On April 29, 2005, Wal-Mart Canada Corp. ("Wal-Mart") definitively closed its Jonquière store. Arguing that the closure was motivated by an anti-union animus – the store having been certified in August 2004 – the United Food and Commercial Workers ("UFCW") then initiated a series of recourses to contest the company's decision. One by one, these proceedings (as well as a class action instituted by the employees themselves) were dismissed by the courts, and one of the cases reached the Supreme Court in 2009. On that occasion (see Plourde v. Wal-Mart Canada Corp., 2009 SCC 54), the Court decided that a complaint under section 15 of the Labour Code was not the appropriate recourse to contest the closure of an establishment, and indicated that the proper remedy would rather be a complaint under section 12 of the Code. That decision, however, did not put an end to the judicial saga, because, at the same time, a final recourse, based this time on section 59 of the Labour Code, was slowly making its way through the courts. The Supreme Court has just rendered its decision regarding this recourse today. 

The dispute was in essence quite simple. The UFCW contended that the closing of the store in Jonquière constituted a change in the conditions of employment of the employees and that, since that change occurred during the period covered by section 59 of the Code, Wal-Mart should be required to prove that the closure took place in the normal course of its business activities. Absent such proof, the Union argued that the arbitrator seized of the case should allow the complaint.

Wal-Mart, for its part, argued on the one hand that the Union's complaint, in essence, was one based on section 12 of the Labour Code, and hence was within the exclusive jurisdiction of the Commission des relations du travail. On the other hand, the company argued that closing a business did not constitute a change in the conditions of employment of the employees, and that the issue should have been considered by examining the job losses resulting from the closure, which were justified by the disappearance of the company's requirements and were therefore part of the "normal economic reality".

Initially, the arbitrator seized of the case accepted the jurisdictional argument developed by Wal-Mart, but his decision was then held to be premature by the Superior Court. At a further hearing (without re-examining the jurisdictional issue), the arbitrator held, in his second ruling, that Wal-Mart should have adduced evidence as to the reasons for the closure and that, in the absence of such evidence, he was obliged to allow the complaint. The arbitrator's second decision was upheld by the Superior Court but was overturned by the Court of Appeal of Quebec, which held that section 59 did not provide an appropriate recourse for contesting the closure of a business.

In its decision rendered today (UFCW, Local 503 v. Wal-Mart Canada Corporation, 2014 SCC 45), the majority of Supreme Court justices were of the opinion that section 59 of the Labour Code could apply to cases involving the closure of a business. Consequently, an employer that closes its business during the "freeze" period "protected" by that section may in the future be called upon to justify its decision and to demonstrate that a "reasonable" employer would have acted in a similar fashion under the circumstances. The Court held that absent such evidence, the employer may nevertheless close its business, but it may then be ordered by the courts to compensate the employees affected by the closure. Since the Court did not indicate, however, the nature or extent of such compensation, this file may well continue to be followed in the months and years ahead.


Frédéric Massé 


Labour and Employment Law