This is a short summary of the Supreme Court of Canada's
June 27, 2014 ruling in United Food and Commercial Workers,
Local 503 v. Wal-Mart Canada Corporation. A further
analysis, in both English and French, is forthcoming in a future
edition of this newsletter. Another analysis of this decision
in French follows in this newsletter.
On June 27, 2014 the Supreme Court of Canada, in a 5-2 decision,
reversed historic precedent and ruled that Quebec's labour
relations law can prohibit a company from closing a business, where
the closure constitutes a change of employment conditions designed
to defeat a union.
The issue arose at a Quebec Wal-Mart store where, in 2004, the
United Food and Commercial Workers ("UFCW") organized a
union among store employees. After unsuccessful negotiations
towards a collective agreement, Wal-Mart's ultimate response
was to close the store, as it has done elsewhere when unions
Section 59 Quebec's Labour Code contains a classic
"statutory freeze" rule, restricting an employer from
altering working conditions when a union is trying to be certified
or is negotiating a collective agreement:
59. From the filing of a petition for certification and until
the right to lock out or to strike is exercised or an arbitration
award is handed down, no employer may change the conditions of
employment of his employees without the written consent of each
petitioning association and, where such is the case, certified
As the dissenting Justices (both from Quebec) note in their
reasons, section 59 has never before been interpreted to mean that
a company cannot close a business, but rather that the rule is
meant to "freeze" working conditions where the business
continues to operate. This did not deter the majority of the
Court from finding that "continued employment" was a
"condition of employment" which could not unilaterally be
changed without "legitimate reasons"
Whether it is based on the Civil Code, on labour legislation or
on the implicit content of a contract of employment, this right to
continued employment is therefore always the basis for a condition
of employment for employees (art. 1434 C.C.Q.). However, this
condition is not absolute. The employer retains at all times
the power to manage its business, and this includes the power to
resiliate the contract of employment of one or more of its
employees for "legitimate reasons" (economic,
disciplinary, etc.) or upon "sufficient" notice of
The Court acknowledges that a business closure could be tenable
during the freeze:
In this context, the employer cannot simply argue that its
decision is consistent with the powers conferred on it in the
individual contract of employment and by the general law before the
petition for certification was filed. It must continue acting
the way it acted, or would have acted, before that date...
But that if a closure has been effected in response to a new
union or negotiations, it may not be legal, because to permit such
a closure would deprive s.59 of the Code of any meaning in the
This is a departure from traditional interpretations of the
statutory freeze. Subject to further analysis (to be
presented in an upcoming issue of Employment & Labour) it
appears that the Supreme Court has placed a burden on employers to
show that their reasons for business closure are not tainted,
otherwise the closure may be viewed as a breach of the law and of a
union's right to organize and represent employees.
Gowlings' preliminary advice to employers is to seriously
re-consider whether a business closure decision (in the context of
union organizing or bargaining) could survive the kind of scrutiny
now suggested by the Supreme Court of Canada.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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