with costs if demanded.

//L'Heureux-Dubé J.//

The following are the reasons delivered by

L'Heureux-Dubé J. (dissenting) -- Mr. Flieger and Mr. McNutt were officers with the New Brunswick Highway Patrol. Each was laid off after their employer, the province of New Brunswick, decided to disband the patrol and contract its duties out to the Royal Canadian Mounted Police ("RCMP"). My colleague concludes that the contracting out was a "discontinuance of a function" under s. 26(1) of the Civil Service Act, S.N.B. 1984, c. C-5.1, that this section displaces the ordinary rules of contract, and that Mr. Flieger and Mr. McNutt were thus entitled to only 30 days notice. I cannot agree.

This case centres around two issues: first, whether the appellants were laid off because of the "discontinuance of a function"; and second, if they were, whether they are entitled to reasonable notice of termination. The resolution of both these issues turns primarily on the interpretation of the Civil Service Act, in particular ss. 20 and 26(1), and of s. 9(1) of N.B. Reg. 84-229. To that end, I will first discuss the larger statutory framework concerning termination of employment, then consider the meaning of the phrase "discontinuance of a function" and determine whether, on the facts, such a discontinuance occurred in this case. Last, I will comment on the entitlement of employees to notice of termination.

Before turning to the first of these considerations, however, I want to make it clear that this case is not about the ability of an employer to contract out work. The right of the Government of New Brunswick to contract out the policing of highways to the RCMP was never an issue in this case. At issue here is simply whether or not Mr. Flieger and Mr. McNutt were entitled to reasonable notice that their jobs were to be terminated.

1. The Statutory Framework

Sections 20 through 27 of the Civil Service Act set out the terms and conditions governing the employment of civil servants, including the appellants. The first of these provisions merits particular emphasis:

20 Subject to the provisions of this Act or any other Act, termination of the employment of a deputy head or an employee shall be governed by the ordinary rules of contract.

This section radically modifies the common law position of employees of the Crown. Pursuant to a long history at common law, the ordinary rules of contract did not apply to servants of the Crown. On the contrary, such employees were said to be employed "at pleasure" and, in the absence of a collective agreement or statutory modification of this rule, could be dismissed without cause, and without notice. It is interesting to note that under the federal Public Service Employment Act, R.S.C., 1985, c. P-33, for example, the principle of employment at pleasure still applies. However, in New Brunswick, the enactment of s. 20 of the Civil Service Act brought the ordinary rules of contract into play, and extended the protection of these rules to employees of the Crown.

What, then, are the ordinary rules of contract dealing with termination of employment? The general rule is that, unless an employee has given the employer cause for dismissal, the employer must give the employee reasonable notice of termination. In Sweet & Maxwell's Encyclopedia of Employment Law (1992), vol. 1, at pp. 1616 and 1624, two aspects of this general rule are summarized as follows:

1.2 TERMINATION WITH NOTICE

1.2.1 General Principle

A "contract of employment" will be treated as a contract of indefinite duration, terminable by "notice" (either expressly or impliedly) unless it is a "contract for a fixed term" or for the "completion of a specific task" or contains an exhaustive enumeration of the grounds upon which it may be terminated.

1.3 TERMINATION WITHOUT NOTICE

1.3.1 General Principles

(1) Termination without notice at common law

At common law, summary termination of the contract of employment by either party gives the innocent party the right to sue for breach of contract. The defendant may have a defence if the court is satisfied that the plaintiff was guilty of conduct which amounted to a serious breach of contract or to a repudiation of the contract.

In short, while an employer may choose to terminate the contract without giving notice, the employer will then be liable for an amount representing what the employee would have earned during an appropriate notice period.

It should be emphasized that, at common law, the economic realities which face employers are not cause for the termination of the contract, and have rarely been found to relieve the employer of the normal obligation to give reasonable notice of termination. Christie, England and Cotter summarize this well in Employment Law in Canada (2nd ed. 1993), at pp. 661-62:

. . . whenever an employee is terminated at the initiative of the employer without due notice or pay in lieu thereof the employee will be entitled to damages for wrongful dismissal, unless he/she has given cause for dismissal. The employer may have any number of very good reasons why it cannot continue to employ the employee but it is still required to give due notice. Unless the contract of employment expressly or impliedly allows for summary termination or lay-off due to lack of work, the employer is not relieved by business exigencies of its obligation to give due notice. Internal reorganizations, for example, no matter how economically necessary, do not justify termination without due notice. The constructive dismissal cases considered above illustrate with particular clarity the almost too obvious point that "cause" for summary dismissal must be found in the conduct of the employee and not the economic needs of the employer. If a business dissolves, winds up or reduces its operations, the employees will inevitably be terminated and where there is a sale or a merger, jobs will often pass out of existence. In all of these cases the employer reaction may well be "business is business, there is nothing I can do about the loss of jobs", but the attitude of the law has always been that none of these events is cause for dismissal. Only where the contract of employment is held to be frustrated rather than terminated by the voluntary act of the employer will there be no liability in damages for summary dismissal without cause. [Footnotes deleted; emphasis added.]

In short, under the ordinary law of contract, business needs simply do not obviate the responsibility of an employer to give an employee reasonable notice of termination.

The effect of s. 20 of the Civil Service Act is to incorporate these principles as terms which govern the employment relationship. As my colleague notes, these principles are incorporated "[s]ubject to the provisions of this Act or any other Act". Because of this qualifier, the rules of contract are modified and augmented by pieces of legislation such as the Employment Standards Act, S.N.B. 1982, c. E-7.2, and the Human Rights Act, R.S.N.B. 1973, c. H-11. For example, the ordinary rules of contract do not allow for any inquiry into an employer's reasons for dismissing an employee. However, the above pieces of legislation modify this stance by permitting certain inquiries into employer "reasons", and by preventing terminations based upon, among other things, "whistle-blowing" by an employee, or upon an employee decision to marry or have children.

The ordinary rules of contract are also modified and augmented by other provisions in the Civil Service Act. The provision which is at the centre of the dispute in this case is s. 26 which reads as follows:

26(1) When the services of an employee are no longer required because of lack of work or because of the discontinuance of a function, the deputy head, in accordance with regulations made by the Board, may lay off the employee.

26(2) An employee ceases to be an employee when he is laid off pursuant to subsection (1).

26(3) Notwithstanding anything in this Act, an employee who has been laid off may be placed by the Secretary of the Board on those eligibility lists for which in the opinion of the Secretary of the Board the employee is qualified.

26(4) Notwithstanding subsection (2), an employee who is laid off is entitled during such period as the Secretary of the Board may determine for any case or class of cases, to enter any closed competition for which he would have been eligible had he not been laid off. [Emphasis added].

The relevant regulation, s. 9(1) of N.B. Reg. 84-229, reads:

9(1) When the services of an employee are no longer required because of lack of work or because of the discontinuance of a function, the deputy head shall

(a) before the employee is laid off, consider the qualifications and work performance of the employee and determine whether or not the employee could be retained on staff in another appropriate position within his department; and

(b) if the employee cannot be retained in another appropriate position in the department, give the employee and the Secretary of the Board, thirty days notice that the services of the employee are no longer required.

Section 26 and the regulations made pursuant to it are engaged when an employee is no longer required because of lack of work or the discontinuance of function. Under these provisions, employees are given entitlements that do not form part of the ordinary rules of contract. They have a right to be considered for alternative work within the department under s. 9(1)(a) of the regulations. Even after the employment relationship has been formally terminated, ss. 26(3) and 26(4) of the Civil Service Act provide that the employee may be placed on eligibility lists, and may enter closed competitions for other positions with the Civil Service. These are not rights or obligations which form part of the ordinary law of contract. I will return later to the question of the notice period mentioned in s. 9(1)(b) of the regulations, but would note at this point that these provisions appear to add to the protection available to an employee under the ordinary rules of contract.

I would also emphasize that s. 26(1) does not purport to provide an exhaustive list of circumstances in which the employer may dismiss the employee. There is no language in s. 26(1) which would indicate that the employer can only lay off an employee where there is lack of work or the discontinuance of a function. These provisions add to the ordinary rules of contract governing the termination of contracts under these specific circumstances, but by no means alter the basic rule: in the absence of a collective agreement or statutory provision to the contrary, an employer is free to terminate an employment contract by giving reasonable notice, even if the termination is done to facilitate the contracting out of the same work. Section 26 and the regulations simply provide that, where the termination is necessitated by lack of work or the discontinuance of a function, additional rules come into play.

I raise this point because the interpretation of the term "discontinuance of a function" seems, on occasion, to have been driven by an underlying fear that a narrow interpretation would somehow paralyse the government as an employer, preventing it from taking steps necessary to streamline operations or reduce its overhead. Hints of this underlying fear and concern are present in Transport Guilbault Inc. v. Scott, F.C.A., No. A-618-85, May 21, 1986, where Pratte J.A. at p. 2 expresses his belief that an alternative interpretation of discontinuance of function could have the effect of "unduly limiting the employer's freedom to plan and organize its business as it wishes". Similarly in Mudarth v. Canada (Minister of Public Works), 1988 9351 (FC), [1989] 3 F.C. 371 (T.D.), affirmed (1990), 113 N.R. 159 (F.C.A.), the trial judge Addy J. comments at p. 378 that a more narrow interpretation would "preclude the Government from abolishing any position", "greatly preclude reorganization" and "paralyze any updating of administrative procedures".

It is important to be clear about the situation before the Court. The government was at all times free to contract out. This "right" is available under the ordinary rules of contract, and nothing in the Civil Service Act indicates that there are any restrictions on contracting out. This right has even received a sort of statutory protection in other pieces of legislation such as s. 6(2) of the Public Service Labour Relations Act, R.S.N.B. 1973, c. P-25. In this context, there is no reason to adopt an overly broad or distorted interpretation of discontinuance of function, motivated by fear or concern for the rights of the employer. The government was and is able to abolish positions, to reorganize and to update administrative procedures. With these comments in mind, I turn to the proper interpretation of the phrase "discontinuance of a function".

2. Discontinuance of Function

As my colleague notes, neither "lack of work" nor "discontinuance of a function" is defined in the Civil Service Act. According to the respondent, these terms must be seen through the employer's prism. I do not agree. In the absence in the legislative text of any indication to the contrary, both terms should be interpreted objectively. The termination of an employment contract is a matter that involves two parties, and the interpretation of both the terms "lack of work" and "discontinuance of a function" must necessarily be one that focuses not simply on either party, but on the larger context of the employment situation. Both these terms must be interpreted in a fashion that accounts for that which unites the employee and the employer; that is, the work itself.

Although this case was argued on the basis of a discontinuance of function, and it was not suggested that this situation involved "lack of work", it may be useful to comment on the meaning of both these terms, as the meaning of each may assist in informing the meaning of the other, and the presence of either activates the additional protections of s. 26(1). In my view, both terms have a relatively plain meaning, one that is readily discernable in the employment context.

"Lack of work" is a situation which exists when an employer determines that the work being performed can be performed by fewer people. The phrase "lack of work" does not necessarily imply that business has slowed down, or that employees are not busy. However, the employer has the right to determine how many employees to hire to perform the required work, and whether the work can be performed with fewer employees. Where the employer determines to cut back on employees, for whatever reason, the resulting terminations are related to lack of work. It should be clear that lack of work is not simply a description of the situation after an employee has been laid off.

A "discontinuance of a function" occurs when an employer decides to abolish a service or function in its totality. My colleague uses the term "office" to inform the meaning of "function". I do not find this term to provide much in the way of guidance. On the contrary, I am of the view that a focus on "office" may detract from the central issue which is the existence of the "function". I agree with the comments of Hoyt J.A., now C.J.N.B., that:

. . . function relates to the work being performed by the laid off employee and not, in some abstract sense, to an office held by the employee who performs the work. Otherwise, each time there was a lay-off, there would be a discontinuance of a function because that person would no longer be performing the work.

((1991), 1991 2711 (NB CA), 125 N.B.R. (2d) 228, at p. 245.)

While the bundle of tasks performed by a specific employee must be considered, the appropriate focus must also account for the larger context and for the work in which the employer is engaged. This larger focus simplifies the task of assessing whether employees have been let go because of either the lack of work or the discontinuance of a function.

Perhaps an example would provide a framework for discussion about the distinctions between lack of work, discontinuance of function and contracting out. Let us consider a computer company which has four departments: computer sales, accounting, the kitchen (which provides lunch to all employees five days a week), and computer service. Faced with a tight economic market, the company takes four steps to reorganize for greater efficiency. First, it decides to cut the number of computer sales employees in half, and to close one of the sales outlets. Second, it purchases a computer program that is capable of producing the accounts and cheques automatically. Because of the efficiency and accuracy of the program, it is able to do the work of the entire accounting staff, who used to produce all the accounting work manually. The manual accounting tasks are rendered obsolete in the face of this technological breakthrough, and the entire accounting staff is laid off. Third, the company decides that it is too costly to provide lunch to all the employees. The kitchen is closed, and the kitchen staff are laid off. Last, the company decides to reduce overhead costs by contracting out the computer service portion of the business to a highly specialized computer service company, and so lays off all the computer service employees. The company continues to provide computer service to its customers, but does so by employing contract computer service employees.

In this scenario, the computer sales people are laid off because of lack of work. The closing of an outlet does not change this characterization. The work of computer sales continues to be done, but by fewer people and at fewer locations. The kitchen staff are laid off because of the discontinuance of a function. Lunch is no longer provided. The computer services employees, however, are laid off neither because of lack of work, nor because of the discontinuance of a function. They are laid off simply because the company decided to contract out the jobs performed by these employees. The company has reorganized the way in which computer service is provided, but has not discontinued the function itself. The lay-off of the accounting staff is slightly more complex, but I am of the view that it is because of lack of work. It should be noted that the function of producing the accounts continues to be performed, albeit in a much transformed manner. However, it is also possible to conclude that the accounting function is being performed in such a radically different manner that the accounting function itself has been discontinued. This is similar to the situation in Mudarth, supra. In that case, a secretarial position was eliminated and the work previously done by the secretary was picked up by other people. Though it was assumed that this was a discontinuance of function, I am of the view that, since all the tasks previously performed by the secretary continued to be performed, that case is perhaps better understood as involving lack of work.

It is not my intention to conclusively define all the possible scenarios or situations which will arise. Furthermore, though the terms "lack of work" and "discontinuance of a function" can be kept conceptually distinct, they are not rigid categorizations, and there may well be some fluidity between the terms. There will undoubtedly be business reorganizations which may be capable of more than one characterization. Clearly, the practical application of these terms to specific business problems may on occasion be quite complex. However, a focus on the larger perspective can reduce many of the problems of characterization.

Whether the label "lack of work" or "discontinuance of a function" is more appropriate in a given instance, it is important that these situations not be found to exist simply because there has been a contracting out of work. Though an instance of contracting out may involve the laying off of an entire division, this does not necessarily mean that the employer is no longer engaged in that line of business. It may simply mean that there has been a reorganization. The focus must continue to be on the function, and this focus must be a broad one that captures not simply the individual employee-employer relationship, but the larger context in which that individual contract is situated.

It should be emphasised once more that this interpretation does not restrict the ability of the employer to organize its economic affairs. The employer, in the absence of a collective agreement provision to the contrary, is left with all the usual economic options: to cut back, close down or contract out. The employer has the right to decide whether there is sufficient work for the employees, whether or not to continue providing a given service, and the manner in which the service will be provided. Section 26(1) of the Civil Service Act does not alter the options available to the employer. It simply provides a set of rules that apply in the event that a termination is necessitated because of the lack of work or discontinuance of function.

3. Application

Is the contracting out in this situation a "discontinuance of a function"? At discovery, William O'Connor, the Deputy Solicitor General of New Brunswick, was asked some questions concerning Gallagher v. New Brunswick (Board of Management) (1990), 1990 5381 (NB BR), 105 N.B.R. (2d) 181 (Q.B.), a decision rendered by Stevenson J. dated February 28, 1990. The Office of the Deputy Solicitor General was respondent in this application for judicial review which arose following the laying off of officers from the New Brunswick Highway Patrol. The following interchange is revealing:

Q. On page [187] of that decision Mr. Justice Stevenson stated:

"Apart from pertinent facts I have already set out, the parties agreed that as of February 1st 1989 the work or function previously performed by members of the Highway Patrol was performed by members of the Royal Canadian Mounted Police."

Q. And has Mr. Justice Stevenson accurately reflected the agreement of the parties in that decision?

A. Yes.

Q. It states at the beginning of the last paragraph, "The evidence was that the New Brunswick Highway Patrol was set up in 1980. The New Brunswick Highway Patrol's primary function was to handle law enforcement relating to motor vehicles, on the highways of the province."

And I take it that the Department would agree with that assessment, based on what you have said earlier today?

A. Yes. Yes.

Q. And that that function is now being performed by the R.C.M.P.?

A. Yes.

The "function" in this case was law enforcement on the highways. The province made a decision to contract this function out to the RCMP. It did not make a decision to discontinue the function. On the contrary, it is clear from Mr. O'Connor's comments that the government fully understood that the function of policing the highways was to continue. In fact, it was imperative that this function continue to be performed.

My colleague, in finding a discontinuance of function, emphasizes that the RCMP would have control over the manner in which the activities of patrolling the highways were carried out. In my view, such control is not determinative. Two employees, each engaged in the same function, may in fact carry out their activities in quite different ways. While the manner in which an employee carries out his or her responsibilities is not irrelevant, it does not necessarily change the function in which the employee is involved. Decisions regarding hiring, firing, and promotion do not significantly alter the nature of the work. Similarly, decision regarding the time specific highways are patrolled, or the location of speed traps, do not affect the essential nature of the function. Despite having administrative control, the RCMP did not have the power to alter the function itself. On the contrary, they were bound under their contract agreement to fulfil a specific function: the provision of Highway Traffic Law Enforcement Services.

My colleague also states that, after February 1, 1990, the function of patrolling the highways would be done in RCMP vehicles and using RCMP equipment. This is accurate only because the equipment and premises belonging to the New Brunswick Highway Patrol became the property of the RCMP. According to paragraph 5 of the Agreement between the province and Canada, the province agreed:

(a)to transfer to the RCMP, at no cost to Canada, equipment valued at approximately $2.2 million, and the former New Brunswick Highway Patrol Doaktown Detachment building valued at approximately $0.3 million.

(b)to be fully responsible for start up costs, consisting up to $2 million for personnel transfers and related costs, and 0.3 million for the acquisition of additional equipment.

In Canada (Attorney General) v. Public Service Alliance of Canada, 1993 125 (SCC), [1993] 1 S.C.R. 941, Cory J. commented at p. 974:

. . . in the present case the so-called contracted employees engaged in exactly the same work, on the same premises, with the same equipment, and carried out the very same instructions as had the indeterminate employees prior to the contracting out. The only change was that the new employer was now the contractor rather than the Public Service. This, in my opinion, cannot constitute a discontinuance of function.

There may be specific instances where both a contracting out and a discontinuance of function simultaneously exist, but this is not such a case. In fact, this case appears to be on all fours with the situation in Public Service Alliance of Canada, supra. The RCMP are engaged in the same work, on the same premises, and with the same equipment. I agree with Hoyt J.A., at p. 245:

As the function formerly performed by Messrs. Flieger and McNutt is now being performed by the R.C.M.P., their former function has not been discontinued. It is merely being performed by others on a different basis. If, for example, highways were no longer being patrolled, perhaps there would have been a discontinuance of a function. That, of course, is not the case.

In my view, the contracting out of the policing of the highways was not a "discontinuance of a function" within the meaning of s. 26(1) of the Civil Service Act. Having reached this conclusion, I am of the view that s. 26(1) of the Act and s. 9 of the regulations have no application in this case. The termination of these employees was governed by the ordinary rules of contract as imported under s. 20. Consequently, the appellants were entitled to reasonable notice of termination.

However, even were I to have found that the function had been discontinued, I would not find, as did my colleague, that the Civil Service Act establishes a maximum 30 days notice period. It is to this last issue that I now turn.

4. The Notice Requirement

My colleague suggests that s. 26(1) of the Act and s. 9 of the regulations expressly provide for the summary termination of an employee upon 30 days notice, and that the employee is thereafter entitled to no further compensation. Under this approach, there is no distinction to be drawn between an employee of 6 months and an employee of 25 years. Both would receive only the same 30 days notice. This is, to say the least, a surprising and rather draconian result. In choosing an admittedly harsh and inequitable interpretation, my colleague emphasises that employees of the Crown were at one point employed at pleasure, and were thus not entitled to any notice at all. This may be true, but, in my view, misses the point. Employees of the Crown in New Brunswick are not employed at pleasure. Pursuant to s. 20 of the Civil Service Act, they have been accorded the protections available to other employees under the ordinary rules of contract.

Because these ordinary rules are, of course, subject to the other provisions of the Act, the question is essentially whether the regulations have ousted this protection. I return to the wording of the regulation:

9(1) When the services of an employee are no longer required because of lack of work or because of the discontinuance of a function, the deputy head shall

(b) if the employee cannot be retained in another appropriate position in the department, give the employee and the Secretary of the Board, thirty days notice that the services of the employee are no longer required. [Emphasis added.]

In my opinion, the wording of the section, though mandatory for the Secretary of the Board, does not lead inexorably to the conclusion that the required 30 days notice is a maximum. The section does not say "shall give no more than 30 days notice". On the other hand, neither does it say "shall give at least 30 days notice". The wording of the section has an element of ambiguity. However, if the intent of the regulation was to deprive employees of their otherwise normal entitlement to reasonable notice under s. 20 of the Civil Service Act, the regulation should have been drafted to say so clearly and unambiguously.

Furthermore, there is little logic in an approach which limits the notice period to 30 days for employees laid off in some circumstances, while employees laid off for other reasons enjoy the benefit of the common law. I can see no fairness in such treatment, and absolutely no reason for interpreting s. 26(1) in such a fashion. In the absence of a clear legislative directive to do so, it would be inappropriate to adopt an interpretation which nullifies the benefits that are extended under s. 20.

It was suggested that the above interpretation would render s. 9 of the regulations meaningless. I do not agree. In my view, this section lends itself to an interpretation which extends rather than limits the protection that would normally be available to an employee. Recall that under the ordinary rules of contract, an employer has two options: to give reasonable notice prior to termination, or to terminate without notice and to pay the employee an amount in lieu of that notice period. This notice or payment "option" is also present under the New Brunswick Employment Standards Act. Section 30(1) of that Act states that an employer cannot lay off or terminate an employee without giving written notice. Section 34(1) modifies this rule, by stating that the employer in fact can terminate the relationship without notice upon making a payment of an amount equal to the pay the employee would have earned during the appropriate notice period.

The regulations under the Civil Service Act do not expressly provide for this notice or payment option. In my opinion, without depriving the employee of the right to be compensated, the regulation makes it mandatory that some actual notice is given. Under s. 9(1)(b), the employer is required to give 30 days notice of termination. The regulation does not say that the employee who receives such notice is disentitled to compensation upon termination. It simply states that the employee must actually receive 30 days notice prior to the termination of the job. There is no language indicating that, following termination, the ordinary rules governing compensation should not apply. Under this interpretation, employees terminated pursuant to s. 26(1) are entitled to receive the benefit of an actual notice period of 30 days. They are not, however, disentitled from the normal remedies to which they are entitled under the ordinary law of contract.

This interpretation, rather than limiting the rights of employees under s. 26(1), extends an additional benefit. This interpretation is far more consistent with the legislation as a whole, which expressly extends rather than cutting back on the protections of the ordinary law of contract. As I noted above, s. 26(3) and 26(4) of the Act and s. 9(1)(a) of the regulations provide additional remedies not normally available under the ordinary law of contract. In this context, it seems odd to adopt a regressive interpretation of s. 9(1)(b). This is particularly so as the additional protections of s. 26(1) are extended only where there is lack of work or the discontinuance of a function. These are situations that most often arise in circumstances of economic turmoil, where it can be easily inferred that the employee will encounter more difficulty in finding alternative employment.

I find additional support for this approach by noting that under s. 30(1)(a) of the Employment Standards Act, the statutorily mandated minimum notice period for those employed for less than five years is only two weeks. In spite of this, s. 9(1)(b) of the regulations mandates 30 days notice for all employees, including those who have been employed for only a short period of time. If the intention of s. 9(1)(b) was to reduce benefits, it would be unusual to reduce them only for long term employees while at the same time extending the protection available to short term employees. This insight further suggests that s. 9(1)(b) is not meant to limit benefits, but is rather intended to extend them.

Finally, it is important that the interpretative process be viewed within the context of employment reality. Case law eloquently illustrates that the ordinary rules of contract have rarely derogated from the rights of employers to organize their affairs as they see fit. Employees have historically had very little in the way of job security or protection, and have had to organize their personal and economic affairs subject to the vagaries of employment markets. Over the years, the concept of reasonable notice has developed to remedy the general harshness of the contract regime on employees who are, to a great extent, left subject to the full force of the winds of economic change. While the doctrine of reasonable notice does not provide a great deal of protection, it is often all that is available to those who do not have the economic power or voice to collectively bargain for greater protection.

The interpretation proposed by my colleague would substantially whittle down this already minimal protection. Such a harsh interpretation should only be adopted in the presence of clear and unequivocal statutory language. In this case, however, the wording of the section is ambiguous, and other interpretations can as readily be sustained given, in particular, the statutory context and the history of the legislation as well as the common law remedies which now apply to the Crown. It would thus be inappropriate, in my view, to interpret s. 26(1) of the Civil Service Act and s. 9(1)(b) of the regulations in a manner that places the entire economic burden of restructuring squarely on the shoulders of those who have the least power to adapt or to protect themselves, when an alternative interpretation is available and does not do violence to the letter or spirit of the legislation.

5. Conclusion

In conclusion, I am of the view that Mr. Flieger and Mr. McNutt were not laid off because of the discontinuance of a function under s. 26(1) of the Civil Service Act. Accordingly, they are entitled to be compensated under the ordinary rules of contract for an amount reflecting a reasonable notice period. Further, even were I to have found that there had been a discontinuance, I am of the view that s. 9(1)(b) of the regulations does not provide for summary termination without compensation. Rather, this section requires only that employees being laid off pursuant to s. 26(1) of the Civil Service Act receive at least 30 days actual notice of the impending termination. Though this 30 days notice was given in this case, the notice does not deprive employees of their right to compensation upon termination.

I would allow the appeal with costs and recommend that the matter be referred back to the trial judge for a determination as to reasonable notice, and the appropriate compensation in the circumstances.

Appeal dismissed with costs, L'Heureux-Dubé J. dissenting.

Solicitors for the appellants: Petrie Richmond Goss, Fredericton.

Solicitor for the respondent: The Office of the Attorney General, Fredericton.