In United Food and Commercial Workers, Local 503 v Wal-Mart Canada Corp, the Supreme Court of Canada upheld the decision of a Quebec arbitrator who concluded that the closure of the Jonquiere, Quebec Wal-Mart was contrary to the statutory freeze provisions in the Quebec Labour Code.

The procedural background is convoluted (Rothstein and Wagner wrote that “This is the latest in a seemingly interminable series of cases in this Court and the courts in Quebec arising from the closure of the Wal-Mart store in Jonquiere, Quebec over nine years ago”). In 2005, after a certification drive, but before a collective agreement was reached, Wal-Mart closed the store. The employees and the UFCW brought a series of complaints under the Quebec Labour Code, and a class action. Apart from this case, all of these actions had been unsuccessful. In particular, in Plourde (a 2009 decision of the Supreme Court of Canada, available here), Wal-Mart prevailed over claims by the individual employees, in part based in long-standing Quebec law (City Buick and Place des Arts) which confirmed that an employer in Quebec can always close its business, even for “reprehensible” reasons.

This particular complaint was under s.59 – the statutory freeze provision. All jurisdictions in Canada contain similar statutory freeze provisions designed to preserve terms and conditions of employment pending application for certification and during certain stages of collective bargaining.

The Arbitrator concluded (these sort of complaints are heard by arbitrators in Quebec, as opposed to the Labour Board) there was a breach of s. 59 because closing the business was altering the terms and conditions of employment and there was no evidence lead by Wal-Mart to justify the closure. This finding was overturned by the Quebec Court of Appeal, who relied on the City BuickPlace des Artsand Plourde cases to conclude that the s. 59 had no applicability in the context of a closure of a business.

The Court concluded that the Arbitrator’s finding was reasonable confirming that termination in the context of a business closure is a change to the terms and conditions of employment. He further concluded that Plourde was limited to its particular facts and did not prevent the arbitrator from reaching the conclusion that he did. Wal-Mart was not shielded by the closure of its establishment or otherwise relieved of the burden of proving that its decision was consistent with its normal management practices. The matter was remanded to the Arbitrator to determine the appropriate remedy.

The minority decision concluded that section 59 did not apply in the context of a business closure. They argued that the majority position ignored Plourde, Place des Arts and City Buick and undermined the principal of stare decisis (the notion that courts are bound by legal precedent). They further contended that:

…the purpose of s. 59 is to protect the equilibrium between the parties as they work toward a collective agreement, and to allow the union to get around its burden of proof under ss. 12 to 14 in the context of a business closure.

The decision is largely limited to the particular statutory regime in Quebec. However, there are some comments in the majority decision which suggest a more robust and pro-union interpretation of the statutory freeze provisions, for example:

In my opinion, the purpose of s. 59 in circumscribing the employer’s powers is not merely to strike a balance or maintain the status quo, but is more precisely to facilitate certification and ensure that in negotiating the collective agreement the parties bargain in good faith.

It seems unlikely that this decision will radically alter the approach taken in common law jurisdictions, where the “business as usual” test typically applies in the freeze period, and considerations of anti-union animus are considered in the context of unfair labour practice complaints. For context, an unfair labour practice complaint was initially pursued by the UFCW in this case, but dropped. The Labour Code provisions in Quebec do not contain a reverse onus provision, which makes that process more difficult than in most of the other jurisdictions in Canada.

However, this decision may be cited by unions to support a generous interpretation of statutory freeze provisions. In any event, extreme caution should be exercised when considering closing a business, or otherwise altering the terms and conditions of employment, during a statutory freeze period.