Work Place Post

Wal-Mart Wins Anti-union Battle at Supreme Court of Canada

On November 27, 2009, the Supreme Court of Canada rendered its much awaited decision on an employer's right to cease operations for alleged anti-union reasons. In two related decisions, the country's highest court ruled in favour of Wal-Mart Canada Corp. that it was not required to re-open a store in Jonquière, Quebec, it had closed following the unionization of employees of that store.

Background

In August 2004, the United Food and Commercial Workers Union, Local 503 (the "Union"), was certified to represent employees of the Wal-Mart store in Jonquière, the first Wal-Mart store to be unionized in North America. After several fruitless bargaining sessions, the Union filed an application under the Quebec Labour Code (the "Code") to establish the provisions of a first collective agreement. On February 9, 2005, the Minister of Labour referred the dispute to arbitration and notified the parties of the referral. On the same day, Wal-Mart informed the employees of its decision to close the Jonquière store. The store eventually closed on April 29, 2005 leaving approximately 190 employees jobless.

In Plourde v. Wal-Mart Canada Corp. [2009] S.C.J. No. 54 (the "Plourde Decision"), Mr. Plourde filed a complaint under Sections 15 to 17 of the Code claiming that he lost his employment because of his union activities. He sought an order that he be reinstated in his job. Reinstatement of Mr. Plourde would require Wal-Mart to re-open the store. Under Section 17 of the Code, when an employer imposes a sanction (for example, a termination of employment) on an employee concurrent with the employee's participation in union activities, there is a presumption that the sanction was imposed because of the employee's union activities. The employer may rebut the presumption if it can prove that the sanction was imposed for good and sufficient reasons. The Commission des relations du travail (the "CRT") found that Wal-Mart had shown the store's closure to be genuine and permanent, which in itself is good and sufficient reason within the meaning of Section 17. The Quebec Superior Court and the Quebec Court of Appeal dismissed Mr. Pourde's appeals.

Similarly, in Desbiens v. Wal-Mart Canada Corp. [2009] S.C.J. No. 55 (the "Desbiens Decision"), three former employees of Wal-Mart filed a complaint claiming that they lost their employment because of the unionization of the establishment. In that case, however, the CRT ordered the reinstatement of the employees and held that Wal-Mart had not shown good and sufficient reason to close the store. The Quebec Court of Appeal quashed the CRT decision.

At the Supreme Court of Canada

In a 6-3 split decision, the Supreme Court of Canada confirmed the principles stated in its recent decision in (I.A.T.S.E.), Stage Local 56 v. Société de la Place des Arts de Montréal, [2004] 1 S.C.R. 43 ("Place des Arts") that: 1. there is no legislation to oblige an employer to remain in business; 2. if an employer decides to close up a shop, the dismissals which follow are the result of ceasing operations; and 3. ceasing operations is a valid economic reason not to hire personnel, even if the decision to cease operations is based on socially reprehensible considerations.

The Court recognized that Wal-Mart could permanently close one of its stores, regardless of the reason, and Wal-Mart could overturn the presumption established by Section 17 of the Code by showing that the decision to close is real and definitive and the closing is genuine and permanent.

However, the Supreme Court of Canada did limit the application of the principle in Place des Arts by stating that the principle "did not suggest that the closure immunized the employer from any consequences or that there was no remedy anywhere under the Code to provide for compensation to the terminated employees, or other relief or remedy, on proof that the termination was for anti-union reasons." The Court recognized that the employees maintained their right under other sections of the Code (e.g. Sections 12 to 14) to seek damages arising from the closure of the store and their claim that the closure of their employer's business was a result of anti-union motives.

It is important to note that Mr. Plourde and the Union raised a constitutional argument relying on Heath Services and Support – Facilities Subsector Bargaining Assn. v. British Columbia, [2007] 2 S.C.R. 391, in which case, the Supreme Court of Canada recognized that the freedom of association protected by Subsection 2(d) of the Charter includes the right to collective bargaining. The Court dismissed the constitutional argument by stating that this argument "extends the reasoning in Health Services well beyond its natural limits" and "it cannot be correct that the Constitution requires that every provision, (including s. 17), must be interpreted to favour the union and the employees."

In the dissenting judgement, Abella J., held that proof of permanent closure was not enough to discharge the employer's burden to rebut the presumption in Section 17. Instead, an employer must demonstrate that a decision to cease operations was not motivated by anti-union animus. If the decision was made for anti-union reasons, it would be unlawful. The dissenting judges were of the opinion that it was counter-intuitive to conclude that a business closing is a good enough reason for closing a business because "the effect is to suggest that under the Labour Code, an employer's conduct can be scrutinized for anti-union motives if a single employee is dismissed, but not if all employees are dismissed. Closing a business can in fact be the most severe form of reprisal for union activity."

Conclusion

As a result of the Plourde Decision and the Desbiens Decision, the presumption offered by Section 17 of the Code will be practically unavailable to employees if the employer has genuinely and permanently ceased operations. The decisions confirmed that unions and employees may file claims for damages and other remedies under on Sections 12 to 14 of the Code when the employer shuts down its operations concurrently with the employees' union activities. However, absence of the reversed burden of proof offered by Section 17, the burden of proof that the business is closed for anti-union reasons will rest upon the unions and employees. It will be interesting to see how such burden of proof can be discharged in future cases and what types of remedy the Labour Relations Commissions will be ordering if and when such burden of proof has been successfully discharged.

"I Can’t Talk, I'm Driving": Employers and the Cell Phone/Driving Ban

There is growing evidence that driving while using cellular phones, BlackBerrys or other PDAs increases the likelihood of a car accident. A recent study from the University of Toronto found that "the risk of collision when using a cellular phone was four times higher than the risk when the cellular phone was not being used".

To curb the dangerous trend, provincial governments across Canada have introduced laws to ban PDA/cellular phone use while driving. In October 2009, British Columbia joined the group, and after January 1, 2010, drivers will be prohibited from:

• holding their PDA/cellular phone in a position to be used
• texting or sending emails
• talking
• using the GPS function
• searching the internet.

Drivers face a fine of $167 and three penalty points on their license. Hands-free use, however, is not prohibited, so long as the device is in a fixed position.

With the coming ban, employers may wish to alert employees of the risks and adopt a policy on the issue.

How does PDA use while driving affect employers?

Many employers have employees who drive, either as a direct part of their duties or incidentally to their job. Most of those employees have a cellular phone and at least one PDA.

In May 2009, WorkSafeBC adopted a policy document on PDA/cellular phone use while driving. The report noted that collisions involving employees can result in substantial costs to employers through increases in WCB premiums, assessments and impacts on the employer’s "experience ratings".

Employers also face increased risks of being liable to others on the road for collisions caused by employees using PDAs/cellular phones while driving, even if the employees are not expressly driving for work purposes. In several U.S. cases, employers have been found liable for collisions caused by employees who were driving while using a PDA/cellular phone, where the PDA/cellular phone was provided or required by the employer.

Some examples of where an employer could potentially become liable for accidents caused by employees:

• a delivery driver in a company vehicle using her cellular phone while driving
• a sales representative in his own car taking a call from the office on his way to a sales meeting
• an executive in her own car sending an email to her assistant while driving home at night.

The incoming ban may increase the risk of an employer being found liable.

In addition, employers may also face liability to the employee for creating an unsafe work environment. This is particularly so where the employer requires an employee to be available even when driving.

Why have a policy?

While there is no guaranteed defence to liability, adopting an appropriate policy on PDA/cellular phone use has several benefits.

1. A policy may reduce the risk of the employee using his PDA/cellular phone while driving, and thereby reduce the risk of a collision in the first place. Such an outcome would be more likely to occur if the policy included a warning of disciplinary action or dismissal for breach of the policy. A policy, therefore, allows an employer to be proactive in controlling collision risks.
2. The employer may rely on the policy if challenged by WorkSafe BC as having an unsafe workplace.
3. The employer may rely on the policy to discipline or dismiss those who refuse to comply the ban. "But I didn't do anything really wrong" will not be a sympathetic defence in the face of a clear, explicit policy.
4. The policy may contribute to overall employee wellness: by overcoming the attitude that the employee must be connected at all times to the work place at all times (see our article on the "The BlackBerry Dilemma: Paying For The 24/7 Work Culture" from September 2008).
5. The employer may promote the policy as an example of good corporate citizenry, particularly if the employer is well-known for having drivers on the road. Much as financial institutions publicize their employee Code of Ethics on their websites and companies go to lengths to promote their "green" credentials, an employer may use a policy on using PDAs/cellular phones while driving to show respect for others on the road. UPS is one company with such a policy.

What should the policy say?

A policy need not be complicated or lengthy. At a minimum, however, the policy should include the following:

• a clear statement of the new law and what it prohibits
• a clear statement of the safety risks
• a direction to employees on what not to do, and what to do; for example: do not use while driving; if necessary, pull over if the employee must make a call
• a direction to managers to ensure compliance, including, if necessary a direction not to call an employee if the manager knows the employee is driving
• a clear statement of the consequences for breach of the policy: consider whether the breach will result in discipline up to and including dismissal.

As with all policies implemented by employers, a policy on PDA/cellular phone use while driving will only be effective if it is applied and enforced rigorously. "But everyone does it" is a common retort. While that reasoning would not be accepted in a criminal court, it would likely nullify any protection to the employer in a civil court. If the employer does not enforce the policy, a civil court will not allow the employer to rely on it. Consequently, ongoing monitoring and enforcement is crucial.

Change isn't Always Bad: Court Upholds Employment Contract Despite Change in Position of Employee

Sometimes a change in an employee’s duties or position results in such a fundamental shift in his or her relationship with the employer, such that a pre-existing employment agreement may no longer be enforceable. But that is not always the case and a recent decision of the BC Supreme Court is a good example of where incremental changes in an employment relationship do not oust a pre-existing agreement.

Mr. Wernicke had worked for Altrom Canada Corp. for 12 years. At the time of his dismissal, he was the company’s CFO and VP of Finances, although when he had started he had held the position of controller. Altrom conceded that Mr. Wernicke had been terminated without cause but relied on a written employment agreement signed by Mr. Wernicke when he was first hired which limited the severance to which Mr. Wernicke was entitled to 8 weeks. However, Mr. Wernicke took the position that his job had fundamentally changed since he signed the written employment agreement, such that the agreement no longer governed the amount of notice or severance to which he was entitled.

There was little doubt that Mr. Wernicke was a sophisticated employee. The Court heard evidence that Mr. Wernicke had negotiated the terms of the employment agreement with Altrom before commencing work, had not been under pressure to accept the terms of the agreement and had received legal advice with respect to the agreement before signing. During his employment with Altrom, Mr. Wernicke had even attended seminars about employment contracts, routinely drafted employment contracts and made offers of employment on behalf of Altrom.

The Court also heard evidence that Mr. Wernicke had understood that under the employment agreement's "entire agreement" clause, any changes to the employment agreement had to be in writing and signed by both he and Altrom. During the course of Mr. Wernicke's employment with Altrom, the employment agreement was in fact revised on more than one occasion with respect to Mr. Wernicke’s remuneration. These revisions were made in writing and were signed by both Mr. Wernicke and Altrom.

In finding that Mr. Wernicke was bound by the termination provisions in the employment agreement, the Court cited four reasons. First, Mr. Wernicke understood the termination provision in the agreement. He had had time to review the agreement and had sought legal advice before signing it. Second, the Court found that the change in Mr. Wernicke’s role, from controller to CFO, was not a fundamental change, either in the nature of what he was hired to do or in what in fact he had been doing. The Court held that there was no evidence of any intention by either party that the employment agreement be renegotiated when Mr. Wernicke became CFO.

Third, and perhaps most importantly, the Court found that the changes in Mr. Wernicke’s employment were incremental and predictable, and consistent with his expectations when he accepted employment. The changes were not "so dramatic or fundamental so as to erode or extinguish" the basic foundation of the employment agreement. Lastly, the Court noted that Mr. Wernicke had implicitly relied on terms of the employment agreement in respect of his claim for reimbursement of his yearly dues and other expenses. That reliance was found to be inconsistent with his argument that the foundation of the employment agreement had been extinguished.

The decision of the Court is under appeal.

Again, this case is a good example of circumstances where there was not such a fundamental change in the relationship that the written agreement could no longer be enforced. However, this is not always the case and it is important to have your employment agreements reviewed when a promotion or change of role is contemplated. That way, you can ensure there is always an enforceable employment agreement in place.