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Supreme Court of Canada Rules on Wal-Mart’s closure of Jonquiere, Quebec Store

The Supreme Court of Canada this morning released its decision in the 2005 closing of Wal-Mart’s Jonquiere, Quebec location upon certification by the United Food and Commercial Workers union (“UFCW”).  The store opened in 2001 and in 2004 the Commission des relations du travail, Quebec’s equivalent of the Ontario Labour Relations Board, certified the UFCW as bargaining agent for the store’s employees.  In the following months, the two sides were unable to negotiate a first collective agreement, and on February 2, 2005 the UFCW applied to the Minister of Labour to appoint an arbitrator to settle the dispute.  One week later, Wal-Mart advised that it intended to terminate the contracts of all of the approximately 200 employees and close the store on May 6, 2005 for business reasons.  In fact, Wal-Mart closed the store on April 29 that year.

The Union filed a number of complaints, believing that Wal-Mart’s decision was informed by anti-union considerations.  The complaint considered by the Supreme Court of Canada in this case was that Wal-Mart violated s.59 of Quebec’s Labour Code, which prohibits employers from changing employees’ conditions of employment while a collective agreement is being negotiated.  It is substantially the same provision as subsection 86 (1) of Ontario’s Labour Relations Act, which is also known as the “statutory freeze”.  The labour arbitrator agreed with the UFCW, finding that Wal-Mart’s decision was not made for business reasons.  That decision was upheld by the Superior Court, however, Quebec’s Court of Appeal disagreed, stating that the statutory freeze did not apply in the circumstances.  The Union appealed to the Supreme Court.  Today, in a 5 to 2 majority decision, the Justices of the Supreme Court of Canada allowed the appeal, and remanded the case back to the Arbitrator to determine the appropriate remedy. 

In its decision, the Court agreed with the arbitrator’s finding that the employer had not shown the closure to have been made in the ordinary course of the company’s business.  It was determined that the change was not consistent with the employer’s past management practices or with those of a reasonable employer in the same circumstances. In fact, the Supreme Court held that it was reasonable to find that a reasonable employer would not close an establishment like the Jonquiere Wal-Mart, which evidently was performing very well with its objectives being met to such an extent that bonuses were being promised.

This decision should serve as a reminder than an employer is statutorily barred from altering its employees working conditions while a collective agreement is being negotiated.  The purpose for the prohibition is to ensure that the employer does not attempt to place any undue pressure or influence on its employees to accept less-favourable terms of employment in a collective agreement.  Further, if an employer were to make such changes to its employees’ work terms, the Union would likely file an unfair labour practice complaint alleging that the employer, guided by anti-union motive, attempted to interfere in the trade union’s representation of employees.

Serious consequences may follow from breaches of labour relations legislation; we will be following this case as it goes back to the arbitrator to determine exactly what penalty Wal-Mart will suffer in the circumstances.  Ideally, an employer would not find itself in that situation, and the lawyers at CCPartners are experienced and able advise your company on how to manage your employees during collective agreement negotiations, to ensure compliance with the law and to minimize exposure.