Store Closures Represent a Change in Conditions of Employment: United Food and Commercial Workers v Wal-Mart Canada

Wal-Mart’s historically combative relationship with unions most recently became an issue at the Supreme Court of Canada (SCC) in the case of United Food and Commercial Workers, Local 503 v Wal-Mart Canada Corp., 2014 SCC 45. In this case, the question before the Court was whether s. 59 of the Quebec Labour Code, c 27 (“the Code”) could be used to challenge the unilateral cancellation of the employment contract for all of the employees of an establishment, as would occur in the closure of a business.

Indeed, this very situation did occur with the closure of the Wal-Mart store in Jonquière, Québec—announced on the same day that an arbitrator had been brought in to resolve the stalled negotiation of the first collective agreement between the United Food and Commercial Workers, Local 503 (“the Union”) and Wal-Mart. The SCC also dealt with the related sub-issue of whether the arbitrator’s award was unreasonable in light of the arbitrator’s finding of an unlawful change in the conditions of employment.

The employees had previously made significant gains in achieving the union certification in the first instance, especially given the context of Wal-Mart’s staunch resistance to unionization, a resistance that has been manifested in the form of store closures in the past. For example, the instant case bears an important comparison with that of a 2005 decision, which also dealt with the closure of the same Jonquière store, but was litigated on a different section of the Code. This comparison with Plourde v Wal-Mart Canada Corp., [2009] 3 SCR 465, will be discussed below in the analysis of the majority’s decision.

Wal-Mart and the Union Have History (not) Together

At the arbitration and subsequent Superior Court level it was concluded that the store closure was in violation of s. 59 of the Code. Section 59 states:

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.

Arbitrator Ménard found that the dismissal of the entire workforce was a change in the conditions of employment, and that Wal-Mart had not presented evidence to show that this change was based on the ordinary course of its business. On judicial review, the Superior Court upheld the findings of the arbitrator. However, this finding was later overturned at the Court of Appeal, where the Court disagreed on the scope of s. 59 yet determined that it did not apply to the case in question. In contrast, a majority of the Supreme Court found that the Court of Appeal had erred in intervening with the decision of the arbitrator, as the Court found s. 59 was reasonable to be applied to the closure of the Wal-Mart store.

The store in Jonquière was first opened in 2001, with the United Food and Commercial Workers, Local 503 becoming certified as the bargaining agent for the store employees in 2003. However, after approximately 10 meetings, the Union and the employer were not able to come to an agreement over the terms of the collective agreement. The Union then used the “first agreement option” under the Code to apply to the Minister of Labour for the appointment of an arbitrator to resolve the dispute over the collective agreement. Shortly thereafter, Wal-Mart notified the Minister of Employment and Social Solidarity that it would resiliate the contracts of the approximately 200 store employees and close the store.

Before the store closed, the Union grieved the issue and applied to the Commission des relations du travail (“the Commission”) for both an interlocutory and permanent order to have the store remain open. Around this time a number of other legal strategies were also employed by the workers, including applying for a class action certification against Wal-Mart and filing complaints to the Commission based on ss. 15 to 19 of the Code on the grounds of dismissal and actions in response to union activities from the employer.

Analysis of the Majority Decision

The majority decision, written by Justice LeBel, found that the function of s. 59 of the Code was to enable the right of association for workers, thus providing a forum for certification and good faith bargaining on the part of the employer. S.59 accomplishes these goals through freezing the conditions of employment to prevent the employer from influencing the unionization process, with the intent of allowing the employees to exercise their rights free from employer intimidation. However, Justice LeBel also noted at paragraph 38 that it is not necessary for unions to show that the employer possessed an anti-union animus for this section to be available, as the section contemplates only a change in the conditions of employment.

In addition, the burden is on the union seeking to invoke this section to show that a unilateral change in the conditions of employment had occurred by demonstrating that the following conditions have been met:

1) A condition of employment was in existence on the date that a petition of certification was filed,
2) The condition of employment was changed without consent, and,
3) The change was made during the prohibited period.

The union must provide the evidence necessary to show that the change in the conditions of employment is inconsistent with the employer’s normal management. If the employer is unable to adduce sufficient evidence to the contrary, their case will be quite hindered. However, if the employer is able to demonstrate that the change is consistent with past management processes, or, is consistent with what a “reasonable employer” would have done in the similar circumstances, and the arbitrator is satisfied of the genuine nature of the claims, then the change may be permitted.

In reaching their decision, the majority distinguished the case of Plourde v Wal-Mart Canada Corp. from the current decision, as Plourde dealt with s. 15 of the Code—the provision that prohibits the dismissal of an employee due to union activity. While Plourde also arose in response to the same Jonquière store closure, the majority in Plourde found that s. 15 could not provide an effective remedy for such a closure. S.15 of the Code provides for the reinstatement of an employee who has been dismissed as a result of union activity, however, in Plourde, the majority found that they could not order Wal-Mart to reinstate an employee as the business had closed. The majority also determined that a business closure would be a complete defence for an employer charged with a violation of ss. 15-19 of the Code.

Yet what was different in the instant case was that the majority found that unlike s. 15 of the Code, s. 59 could be applied even if a business had closed. In addition, Justice LeBel noted at paragraph 70 that that s. 59 does provide a remedy in the case of a finding for the union, quoting Justice Binnie from paragraph 8 in Plourde:

The rule in Quebec that an employer can close a plant for “socially reprehensible considerations” does not however mean it can do so without adverse financial consequences, including potential compensation to the employees who have thereby suffered losses. Thus while the remedy of employee reinstatement may not be available in the event of a business closure, that does not preclude the court from imposing other compensatory remedies against the employer.

The Dissent

In contrast with the majority, the dissent found that s. 59 of the Code was not available in instances of a business closure, as this would deny the employer the freedom to close the business. As such, the dissent focused more on employer rights in finding the right under Québec law to close a business for any reason, as long as the closure is definitive and genuine. In reaching this decision, the dissent would have upheld Plourde in finding that ss. 12-14 of the Code are the appropriate sections applicable in the case. However, using these sections also means that the Union must provide proof that anti-union sentiments were behind the closure of the store. While s. 59, once raised by the unions, shifts the burden of proof to the employer to show that the store closure was consistent with normal business practices.

Applicability Outside of Québec

While the dissent found that s. 59 was not appropriate in this instance given that it would be impossible for a business owner to show that a store closure was part of normal business practices, it is arguable that it is rather possible to show that a store closure would be a reasonable business decision in certain circumstances, such as in a situation of consistent declining profits. However, this was certainly not the situation with the store in Jonquière, or with Wal-Mart in general. As a result, s. 59 can be seen to apply in situations of business closures, especially in situations where it is apparent that the only possible motivation for a closure is an avoidance of collective bargaining by the employer.

Although Québec’s legal system is distinct in many ways, the s. 59 provision of the Quebec Labour Code was noted by Justice LeBel as having parallels in labour laws in the rest of Canada, thus signaling important implications for workers seeking unionization in other provinces. However, given a context of unequal resources and difficulties in gaining access to justice, enforcement may prove to come too late for workers attempting to uphold their association rights. The access to justice issue in relation to time is well-illustrated in the current case, as the Jonquière store closed in 2005 and the Supreme Court released this decision in favour of the workers nine years later, in 2014. While large and profitable businesses such as Wal-Mart can afford to wait, most workers—being dependent on their labour for survival—cannot.