Under the Labour Standards Act (the "L.S.A."), before going ahead with a collective dismissal for technological or economic reasons, an employer is bound to give notice to the Minister of Employment and Social Solidarity within a certain time frame.
If an employer fails to give notice within the statutory time frame or gives insufficient notice, it must pay each laid-off employee an indemnity equal to his usual salary for a period equal to the term or residual term of the notice period to which the employer was bound. However, Section 84.0.5. L.S.A. exempts employers from compliance with the stipulated notice period in the case of superior force or an unforeseeable event. This provision reads as follows:
In the case of a superior force or where an unforeseeable event prevents an employer from respecting the time periods for giving notice set out in section 84.0.4, the employer shall give the Minister a notice of collective dismissal as soon as the employer is in a position to do so.
In Commission des normes du travail v. Les Industries Troie Inc., the Court of Quebec analyzed the interpretation of the terms "superior force" and "unforeseeable event" used in Section 84.0.5 L.S.A.
This case involved an employer, Les Industries Troie Inc. ("Troie Inc."), which manufactured clothing. Troie Inc. sent the Minister of Employment and Social Solidarity a notice that it was shutting down its factory and laying off 186 non-unionized employees. For 17 of those employees, the notice was less than the statutory period, so the Commission des normes du travail (the "C.N.T.") claimed compensation on their behalf for the balance of the 12-weeks’ notice Troie Inc. should have given them.
Relying on Section 84.0.5 L.S.A., Troie Inc. argued that its sudden and major loss of contracts constituted an unforeseeable event that prevented it from giving sufficient notice, and it was therefore exempt from paying the compensation claimed by the C.N.T. The Court was in favour of Troie Inc.
The Court pointed out that a distinction must be drawn between the terms "superior force" and "unforeseeable event". A defence on the grounds of superior force, which is comparable to a fortuitous event, requires proof of an unforeseen and irresistible event. This would include an event such as a fire, which forces the business to shut down immediately.
According to the Court, a defence based on the grounds of an unforeseeable event is less stringent, but must be rigorously assessed. It questioned whether the sudden and major loss of contracts constituted a probable event that the employer would normally be able to foresee, and it concluded that it was not, in particular for the following reasons:
- Despite the tenuous economic situation of the clothing industry at that time, Troie Inc. had made changes to its operations so as to gradually attain a certain degree of economic stability and growth;
- Although Troie Inc. depended on customer orders, it had regular contracts, giving it reason to believe its operations would continue without suspecting it would become necessary to shut down the factory;
- In the space of approximately one month, jeans production fell from 11,500 to 5,000 pairs a week, causing revenue to drop from $110,875 to $46,000 per week;
- Troie Inc. acted in good faith by giving the employees individual layoff notices as soon as it could;
- A reasonably careful person, placed in the same situation as Troie Inc., would probably not have been able to foresee the sudden and major loss of orders.
The Court held that since the legislator provided for a defence based on an "unforeseeable event", that expression must not be confused with an "unforeseen event". Accordingly, given the type of enterprise, it was possible that Troie Inc. would lose contracts, which could happen at any time, but it was unforeseeable that it would lose so many in so little time.