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Collective labour relations: the permanent closure of a company is not a change in the employment conditions within the meaning of article 59 of the Labour Code

Labour law, collective labour relations, employment conditions. In the dispute between Wal-Mart Canada and the union representing the employees of the former Wal-Mart establishment in Jonquière, the Québec Court of Appeal recently ruled on the question as to whether or not the permanent closure of an establishment is considered a change in the employment conditions of the employees who are fired as a result of this closure. (La Compagnie Wal-Mart du Canada v. Travailleurs et Travailleuses Unis de l’alimentation et du commerce, section locale 503, 2012 QCCA 903).

THE FACTS

This case arises from the failure to reach a collective agreement following negotiations between Wal-Mart and the union representing the employees of the establishment of Jonquière, accredited in August 2004. Following the absence of agreement between the parties, Wal-Mart announces the closure of its business and dismisses its employees. In March 2005, the union files a complaint alleging that these dismissals violate s. 59 of the Labour Code and that ultimately, Wal-Mart had changed the employment conditions.

It is useful to recall that s. 59 of the Labour Code provides that an employer cannot legally modify its employees’ employment conditions once there has been the filing of a petition for certification by a potential union, until the right to lockout or to strike is exercised or until an arbitration award is handed down.

THE ARBITRATOR AND SUPERIOR COURT’S DECISIONS

a) The arbitrator's decision

The arbitrator first recognizes that an employer has the right to continue managing its business as usual and that the dismissal not made for a good and sufficient cause constitutes a change in the employment conditions. He notes that it is the union who has the burden of demonstrating that there has been a change in the employment conditions. The employer is then given the opportunity to refute the proof presented by the union, notably by demonstrating that its decision was made in the normal course of its activities. This being said, Wal-Mart had the right to terminate its activities, provided this decision was not ​​based on discriminatory, abusive or unfair considerations. If this is the case, all resulting dismissals would be justified by a good and sufficient cause. Ultimately, the arbitrator finds that Wal-Mart has not succeeding in meeting its burden of proof, as it has not been able to demonstrate the legitimacy of its decision to close its establishment in Jonquière. The union's complaint is therefore granted.

b) The Superior Court's decision

In the context of a judicial review requested by Wal-Mart, the Superior Court concludes that the arbitrator, who had simply asked that Wal-Mart demonstrate that its decision to close its establishment was made in the ordinary course of business, had rendered a reasonable decision. The Court adds that Wal-Mart could not justify the dismissals by simply invoking the closure of its establishment and that the closure itself also needed justification. The Superior Court therefore rejects Wal-Mart's petition for judicial review.

THE COURT OF APPEAL’S DECISION

Judge Léger, of the Court of Appeal, recalls that there exists no legislation in Québec requiring an employer to remain in business. The judge states that the debate should focus on the immediate cause of the dismissals, which in this particular case is the loss of jobs due to the permanent closure of the establishment, instead of focusing on the reasons behind the closure of the establishment. The Court of Appeal notes, in this regard, that the logic behind the arbitrator’s final decision is inadequate: considering the decision to close a business as a good and sufficient cause justifying the dismissals of employees is not necessarily consistent with the idea that the continuation of the employment relationship is a condition of employment.

In addition, the Court notes an error on the part of the arbitrator's interpretation of s. 59 of the Labour Code. The judge recalls that even though the disposition in question aims to freeze the employment situation within a business following the filing of the petition for certification, it does not give job security to employees.

THE CONCLUSION

According to the Court of Appeal, when the arbitrator declares that the employer has the right to close his business and that the resulting dismissals are justified by this decision, but then declares that these dismissals are changes to the employment conditions, he contradicts himself and, in doing so, he provides job security for employees. This reasoning is contrary to the "spirit" of s. 59 of the Labour Code. Judges Vézina and Gagnon, in agreement with the reasoning of judge Léger, believe that the closure of an establishment is a suppression of labour. The business' activities and the employment conditions are therefore not changed, but rather simply disappear. Dubé Légal inc., Montréal Labour law lawyers.