Where a retail store is performing very well, with objectives
being met to such an extent that bonuses are being promised to
employees, would a reasonable employer close that store? The
Supreme Court of Canada determined in the U.F.C.W., Local 503
v. Wal-Mart Canada Corporation decision released on June 27,
2014 that the answer is no when the closure occurs while a
collective agreement is being negotiated.
This grievance, along with several others based on different
arguments by the United Food and Commercial Workers Union
("UFCW"), was brought against Wal-Mart after it closed
its Jonquiere, Quebec store on April 29, 2005. The UFCW was
certified as the bargaining agent for the store in 2004. This was
the first Wal-Mart store in North America to complete the
certification process and become unionized. The parties were unable
to reach a collective agreement and the UFCW applied on February 2,
2005 to the Minister of Labour to appoint an arbitrator to settle
the dispute. One week later, Wal-Mart advised the Minister
that it intended to close the store on May 6, 2005 for
"business reasons" and terminate all of the approximately
200 employees. In fact the store closed early, on April 29,
In this case the Supreme Court was called upon to consider the
complaint of the UFCW that by closing the store Wal-Mart had
violated s. 59 of Quebec's Labour Code, which
prohibits employers from changing employees' conditions of
employment while a collective agreement is being negotiated; this
is often referred to as a "statutory freeze".
Labour legislation across the country, including in Alberta (see
sections 147(2) and (3) of the Labour Relations Code),
contains similar "statutory freeze" provisions.
The majority of the Supreme Court of Canada, in a 5-2 ruling,
agreed with the labour arbitrator (who decided the grievance at the
first instance) that the employer had not shown the closure to have
been made in the ordinary course of the employer's
business. The closure could not be said to have been
consistent with the employer's past management practices or
with those of a reasonable employer in the same circumstances.
The matter was remitted back to the arbitrator to determine the
appropriate remedy. An arbitrator in Quebec, as in many other
Canadian provinces, has quite broad remedial powers, including the
ability to order an alternative remedy in the form of damages; the
closure of the store meant the usual remedy of reinstatement was
The effects of this ruling will be felt throughout Canada as it
will apply to all general labour relations schemes. As the
Supreme Court of Canada noted, the true function of s. 59 (and by
analogy other "statutory freeze" provisions in Canada) is
to foster the exercise of the right of association. Closing a
store during a statutory freeze, where it is not consistent with
the employer's past management practices or with those of a
reasonable employer in the same circumstances, deprives employees
of that right.
This decision serves as a reminder to employers that they are
not entitled to alter the working conditions of their employees
while a collective agreement is being negotiated (unless the
alteration is consistent with past management practices or with
those of a reasonable employer in the same circumstances). As
well, in Alberta, employers are not entitled to alter the working
conditions of any employees in the unit affected from the date of
an application for certification by a union until the certification
is refused or until 30 days after the union is certified.
Accordingly, if an employer closed a store after a union
certification application had been filed but before it had been
finally dealt with or before the 30 day period after certification
expired, the employer may have violated section 147(1) of the
Labour Relations Code and could be required to pay damages
to the affected employees.
The lawyers at Field Law are experienced in labour matters and
able to advise your company on how to manage employees during
collective agreement negotiations and union certification drives to
ensure legal compliance.
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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