I noted a while back that Target had purchased some 179 Zellers stores with plans on moving into Canada. I queried then whether Target would ‘target’ any of the 15 unionized Zellers. Recall that Walmart moved into Canada by purchasing Woolco stores, but it was careful to avoid the unionized Woolcos. In Canada, we have strong “successor rights” in our labour statutes. These provisions are designed to prevent companies from eliminating unions, collective agreements, and unionized workers by means of the transfer of a business. If the transfer of a business eliminated a collective agreement, then collective agreements would be very precarious. Therefore, our governments have long required collective agreements to transfer along with the business.
I was surprised to learn that Target had chosen some of the unionized Zellers. Therefore, this would trigger the successor rights provisions, provided the business transfer falls within the meaning of a “sale of business”. Target has not shown itself to be an upstanding corporate citizen so far in its foray into Canada. It insisted that all of the Zellers employees be fired, regardless of their length of service or productivity, so that it can then hire all of its own employees from scratch. [We will be watching carefully if it tries to use its indoctrination antiunion videos that it used in the U.S... Will these be illegal here?] Trouble is, the unionized Zellers employees can not be dismissed on mass if the collective agreements follow the transfer of the leases from Zellers to Target. The collective agreements would prevent a mass termination of employees for no cause.
All of this will come to a head in what is probably a series of “successor employer” applications. The first one has been filed in British Columbia, as explained in this Globe and Mail piece. The UFCW is arguing that Target is the successor employer for the store in Burnaby, and that the old Zellers collective agreement applies to the new Target store opening in that location. Target is claiming that this was not a sale of business at all, but only a “real estate” deal, a transfer of leases for a series of buildings. I’m called the B.C. Bar, but it’s been a while since I practiced labour law there, so I won’t claim to be current on the state of B.C. labour law. The definition of a transfer of business in Section 35 of the Code is pretty broad, similar to legislation throughout Canada. Here is what it says:
35 (1) If a business or a part of it is sold, leased, transferred or otherwise disposed of, the purchaser, lessee or transferee is bound by all proceedings under this Code before the date of the disposition and the proceedings must continue as if no change had occurred.
(2) If a collective agreement is in force, it continues to bind the purchaser, lessee or transferee to the same extent as if it had been signed by the purchaser, lessee or transferee, as the case may be.
Target purchased the “leases” from Zellers. Section 35 refers expressly to the transfer of “leases”, but the question remains whether buying a lease for store is the same as buying a lease for “a part of business” of Zellers. Is ownership of store leases part of the business of a retailer? Certainly, Zellers’ retailing business could not operate with stores, and the location of the stores no doubt has substantial business value. Note too that the statue is broader than just the ‘transfer of leases’; it includes as well the sweeping phrase, “or otherwise disposed of“. Section 69 of the Ontario Labour Relations Act is similarly broad.
Does that language seem broad enough to catch this situation? Any B.C. experts want to chime in? Labour lawyer Steven Barrett (quoted in the Globe piece) from Sack Goldblatt in Toronto says that this seems to be the sort of situation that the successor provisions were designed to address.
If the UFCW wins the successor argument, do you think the Labour Board should order Target to rehire all of the dismissed Zellers’ employees?
Should the Board order a vote of the newly hired Target employees to see if they would like to be represented by the UFCW?
Would that be a fair outcome to the terminated Zellers’ employees?
We’ll keep our eye on this, and on Target, to see whether it proves to be a better corporate citizen than Walmart, which has been willing to violate Canadian labour laws in order to keep in tact its low wage, precarious employment model in tact here.