The Supreme Court Confirms the Principle of Employee Protection in Quebec: Quebec v Asphalte Desjardins

The decision in Quebec (Commission des normes du travail) v Asphalte Desjardins inc., 2014 SCC 51, demonstrates the Supreme Court of Canada’s support for employee protection while leaving an unclear future for Quebeckers who are employed in competitive industries. The case dealt with an employee’s notice of resignation and his employer’s subsequent attempt to shorten the employee’s remaining tenure without providing either notice or payment in lieu of notice. The Supreme Court’s decision hinged upon determining whether an employment contract remained in place once an employee or employer had provided notice of an intent to terminate the contract.

Penned by Justice Wagner, the judgment aimed to harmonize Quebec’s Act Respect Labour Standards and Civil Code of Quebec with respect to the employment relationship by emphasizing that a legislative intent to protect employees as vulnerable parties constitutes a common thread that runs through both pieces of legislation. Accordingly, the employment contract remains in place as a source of protection for employees from the time of notice of termination until the effective date set out in the notice. While this decision signals the judiciary’s employee-friendly approach in matters of notice and termination, its practical consequences may cause employers to adopt precautions that will limit employees’ mobility between firms and thereby hamper the innovation and competitiveness that arises from such mobility.

Background

The issue stemmed from an employee’s resigning from his employer to work for a competing firm. The employer in question, Asphalte Desjardins inc. (“Desjardins”), provided paving services. The employee, Daniel Guay (“Guay”), worked for Desjardins as a project manager, a position that afforded access to confidential information concerning the firm’s competitive tenders bidding. When Guay obtained a similar position with another paving firm that directly competed with Desjardins, he resigned from his position with Desjardins.

In his notice of resignation, Guay stated that his resignation would take effect three weeks following the notice date. Desjardins initially tried to convince Guay to change his mind. Four days after Guay had tendered his notice of resignation, however, he remained intent on resigning and Desjardins chose to terminate his employment immediately without either notice or payment in lieu of notice.

Due to this lack of notice or payment, Guay made a claim for three weeks’ compensation owed to him based on the working period set out in his notice of resignation. The claim was successfully brought forward at the Court of Quebec by Quebec’s Commission des normes du travail.

Judicial History

The Quebec Court of Appeal determined that the employment contract effectively ended when the employee’s notice of resignation was tendered. In a 2-1 decision, Quebec’s Court of Appeal determined that employers could renounce employees’ notices and that Desjardins was therefore entitled to terminate Guay immediately without either payment or notice. Justice Bich, once a colleague to Justice Wagner on the Court of Appeal and presently considered a top Quebec candidate to be appointed to the Supreme Court, authored the majority’s decision.

The majority reasoned that Quebec’s Act Respecting Labour Standards did not require Desjardins to provide Guay with notice of his termination under the circumstances because Guay’s notice of resignation had made the termination of his employment inevitable. Accordingly, the employer was to be regarded as released from its obligations under the employment contract as of the date when the employee tendered his notice. The termination date unilaterally determined by the employee was of no effect as it could not constitute an agreed-upon term in a bilateral contract between the employer and employee. The employer was therefore free to terminate the employee at anytime following the notice of resignation without providing notice or payment in lieu of notice.

In dissent, Justice Pelletier focused on the application of the Civil Code of Quebec to Quebec’s Act Respecting Labour Standards. Specifically, the former requires that parties to a contract to provide one another with notice of the contract’s termination. Accordingly, any release from a contract could only be achieved through bilateral agreement between the parties. Because Desjardins had not accepted the terms of Guay’s resignation, a release had not occurred and the obligations attaching to the employment contract remained in effect when Desjardins chose to terminate Guay.

The SCC Decision

The Supreme Court reversed the majority of the Quebec Court of Appeal and adopted the reasoning in Justice Pelletier’s dissent. The Supreme Court characterized the Quebec Court of Appeal’s decision as a “radical reversal” of established authorities dealing with labour relations in Quebec. The Supreme Court agreed with Justice Pelletier, stating that Quebec’s Act Respecting Labour Standards must be read harmoniously with the Civil Code of Quebec, and that the employment contract remained in effect after Guay had tendered his notice of resignation. As such, Desjardins remained obliged to provide either notice or payment in lieu of notice at the time when Guay was terminated.

The Supreme Court further articulated the harmonization of Quebec’s Act Respecting Labour Standards the Civil Code of Quebec by stating that the intent of applicable provisions in the latter is to protect employees as vulnerable persons in the employment relationship. According to the Supreme Court, this intent must be understood as framing the relevant provisions of the Act Respecting Labour Standards. The protection of employees as vulnerable persons in the employment relationship was thus recognized as a common thread running through both pieces of legislation, closing the door to employers unilaterally terminating employees without providing either notice or payment.

Conclusion: The Principle of Employee Protection

The Supreme Court’s decision supports employee protection in law, but may ultimately restrict employees faced with similar facts in the future. On its face, the Supreme Court’s alignment of Quebec employment legislation ensures fairness by encouraging  employees to be transparent about their intentions to resign while also ensuring that employers are not strictly subject to the resignation dates unilaterally determined by their employees. Looking forward, however, this decision may gives rise to new practical challenges for both employees and employers.

In light of the Supreme Court’s decision, employers such as Desjardins could effectively be required to pay employees to join competitors. When Quebec employers learn that an employee with access to sensitive information intends to begin working for a competitor but does not intend to resign until a later date, the Supreme Court’s decision allows the employer to terminate the employee sooner only after providing either: (1) notice of the earlier date of termination; or (2) payment in lieu of such notice. If the employee’s access to sensitive business information is a concern to the employer, then the employer could not reasonably be expected to choose to provide the employee with notice of an earlier termination date and thereby allow the employee to have continued access to sensitive information in the interim.

Instead, such employers will opt to pay their employees in order to terminate them at an earlier date. Such payment would afford little benefit from a policy perspective, as employees such as Guay are not in need of severance and have already mitigated the losses of termination by securing new employment with a competing firm. Policywise, the regime articulated by the Supreme Court may therefore simply provide employees in circumstances similar to Guay with incentive pay to join competitors.

Such an outcome would be problematic as it would induce employers to adopt precautions to reduce employees’ mobility between employers. That is, employers are likely to respond to the Supreme Court’s decision by increasingly requiring strict confidentiality  and/or non-competition agreements as a term of employment in order to minimize the risk of having to pay employees to join competitors. If such measures are adopted, they would have the effect of limiting employees’ mobility between employers and hampering the productive competition that results from such mobility.

While the decision of the Quebec Court of Appeal received a favourable reception from Quebec’s employers, the practical implications of the decision of the Supreme Court of Canada may yield unfavourable outcomes for both Quebec’s employees and its employers over the long term.