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Business Closure Found A Breach Of The Statutory Freeze On Employment Terms

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In June, 2014, a majority of the Supreme Court held, in United Food and Commercial Workers, Local 503 v Wal-Mart Canada Corp., 2014 SCC 45, that an arbitrator had reached a reasonable conclusion in finding that Wal-Mart's 2005 closure of a Quebec store constituted a prohibited unilateral change in conditions of employment following the certification of the union.

The Court noted that s. 59 of the Quebec Labour Code (the counterpart of the statutory freeze provisions found in labour legislation in the common law provinces) was not limited merely to preserving the status quo during negotiations for a first collective agreement. It had the broad purpose of promoting the exercise of rights of association by facilitating certification and good faith bargaining.

Anti-union conduct was not an essential component of a breach of s. 59. What was required, once the union had shown that the employer was not managing its business in accordance with its normal practices in effecting the change, was an reasonable explanation for the change that would have motivated a reasonable employer to do the same. Here, Wal-Mart had provided no justification for closing a well-performing store and altering the employees' rights to maintain their employment, which were 'conditions of employment' protected by the freeze. The matter was remitted to the arbitrator to determine an appropriate remedy.

Note: This a reprint of an article by Michael Torrance of Norton Rose Fulbright Canada LLP.


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