In a judgment dated May 11, 2012, the Quebec Court of Appeal confirmed that the laying off of employees due to the closure of an undertaking does not constitute a change in the conditions of employment following the filing of a petition for union certification, pursuant to Section 59 of the Labour Code  (LC). The court said that when there is a closure of an undertaking, a complaint filed pursuant Section 59 LC is not appropriate because it is not a change but an elimination of jobs and, as such, the operations of the undertaking do not change, they disappear.»2.

Facts

On August 2, 2004, Quebec’s labour relations board, the Commission des relations du travail, certified United Food and Commercial Workers Union Local 503 (the Union) to represent the workers of the Wal Mart store in Jonquière. After negotiations to reach a collective agreement failed, the Quebec Minister of Labour appointed a dispute arbitrator on January 9, 2005.

That same day, Wal-Mart notified all its employees that it was closing its Jonquière store on May 6. As a result, they would be laid off.

Several complaints were filed after this announcement. Among them, the Union filed a complaint on May 23, 2005, pursuant to Section 59 LC alleging that the layoffs constituted a change in the conditions of employment of the employees. This complaint was referred to a grievance arbitrator.

Wal-Mart claimed that the complaint actually concerned a violation of rights protected by Sections 12, 13 and 14 LC (unfair labour practices), and objected to the grievance arbitrator’s jurisdiction to hear it. Wal-Mart felt that the complaint should have been brought before the Commission des relations du travail, to the exclusion of any other tribunal.

The Union argued that, on the contrary, the closure of the Jonquière store was a change in the conditions of employment of the employees, thereby conferring jurisdiction on the grievance arbitrator.

At first, the grievance arbitrator declined jurisdiction.

The Union applied for a judicial review of the arbitration award. In the Superior Court’s opinion, the wording of the complaint did not authorize the grievance arbitrator to find that Section 59 was not applicable in the case at issue, particularly as no evidence had been taken. The Superior Court therefore quashed the arbitration award and returned the case to the grievance arbitrator for a ruling on the merits of the complaint.

The arbitrator then determined that Wal-Mart had violated Section 59 LC by illegally changing the conditions of employment of its employees, as it had failed to demonstrate that the closure of its Jonquière store was a decision made in the normal course of business.

Wal-Mart then applied to the Superior Court to have it exercise its superintending and reforming power and intervene by quashing the arbitration award that had allowed the complaint. This application for judicial review was rejected. Wal Mart appealed the Superior Court ruling.

Judgment of the Court of Appeal

As regards the merits of the matter, Wal-Mart argued that the Union was unable to demonstrate that there had been a change in the conditions of employment of its employees – i.e. that the decision was not part of the normal course of business – because case law recognizes the right of Quebec employers to close an undertaking. Moreover, Wal-Mart asserted that the arbitrator’s interpretation of Section 59 LC had the effect of conferring job security on its employees, preventing it from closing its undertaking, which was not the case before the petition for certification was filed.

The Union argued for a broad and liberal interpretation of the concept of “condition of employment” that emerged from case law, conceding, however, that an arbitrator hearing such a complaint would not have the power to order the reopening of the undertaking, but would have other remedial powers, such as the power to award monetary damages. In other words, according to the thesis defended by the Union, Wal-Mart had to substantiate the reasons and rationale underlying the closure of its store.

The Court of Appeal sided with Wal-Mart by allowing the appeal, quashing the arbitration award and dismissing the Union’s complaint under Section 59 LC.

Justice Vézina, whose reasons are shared by Justice Gagnon, felt that the broader scope of the concept of “condition of employment” could not be extended to the permanent closure of an establishment or undertaking.

Justice Vézina is categorical: the permanent closure of an establishment or undertaking does not constitute a change in the conditions of employment, but rather an elimination of jobs. His comments leave no room for interpretation:

[Translation]

“[117] Is there an argument to be made that the closure nonetheless constitutes a change in the conditions of employment contemplated by Section 59 LC? In my opinion, no. It is not a change, but an elimination of jobs. The operations of the undertaking do not change; they disappear.

[118] Despite the broader scope given to the concept of “conditions of employment” over the years, the permanent closure of an establishment is an altogether different matter; it lies beyond this concept.

[119] We stop looking for a cure to a patient’s disease when the patient dies. When there is something wrong with an undertaking’s operations, it can no longer be corrected once the undertaking has permanently vanished.”

In other words, the permanent closure of an establishment or undertaking must be distinguished from the way the undertaking is operated. In fact, a change in the operations of the undertaking, which could potentially constitute a change in the conditions of employment, could give rise to an order under which the employer would be required to operate the undertaking again as it had done prior to the change, in order to remedy such an illegal change. But such is not the case in a situation where an establishment or undertaking is closed permanently, since an arbitrator would be unable to order a return to the situation that preceded the closure – in this instance, the resumption of the undertaking’s operations.

An employer cannot be forced to reopen its undertaking, whatever the reasons that motivated its decision to close it, as has been pointed out by the Supreme Court over the past few years.

Finally, Justice Vézina noted that complaints could be filed with the Commission des relations du travail pursuant to Sections 12 to 14 LC (unfair labour practices), although it would not be an easy road for the Union.

Justice Léger shared his colleagues’ conclusion, but for different reasons. On the merits of the matter, he felt that the arbitration award was unreasonable because the rationale was contradictory. The arbitrator had found that closure was a valid ground for termination, but in the same breath said that the dismissals resulting from such a closure change the conditions of employment. He also accepted Wal-Mart’s argument that the arbitration award had the effect of giving non-existent job security to the employees when the application for certification was filed.

Conclusion

The Quebec Court of Appeal is categorical: the complaint based on a change in the conditions of employment pursuant to Section 59 LC is of no assistance in the case of a permanent closure of an establishment or undertaking. The elimination of a job, in such circumstances, does not in any way constitute a change in the conditions of employment. 

It will be interesting to follow this case and see if an application for leave to appeal will be filed with the Supreme Court and, if so, if such leave will be granted. We will follow this case and see if, as stated by the Court of Appeal, complaints will be filed by the Union with the Commission des relations du travail pursuant to Sections 12 to 14 LC.