Supreme Court Issues Decision in Wal-Mart Closure Case

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In Plourde v. Wal-Mart Canada Corp. (released November 27th, 2009), the Supreme Court of Canada found for Wal-Mart and confirmed that a recently certified employer has no legal obligation under labour legislation to stay in business, and that a closure of one of its locations can constitute sufficient reason for the termination of the employees at that location.

In August 2004, the United Food and Commercial Workers, Local 503 was certified to represent employees at a Wal-Mart in Jonquière, Québec. The Jonquière store thus became the first Wal-Mart in North America to be unionized. In February 2005, on the same day that the Minister of Labour referred the parties to arbitration in order to assist them in establishing the terms of their first collective agreement, Wal-Mart informed its employees that it had decided to close the the Jonquière store. In April 2005, Plourde’s employment, along with that of approximately 190 other employees, was terminated.

Plourde filed a complaint under section 15 of Québec’s Labour Code, alleging that his employment had been terminated as a result of his union activities. Section 17 of the Code provides that, where an employer dismisses an employee after the employee has exercised his rights under the Code, there is a presumption that the employee was dismissed because he exercised his rights. This presumption is only overcome if the employer can demonstrate that the employee was terminated for “good and sufficient reason”.

In this case, Wal-Mart alleged that Plourde had been dismissed, not because of his union activity, but simply because the store had closed and his job was no longer available. Wal-Mart further argued that the permanent store closure constituted “good and sufficient reason” for termination of employment within the meaning of section 17. The Commission des relations du travail (“CRT”) agreed with the employer and dismissed Plourde’s complaint.

The Superior Court dismissed Plourde’s application for judicial review, finding that the CRT was correct in accepting the store closure as the reason for Plourde’s dismissal, and not requiring Wal-Mart to explain its reasons for closing the store. The Court of Appeal similarly dismissed Plourde’s motion for leave to appeal. Plourde then appealed to the Supreme Court of Canada, which rejected his appeal. The Supreme Court’s decision also resolved the issues, arising from the same factual scenario, that was before it in Desbiens v. Wal-Mart Canada Corp.

The decision of the Supreme Court deals with the narrow issue of whether a permanent store closure constitutes a good and sufficient reason for terminating employment for the purposes of section 17 of the Code.

In a 6-3 decision, the Supreme Court stated that an employer has no legal obligation to stay in business. Writing for the majority, and relying on the Québec Labour Court’s earlier decision in City Buick, Justice Binnie found that a business is permitted to close a location even as the result of “socially reprehensible considerations”.

The Court went on to find that the case law establishes that the closure of a store or plant constitutes “good and sufficient reason” to terminate an employee within the meaning of section

17. In other words, the closure of a business ends the inquiry into the reasons for the employee’s dismissal – the termination is sufficiently explained by the closure. Thus, a remedy under section 15 of the Code is not available when there has been a store closure and the employee’s workplace no longer exists.

However, the Majority avoided making sweeping pronouncements about the Charter and freedom of association, and instead decided the case on the relatively technical and narrow issue of the meaning of section 17 of Québec’s Labour Code. Thus, while it remains to be seen how Ontario courts will interpret the Supreme Court’s decision, the impact of the case on employers located outside of Québec may be limited.

Further, while it is encouraging for employers that the Supreme Court of Canada confirmed that a store closure will not automatically result in a finding that employees were terminated without good and sufficient reason, the Court did indicate that a union could be successful in bringing a complaint on the basis that the store closure itself constituted an unfair labour practice. As stated by Justice Binnie, a closure will not immunize the employer from all potential negative financial consequences. A finding of an unfair labour practice and an award of damages remain a possibility.