The Supreme Court of Canada released on February 2nd its
judgment in the case of Remstar Corporation v. Syndicat des
employés-es de TQS Inc. (FNC-CSN) et al. dismissing
with costs the application of Remstar Corporation
("Remstar") for leave to appeal from the
decision of the Federal Court of Appeal (the
"FCA"). The FCA had dismissed
Remstar's application for judicial review of a reconsideration
decision by the Canada Industrial Relations Board (the
"CIRB") in which the CIRB had concluded
that Remstar was the true employer of the TQS's employees under
the Canada Labour Code (the
"Code") when it carried out massive
layoffs in 2008.
The case dates back to December 2007 when TQS was granted an
order for protection under the Companies' Creditors
Arrangement Act (the "CCAA"). After
the Superior Court of Québec had approved a formal process
allowing offers to purchase TQS, Remstar presented an offer to
acquire the TQS shares. This offer was approved by the Superior
Court on March 10, 2008.
On March 14, 2008, Remstar entered into a temporary management
contract with TQS pursuant to which Remstar was vested with
extensive powers, the whole pending the approval of the change of
control by the Canadian Radio-television and Telecommunications
Commission (the "CRTC"). CRTC approval
was granted on June 26, 2008.
In the meantime, specifically between the date of the signing of
the management contract and the date when, following the CRTC's
approval of the change of control, the management contract was
terminated, Remstar carried out massive layoffs.
In the name of TQS's former employees, the Syndicat des
employés-es de TQS Inc. (FNC-CSN) and other unions of
TQS (collectively, the "Syndicat"),
asked the CIRB to find that, under section 44 of the Code, the
signing of the management contract constituted a sale of TQS's
business to Remstar and that, consequently, Remstar had been the
true employer of TQS's employees at the time of the layoffs and
was bound by the applicable bargaining certificates and collective
agreements. Remstar, for its part, argued that at the time of the
layoffs, the sale of TQS had not been completed and that Remstar
was not the true employer of the TQS employees but merely a
temporary manager. Consequently, Remstar had refused, for example,
to follow up on the grievances concerning monetary claims and
severance packages payable to the former employees of TQS and to
respect the collective agreements that were in force.
The CIRB concluded that section 44 of the Code must be broadly
and liberally interpreted, its basic purpose being to prevent
employees from losing union protection when a business is sold. The
CIRB found, both in its initial decision and in its reconsideration
decision, that there had been a sale of business within the meaning
of section 44 of the Code as of the date of the signing of the
management contract. The CIRB found that since that date, Remstar
had been the true employer of TQS's employees and had been
bound by all the applicable bargaining certificates and collective
agreements. This meant that Remstar had an obligation to pay
severance packages claimed by the former employees of TQS.
The FCA, in an order dated May 30, 2011, dismissed Remstar's
application for judicial review and concluded that the CIRB's
decision was not unreasonable. The FCA added that the CCAA and
section 44 of the Code have different objectives that are not
incompatible and that allow for a harmonious interpretation and
The Supreme Court's denial of leave to appeal does not
really signify the end of this affair, since Remstar has not yet
been ordered to pay any specific amounts. The Syndicat will
therefore need to establish whether monetary claims and severance
packages payable to the former employees of TQS are well-founded.
Nevertheless, given the Supreme Court of Canada's refusal to
hear Remstar's appeal, Remstar can no longer allege that it was
not the true employer of TQS's employees at the time of the
layoffs in order to justify its refusal to pay the severance
packages. As is generally the case when the Supreme Court denies or
grants leave to appeal, no reasons are given.
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Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
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