Another chapter has been written in the ongoing saga of Walmart’s antiunion, illegal activities in Canada. The Supreme Court of Canada issued a decision today involving the 2005 store closure of a Walmart store in Jonquière, Quebec. Here is the decision.
This case involved the ‘statutory freeze’ provision (Section 59) of the Quebec Labour Code. That section prohibits an employer from ‘changing
the conditions of employment’ without the union’s consent during the period of bargaining a first collective agreement. It reads:
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 association.
The UFCW argued that a closure of the store and mass termination of all employees amounts to ‘change in the conditions of employment’ of the employees in the bargaining unit. Hard to imagine a bigger change that a mass termination of the entire bargaining unit. The test in Quebec, as elsewhere in Canada, is whether the change amounted to a change in the way the normal business operations of the employer. In other words, an employer is permitted to make changes that are in the ordinary course of business. Sometimes we say that the freeze does not prohibit changes that reflect ‘business as usual’. Therefore, the issue in this case was whether a complete closure of a store was a made in the ordinary course of business. Walmart argued that section 59 does not apply to the complete closure of business, that it can effectively render section 59 meaningless simply by closing the workplace in response to unionization.
The majority decision was written by Justice Le Bel, a Quebec labour lawyer about to retire. He begins by noting the obvious point that a termination is a change in conditions of employment:
The condition of continued employment is implicitly incorporated into the contract of employment and need not be expressly stipulated. The essence of every contract is that it requires each party to perform its obligations as long as the other party does so and no other recognized cause of extinction of obligations occurs. The law applicable to contracts of employment does not stray from this principle in providing that where a contract is resiliated, a “serious reason” (art. 2094 C.C.Q.) or “good and sufficient cause” (s. 124 A.L.S.) must be shown, or reasonable notice must be given (art. 2091 C.C.Q. and s. 82 A.L.S.). Absent one of these justifications, the employer is bound by an obligation to continue employing the employee. This principle is all the more fundamental in our modern society, because the systemic importance of work means that the vast majority of employees are completely dependent on their jobs (in this regard, see Reference re Public Service Employee Relations Act (Alta.),  1 S.C.R. 313, at p. 368; Delisle v. Canada (Deputy Attorney General),  2 S.C.R. 989, at para. 66; U.F.C.W., Local 1518 v. KMart Canada Ltd.,  2 S.C.R. 1083, at para. 25; Isidore Garon ltée v. Tremblay, 2006 SCC 2,  1 S.C.R. 27, at para. 35). In this context, it can be said that such employees have a reasonable expectation that their employer will not terminate their employment except to the extent and in the circumstances provided for by law.
Section 59 has been interpreted so as to include dismissals as a change in conditions. The Court then summarizes how the ‘business as usual’ interpretation of the statutory freeze provisions works:
Thus, a change can be found to be consistent with the employer’s “normal management policy” if (1) it is consistent with the employer’s past management practices or, failing that, (2) it is consistent with the decision that a reasonable employer would have made in the same circumstances. In other words, a change [translation] “that would have been handled the same way had there been no attempt to form a union or process to renew a collective agreement should not be considered a change in conditions of employment to which section 59 of the Labour Code applies”:
Applying that test, the SCC ruled that Walmart’s closure of its Quebec store during bargaining, and the mass termination of all employees, was not part of its ‘normal management policy’:
Given that going out of business either in part or completely is not something that occurs frequently in any company, the arbitrator often has to ask whether a reasonable employer would, in the same circumstances, have closed its establishment…
In the particular case, the Arbitrator that decided the initial case relied on evidence that prior to the union being certified, Walmart had never mentioned the idea of closing the store and had indicated instead that the store was “performing very well” and meeting its objectives (para. 95). There was also evidence that bonuses were being given to the store’s managers. On this evidence, the SCC ruled, the arbitrator’s finding that the store closure was not business as usual was reasonable, and Walmart had violated Section 59 by closing the store.
In terms of the damages payable for the breach, the SCC ordered the matter back to the arbitrator for an assessment.
This is the second SCC decision involving this dispute. My earlier post explains the first SCC decision. That case dealt with a different section of the Code (Section 15), one that permitted the ‘reinstatement’ of an employee ‘to his employment’. The SCC in the earlier Plourde decision ruled that language expressed an intention that the section would not apply to a situation in which a workplace no longer exists due to a closure. However, Section 59 makes no reference to reinstatement and permits the alternative remedy of damages. There is no question that an employer that closes and terminates unionized employees can be ordered to pay damages if the closure violates the Labour Code.
Like the first decision coming out of this dispute, the implications are mostly Quebec specific. However, the broader commentary on how the statutory freeze provisions should be interpreted, including the ‘business as usual’ approach, could have broader application to the rest of the country. However, even there, the SCC really just confirmed the basic approach labour boards have taken. The majority decision includes a toughly worded smack down of the dissent written by Justice Rothstein and Wagner starting at para. 74, which is worth a read.
This isn’t the first time Walmart has violated Canadian labour laws in its systemic efforts to crush all attempts by its employees to exercise their Charter protected rights to collective bargaining. For example, in the 1990s, Walmart was found to have violated Ontario’s Labour Relations Act by threatening to close the store if workers voted to join the United Steelworkers. The remedy then was remedial certification, resulting in the first unionized Walmart store in the world.