Richard Gaudreault represented Wal-Mart in its successful appeal of a Quebec Labour Relations Board decision. Photo by Ian Barrett Click here to see full sized version.

Quebec’s well-deserved reputation as having the most progressive labour laws on the continent has taken a hit after a recent Quebec Court of Appeal ruling determined that Wal-Mart Canada Corp. did not transgress the province’s Labour Code when it closed down a store shortly after employees became the first to earn union accreditation in North America.

In a unanimous ruling that overturned a decision by the Quebec Labour Relations Board, a provincial judicial body that oversees labour legislation, the appeal court stated that it is well established that an employer’s decision to close down its enterprise, “even if its motives behind its actions are socially debatable,” constitutes a just and sufficient cause to lay off its employees.

On February 2005, Wal-Mart closed down its store in the remote town of Jonquière on the day that an arbitrator was given a mandate to impose its first collective agreement. Nearly 80 complaints were then lodged by the laid-off employees before the board against the Wal-Mart, arguing that s. 15 of the Quebec’s Labour Code should come into effect, namely that the employer took reprisals against them because they exercised a right arising from the Labour Code .

On September 2005, after examining four of the complaints, the board concluded that three of the four complainants established a “presumption in their favour,” that is, that the sanction imposed upon them was taken because they exercised their rights, as per s. 17 of the Labour Code. Under s. 17 an employee must demonstrate that he was a salaried employee, that he was the object of a sanction and that he exercised a right under the Labour Code. If the employee passes the test, then the burden of proof is upon the employer to demonstrate that it resorted to the sanction or action against the employee for “good and sufficient reason.”

The commissioner ruled that Wal-Mart did not provide “good and sufficient reason” because it kept its options open to re-open store No. 3643, given the absence of an explanation over the future of the locale it rented for a period of 20 years.

“Wal-Mart did not satisfy the burden of proof to convince the Board that the closing of the establishment  was definitive that can be considered as good and sufficient cause as required as per s. 17 of the Labour Code,” said the board. The board had still reserved its judgment regarding a remedy when its decision was appealed.

The ruling was upheld by Quebec Superior Court after it determined that the board did not commit a manifestly unreasonable error in the appreciation of the evidence given the criteria developed by jurisprudence.

But in a ruling that was applauded by business while denounced by labour, the Court of Appeal determined that the board erred in its interpretation of s. 17 of the Labour Code by imposing a burden of proof on the employer that the law does not demand.

While under s. 17 an employer must demonstrate, if it intends to “definitely close down its establishment,” that it has good and sufficient reason for its actions against employees, it does not have “the obligation to prove that the decision is not a subterfuge,” said Justice Paul-Arthur Gendreau in the eight-page ruling.

He added that it would be “unreasonable to oblige employers to demonstrate the absence” of a ruse that disguises its intentions of an eventual re-opening of its enterprise. On the contrary, it is up to employees to provide evidence that demonstrates that the employer’s contentions are false and hide ulterior motives, said Judge Gendreau.

As a result, the Quebec Court of Appeal granted Wal-Mart’s motion for a request for judicial review of the Commissioner’s ruling.

According to lawyers representing both parties, the ruling not only quashes the Commissioner’s judgment but also puts an end to the case – something that does not sit well with Bernard Philion, a Montreal lawyer who pled the case for Wal-Mart’s former employees.

“The court, from my understanding, is saying that employers will now have to only demonstrate that when they close down an establishment that it is definitive. They are under no obligation to prove that it is a subterfuge,” said Philion of the Montreal law firm Philion, Leblanc, Beaudry.

Philion is currently examining the possibility of requesting leave to the Supreme Court of Canada. He argues that the case also deals with an issue that the Court of Appeal did not examine, namely the right to freedom of association – an argument he plead before the board.

“The board, given that it came to the conclusion that the company did not prove that the closing of its store was definitive, felt it did not have to render judgment over the Charter of Rights argument,” said Philion. “It was therefore something that was not debated before Quebec Superior Court. It is our contention that since the Court of Appeal granted the motion for judicial review, the case should have been sent back to the board so that it can rule over the Charter of Rights argument.”

According to Richard Gaudreault, a partner with Heenan, Blaikie that successfully pleaded the case, the ruling thwarts a “canny argument” by labour that attempted to shift the burden of proof onto employers who close down their establishments to demonstrate that it is not a ploy.

“We maintained that when an employer definitively closes down his establishment, the good and sufficient reason for laying off the employees is that they no longer need their services,” said Gaudreault. “To compel an employer to provide evidence indicating the absence of subterfuge is almost impossible. It becomes an extremely onerous burden.”

Reasons: Compagnie Wal-Mart du Canada c. Desbiens, [2008] J.Q. no 673.

All quotes translated from French by author.