By Guylaine Lacerte and Julie C. Fortier

On Friday, June 27, 2014, the Supreme Court of Canada ruled that Wal-Mart will have to compensate the former employees of its Jonquière establishment.

In a five to two ruling, in a case that originated with the filing of a grievance in March 2005, the highest court in the land upheld the arbitrator's decision, concluding that the resiliation of the contracts of employment of all the employees at the Jonquière establishment constituted a unilateral change in conditions of employment prohibited by section 59 of the Quebec Labour Code (Code).

Section 59 of the Code, which provides for a freeze of employment conditions, including from the filing of a petition for certification, is intended to foster the exercise of the right of association and encourage good faith negotiation between the parties.

In this case, the union representing the former employees was able to discharge its burden of proof by showing “(1) that a condition of employment existed on the day the petition for certification was filed or a previous collective agreement expired; (2) that the condition was changed without its consent; and (3) that the change was made during the prohibition period.” ^[1]

By establishing that the alleged change was inconsistent with the employer’s normal management practices, the arbitrator rendered a decision that the Supreme Court of Canada considered reasonable, because it was “clearly one of the possible, acceptable outcomes which are defensible in respect of the facts and law.” The court indicated that, when faced with such a decision, deference was in order.

Given that the case involved a complaint made under section 59 of the Code, section 100.12 of the Code and article 1590 of the Civil Code of Québec conferred broad remedial powers on the arbitrator. Consequently, he was empowered to order an alternative remedy in the form of damages, because the closure of the business did not preclude him from granting compensation under section 59 of the Code. The case was therefore remanded to the arbitrator to determine the appropriate remedy in accordance with the disposition of his award dated September 18, 2009, in which he had reserved jurisdiction to establish the appropriate remedy.^[2]

Although Québec law frequently contrasts with the laws elsewhere in Canada, it appears that the mechanism of section 59 of the Code is reflected in the legislation of other Canadian provinces, in addition to having a federal counterpart. Thus, the effects of this Supreme Court ruling, which will apply to all general labour relations schemes, will be felt throughout Canada. From now on, the management of a business in which a unionization process has begun will prove to be a more delicate matter for the employer.

Readers may recall that the approximately 200 employees of the Jonquière Wal-Mart were the first in North America to complete the certification process and then become unionized, after which, a few months later, while negotiations for the terms of a first collective agreement proved unfruitful, their employer closed the business, claiming financial reasons to support the closure. In 2009, in a case based on other legal arguments, the Supreme Court of Canada had dismissed the union's appeal and had upheld Wal-Mart's defence against allegations that it had used roundabout means to prevent unionization by closing the store in 2005.

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^[1]United Food and Commercial Workers, Local 503 v. Wal-Mart Canada Corp, 2014 SCC 45 (CanLII).
^[2] United Food and Commercial Workers, Local 503 and Compagnie Wal-Mart du Canada – Établissement de Jonquière (grief syndical), T.A., 2009-09-18, AZ-50576196.