Wal-Mart’s Store Closure Contrary to Quebec Labour Code

On June 27, 2014, the Supreme Court issued its ruling in United Food and Commercial Workers, Local 503 v. Wal‑Mart Canada Corp., 2014 SCC 45 after a decade-long litigation battle between the parties.   Ultimately, the Supreme Court upheld the decision of a Quebec arbitrator who determined that the closure of the Wal-Mart location was contrary to s. 59 of the Quebec Labour Code (the statutory freeze provision).

FACTS:

The employer, Wal-Mart Canada Corp. (“Wal-Mart”) and United Food and Commercial Workers, Local 503 (the “Union”) were in the midst of negotiations for a first collective agreement for employees of a store in Jonquiere, Quebec, when Wal-Mart announced it was laying off all employees and closing the Jonquiere store.

This appeal to the Supreme Court dealt with the nature and scope of s. 59 of the Code.  This statutory “freeze” provision prevents an employer from unilaterally changing the conditions of employment during collective bargaining of a first collective agreement.  The Supreme Court considered whether the termination of employment contracts during the “freeze” was contrary to the Code.

DECISION:

The Court upheld the arbitrator’s decision that the termination of the employment contracts constituted a change in the employees’ conditions of employment within the meaning of the Code.

The Court determined that the principal effect of s. 59 of the Code is to “freeze” the employer’s business environment as it existed at the time the union arrived.  Although the Court was clear that the employer retains the right to close its business, the decision must be consistent with its “normal management practices.”

In this case, the Union’s evidence satisfied the arbitrator that Wal-Mart’s decision to close the store was not consistent with the employer’s normal management practices, and thus, the onus shifted to Wal-Mart to present evidence to prove the contrary.  The arbitrator was not satisfied that Wal-Mart would have closed the business if not for the filing of the petition for certification, therefore, the closure was contrary to s. 59 of the Code.

The Supreme Court has remanded the case to the arbitrator to determine the appropriate remedy for Wal-Mart’s violation of the statutory “freeze” provision.

Lesson for Employers:

Although the Supreme Court’s decision relates specifically to the Quebec legislation, there are indications in the decision that provide a caution to employers in common law jurisdictions about business closures during a “freeze” period.  The “business as usual” test (e.g. when justified by economic circumstances) will continue to be applied by courts and labour boards in common law jurisdictions when considering changes in working conditions during a “freeze.”  However, this decision may increase the likelihood of a union challenge to a business closure decision, in the form of an allegation of breach of a freeze period, as well as unfair labour practice complaints.  It will be important for employers to have clear records of the business reasons underlying a closure decision during a “freeze” period.