In Quebec, many legal consequences must be considered when the
alienation or concession of a business occurs, especially those
that are related to labour relations. More specifically, what
implications does a transfer as such have on the alienated or
licenced business' employees? In order to answer this question,
it is of utmost importance to first determine whether the relevant
situation occurs in a unionized environment or not.
If the employees that work for the alienated business are
unionized, section 45 of the Labour Code1 is henceforth
applicable and provides that the alienation or the operation
– by another in whole or in part – of an undertaking
does not invalidate any certification or collective
agreement2. As such, the new employer shall be bound by
the certification and the existing collective agreement and must
become ipso facto a party to any proceeding relating thereto, in
the place and stead of the former employer.
In light of the foregoing, and where an employee is terminated
slightly prior to the transfer of a business, the union may file a
grievance against the new employer who is liable and will have to
assume the risks surrounding this recourse, subject to a contrary
agreement between the former and the new employer in the
company's purchase agreement.
It is worth nothing that where there is only a part of a
business's operations that is transferred – also referred
to as sub-contracting – the foregoing principle does not
apply. In such cases, the new employer is not bound by the
union's certification nor the existing collective agreement
since the transfer/alienation does not involve the majority of the
business' key elements (such as the employees, equipment,
know-how, expertise, premises, financial resources, etc.).
In a non-unionize environment, sections 96 and 97 of the Act
Respecting Labour Standard3 are applicable, as well as
section 2097 of the Civil Code of Quebec4. In such
cases, a business' alienation or any change in its legal
structure does not imply the termination of the employment
agreement between an employee and the employer. The new employer is
also solidarily bound by the existing contracts and must respect
and take on all of the former employer's responsibilities. Both
the former and new employer consequently become bound with regards
to any civil claim or recourse that is pending at the moment of the
company's alienation. For instance, an employee that has not
been dismissed for a good and sufficient cause prior to the
company's transfer can file a claim to the Labour Standards
Commission against both the former and new
In light of the considerations hereinabove identified, a
company's alienation or concession cannot alter the
relationship between employees and the employer, regardless of
whether it is conducted within a unionized environment or not. As
stated by commissioner Turcotte in Bucovetsky v. 180634 Canada
"new business owners cannot hide behind the fact that
former business owners are those who made the decisions [our
**The author wishes to thank Genevičve Plante, articling
student at Norton Rose Fulbright, for her help in preparing this
1 CQLR c C-27
2 Section 45(1) Labour Code
3 CQLR c N-1.1
4 CQLR c C-1991
5 Section 124 An Act Respecting Labour Standards: If the
employee is credited with two years of uninterrupted service in the
6 2011 QCCRT 446
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