It is already well established in the case law that Article 45 of the Labour Code is only applicable within Québec and has no extraterritorial reach. As such, an employer may sell, assign or transfer either part or all of its operations to another province without affecting the transfer of the certification or of the collective agreement, as the case may be.

However, can the provisions of a collective agreement limit an employer’s right to transfer work performed in an establishment located in Québec to one of its other establishments located outside the province?

This issue was considered by the Superior Court of Québec in Parmalat Canada v. Tremblay,2 in the context of a review of an arbitration award.

What happened?

The union was certified to represent all office and laboratory employees, except for the company’s executive secretary. The address indicated in the certificate was that of the factory in Victoriaville, Québec.

Under the collective agreement:

2.02 An employee excluded from the bargaining unit shall not carry out work usually carried out by an employee if this could result in the layoff or in the continuation of the layoff of an employee. [Translation]

The parties had asked an arbitrator to determine whether Parmalat had the right to transfer work carried out by an employee in the Victoriaville factory to a factory located in Ontario, with the understanding that this could result in layoffs.

The Arbitrator

The arbitrator concluded that the employer did not have this right. It was held that the collective agreement clause that forbade the transfer of work to employees outside the bargaining unit applied not only to the establishment in Victoriaville, but also to any other establishment, even one located outside Québec. Surprisingly, the arbitrator decided that such a collective agreement clause, irrespective of the context in which it had been imposed, should serve to protect the employment of employees covered by the certificate, regardless of where they are situated.

The Superior Court of Québec

The employer asked the Superior Court to review the arbitrator’s decision, raising, in particular, its alleged extraterritorial reach. The court noted that while the inclusion of the civic address in the text of the agreement was unprecedented in other collective agreements, this mere fact did not mean that the parties intended to limit the reach of the contractual clauses to the factory in Victoriaville. In this regard, we note that Parmalat had “inherited” both the collective agreement and the certification following the purchase of the factory from Lactantia Ltd. At the time of the purchase, there was but one establishment. The court concluded that the parties were considered to have taken into account the new reality of the business.

The court also dismissed the employer's argument with respect to the extraterritorial reach of the arbitrator's decision. According to the court, the employer had contractually limited its freedom to outsource tasks to other employees outside the bargaining unit. In the court’s view, employees outside the bargaining unit include not only employees of the establishment identified by the collective agreement, but employees of any other of the employer’s establishments as well.

According to the court, the arbitrator's interpretation of such an undertaking affects in no way the geographical reach of the certificate. Rather, the undertaking merely serves to protect the employment of the persons working in the certified establishment.

Lessons for Employers

You need to pay particular attention to the provisions of collective agreement dealing with outsourcing tasks, and to their wording. The extraterritorial reach of such a clause shall not be sufficient to limit its application; the employer who wishes to control subcontracting or outsourcing with respect to one establishment or geographic region will have to do so using express terms.