Canada: Wal-Mart Victory At The Supreme Court

The long-anticipated judgment of the Supreme Court of Canada in the Québec Wal-Mart case (Plourde v. Wal-Mart Canada Corp., 2009 SCC 54, along with its sister case, Desbiens v. Wal-Mart Canada Corp., 2009 SCC 55) was released on Friday, November 27, 2009. As expected, the judgment sheds significant light on a Québec employer's rights and obligations with respect to the closure of a business in a unionized context. On the positive side, the Supreme Court confirmed that a Québec employer cannot be forced to continue to operate its business — or to reopen its business — as a result of allegations of unfair labour practices, and held that particular recourses under the Québec Labour Code are unavailable to employees in a workplace closure situation. However, the Court made it clear that employers who close to avoid a union are not off the hook. It recognized that unfair labour practices can arise in the context of a business closure, and the closure itself can be found to be an unfair labour practice. Employees in these situations are not without recourse and, in fact, the general recourses available under the Labour Code to sanction unfair labour practices could potentially give rise to a range of penalties against an employer and a variety of remedies for affected employees.

Factual Context

In August 2004, a union was certified to represent the employees of a Wal-Mart store in Jonquière Québec. The Jonquière store was the first Wal-Mart store in North America to be unionized. In April of 2005, after collective agreement negotiations broke down, the Minister of Labour appointed an arbitrator to settle the first collective agreement. On the same day, Wal-Mart announced that it was closing its Jonquière store, leading to the termination of all store employees.

A number of proceedings arose out of the closure of the Jonquière store, mostly alleging that the store closure was a measure undertaken by Wal-Mart as a part of a broader union avoidance and union-busting strategy. Gaétan Plourde was one of several employees to file a complaint under ss. 15 to 17 of the Québec Labour Code, claiming to have lost his job because of his union activities and seeking an order to be reinstated in his position.

Sections 15 to 17 of the Labour Code provide a specific complaint mechanism for employees who consider that they have been dismissed, suspended, transferred or discriminated against, or that they have been the victim of reprisals or any other sanction, because they have exercised a right under the Code. Under s. 17, there is a simple presumption in favour of the employee if the Commission is satisfied that the employee did in fact exercise a right under the Code. It is then up to the employer to rebut the presumption by demonstrating that the measure was justified by another "good and sufficient reason". Section 15 sets out specific remedies that may be ordered by the Labour Relations Commission if a complaint is upheld, notably, in the case of a dismissal, reinstatement with full compensation for lost salary and benefits.

In the circumstances, an order of reinstatement would effectively have forced the reopening of the store. However, Plourde argued that even if the closure was permanent and genuine, it constituted a violation of his freedom of association and should be reversed on that basis.

The Labour Relations Commission dismissed the complaint. The Commission upheld what it said to be a long-established principle in Québec that the genuine and permanent closure of a business, regardless of the reason for the closure, constitutes a good and sufficient reason under s. 17. Based on the evidence presented, it found that the Jonquière store was permanently and definitively closed and, on that basis, that Wal-Mart had successfully rebutted the presumption, thereby defeating the s. 15 complaint. The Commission rejected Plourde's argument that freedom of association could provide a basis for forcing an employer to continue to operate a business. The Québec Superior Court dismissed the application for judicial review, and the Québec Court of Appeal refused the application for leave to appeal. Leave to appeal to the Supreme Court of Canada was granted.

Supreme Court Decision

The Supreme Court dismissed the appeal. The Court held that, in the case of a permanent closure of a business, terminated employees cannot bring a claim against their employer under ss. 15 to 17 of the Labour Code alleging that they were dismissed because they exercised their rights under the Code, regardless of the motives for the closure. In taking this position, the Court maintained the principle established in I.A.T.S.E. Stage Local 56 v. Société de la Place des Arts de Montréal (2004 SCC 2) that an employer cannot be forced to stay in business, even if the closure is motivated by "socially reprehensible considerations". The Court held that the complaint mechanism under ss. 15 to 17 of the Labour Code presupposes the continued existence of the workplace, and is therefore not available in cases of definitive closure. It confirmed the position taken by the Québec Labour Relations Commission that proof of a definitive closure is sufficient to rebut the presumption under s. 17 of the Code and defeat the complaint. The Court rejected the argument that freedom of association and the procedural right to collective bargaining, as described in its decision in Health Services and Support — Facilities Subsector Bargaining Assn. v. British Columbia (2007 SCC 27) justify a departure from this principle.

However, despite its findings with respect to ss. 15 to 17 of the Labour Code, the Supreme Court made it clear that employees and unions in this situation are not without recourse. In particular, the Court maintained that the recourses for unfair labour practices under ss. 12 to 14 of the Code can be exercised against an employer who closes a business for anti-union reasons. Under these sections, the Commission can scrutinize the reasons why a business was closed and whether it was closed as a part of an anti-union strategy. Furthermore, although it acknowledged that employees do not get the benefit of the legal presumption under these sections, the Court noted that the ss. 12 to 14 recourses allow for broader redress under the general remedial provisions of the Code. By way of example, the Court noted that the general remedial provisions of the Code allow for orders to be made to benefit all employees who suffered as a result of the wrongful store closure, including employees who did not participate in union activity, or even those who opposed the union.

Finally, the Court noted that because this decision is specific to the recourses under the Québec Labour Code, it may not be entirely consistent with labour relations practices in other Canadian jurisdictions. Caution should therefore be taken in extrapolating any lessons from the decision to other jurisdictions, and it will remain to be seen how the labour boards in each province apply the decision.

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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