Many retailers in Canada and across the United States have been following the long-running saga of North America’s first unionized Wal-Mart, which had been located in Jonquière, Quebec. The store was successfully unionized in 2004, but was permanently shut in 2005 on the very day an arbitrator had been appointed as part of the collective bargaining process. Since then, former employees and their union have pursued various avenues seeking a legal determination that the closure was a violation of Quebec’s Labour Code or was otherwise unlawful. After an unsuccessful trip to Canada’s Supreme Court in 2009, in a recent decision, the Supreme Court has upheld a finding that the retailer’s decision to close the store was not justified by evidence that it was made in the ordinary course of the company’s business. As the store closure occurred during a statutory “freeze” period which is meant to protect employees from a change to their employment conditions during certain phases of collective bargaining, a 5-2 majority of the Court in United Food and Commercial Workers, Local 503 v. Wal-Mart Canada Corp., 2014 SCC 45 found that it was reasonable to conclude that the decision to close the store violated the Labour Code.
There are four notable aspects to the decision. First, the Supreme Court’s reasoning suggests a broad and contextual interpretation of at least some labour legislation that encourages good faith during the union certification process and collective bargaining. Second, the Court does make clear that a store closure during a “freeze” period could be permissible, but only if it reflects “normal management practices” rather than a response to unionization or collective bargaining. Third, although the provision being interpreted is in Quebec’s Labour Code, there are similar statutory “freeze” provisions across Canada and the Court makes several comments suggesting its approach may apply in other jurisdictions. Finally, there is a forceful dissent by Rothstein and Wagner JJ. which suggests two distinct approaches to labour issues among the Court’s current members. LeBel J., who authored the majority judgment, is retiring later this year. Retailers who may be considering the closure or significant restructuring of parts of their business operations or particular locations during a statutory “freeze” period will want to carefully consider whether doing so would likely be seen as the application of “normal management practices.”