On June 5, 2008, in Teamsters du Québec, chauffeurs et ouvriers de diverses industries, section locale 69 and Crocs Canada (Créations Foam Inc.)[1], arbitrator Marcel Morin rendered the first decision on Section 84.0.8 of the Labour Standards Act[2] (the "L.S.A.") regarding an employer’s obligation not to change the group insurance plan or pension plan for the employees during the statutory notice period required in the event of a collective dismissal.

The facts of this case involved the collective dismissal of 580 of the 700 employees of Crocs Canada, an enterprise specializing in the manufacture of foam plastic sandals. On April 15, 2008, the employer sent a 16-week collective dismissal notice to the Minister of Employment and Social Solidarity (the"Minister"), thus satisfying the stipulations of the L.S.A. However, it preferred to notify the employees of their dismissal on April 16 and 17, 2008 and to pay them a 16-week indemnity in lieu of notice the following week, thus relieving them of the need to supply any further work. It also terminated the group insurance coverage at that time.

The union filed a grievance claiming that the group insurance for the employees subject to the collective dismissal should be maintained on the ground that, unlike the case of individual dismissal, payment of an indemnity in lieu of notice in the context of a collective dismissal did not terminate the employment, which terminated instead on August 5, 2008, as indicated in the notice to the Minister.. According to the union, an employer gives notice of collective dismissal or pays an indemnity in lieu of notice, but in either case the group insurance must be maintained during the statutory notice period.

The employer’s argument was based on the claim that to receive a salary, work must be supplied, in consideration of which the employer pays the insurance premium. However, since the dismissed employees did not supply any work after receiving the 16-week indemnity that accompanied their record of employment, their insurance coverage could not be maintained: they were no longer on the payroll which is one of the conditions for which an employer pays the insurance premium. Thus, the dismissed employees’ loss of employment made them ineligible for the group insurance plan. According to the employer, Section 84.0.8 L.S.A., which stipulates that group insurance must be maintained during the statutory notice period, only applies if the employees work out the notice period.

The arbitrator allowed the grievance. He found that while it is true that a collective dismissal constitutes, according to Section 84.0.1 L.S.A., a termination of work by the employer, the dismissal only becomes effective once the notice is given and the minimum period stipulated in Section 84.0.8 L.S.A. has elapsed. The fact that the employer chooses to pay the entire 16 weeks’ notice immediately and not to require any work in return does not release it from its other obligations under the collective agreement, Section 84.0.8 L.S.A., or the contract taken out with the insurance company. The employer was therefore ordered to reinstate the group insurance for the term of the 16-weeks’ notice and reimburse the dismissed employees for their outlays during the period after the insurance was terminated.

It should be mentioned that this decision is currently under judicial review by the Superior Court.

[1] D.T.E. 2008T-515 (T.A.). Motion for judicial review, 2008-07-11 (S.C.),
200-17-010042-083.

[2] R.S.Q., c. N-1.1.