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BACKGROUND

In two separate grievances,[1] arbitrators had found that they had jurisdiction, following the closure of a business, to determine that terminated employees were entitled to reasonable notice under Articles 2091 and 2092 of the Civil Code of Québec ("C.C.Q.")[2] even though the collective agreements that applied to them made no reference to those provisions. These two arbitral awards were challenged by way of applications for judicial review, which applications, following appeals from the rulings of the Quebec Superior Court, were ultimately dismissed by the Court of Appeal.[3]

The Court of Appeal considered Articles 2091 and 2092 C.C.Q. to be rules "of public order" which were implicitly incorporated into every collective agreement. Accordingly, the Court held that an arbitrator could order an employer to pay terminated employees compensation in lieu of notice in a much more substantial amount than what is provided for in the Act respecting labour standards ("LSA"). In both grievances, the unions had claimed that every employee was entitled to notice (or pay in lieu thereof) of four weeks per year of service. Consequently, much was riding on the definitive resolution of these cases by the Supreme Court of Canada, as all Quebec employers stood to be affected.

In a ruling on both cases handed down on January 27, 2006, almost a year after taking the matter under advisement, the Supreme Court has now allowed the employers' appeals.[4]

THE JUDGMENT OF THE SUPREME COURT OF CANADA

This is a majority decision, with three out of seven justices dissenting.[5] Justice Deschamps, who wrote the reasons for judgment, began by noting that there were two apparently contradictory trends in the case law, one of them holding that the general law had no place in the collective labour relations context and the other that every standard "of public order" was implicitly included in collective agreements. The Court went on to reconcile these two lines of authority, affirming that public order standards could be incorporated only where they were compatible with the collective labour relations scheme. Thus, a grievance arbitrator would not have jurisdiction to apply a public order standard in a case where the standard concerned was incompatible with the collective labour relations scheme.

On the particular question before it, the Court found that applying Articles 2091 and 2092 C.C.Q. was incompatible with the collective labour relations scheme and thus that arbitrators had no authority to incorporate the obligations set out in Articles 2091 and 2092 C.C.Q. into a collective agreement. An employer that terminated employees covered by a collective agreement was not bound by these provisions and therefore had no obligation to give the notice of termination contemplated in them or pay any compensation in lieu of such notice. The opposite was true of the notices provided for in the LSA, since those notices were compatible with collective agreement provisions.

The Court's finding that Articles 2091 and 2092 C.C.Q. were incompatible with the collective bargaining scheme was based on the following three reasons:

1. The Article 2091 C.C.Q. notice of termination is agreed on as an individual matter when employment is terminated and cannot be bargained in advance or negotiated by a third party and then imposed on the employee. A notice that has to be individualized to each employee's particular characteristics cannot be the same for all employees.
2. The employee's right to claim the C.C.Q. notice of termination is the counterpart of the employer's right to terminate a contract of employment unilaterally for any reason. No such right exists for the employee in the collective labour relations context where the employer's right to dismiss is limited and reinstatement is the most common remedy.
3. The legislative history of Article 2091 C.C.Q. shows that the legislature intended the rules governing collective labour relations to remain distinct from those applicable to individual contracts of employment. When the legislature wanted the minimum labour standards contained in the LSA to apply to employees covered by a collective agreement, it made this explicit in section 93 of the LSA. There is no similar provision allowing Articles 2091 and 2092 C.C.Q. to be applied to employees governed by a collective agreement; on the contrary, a provision to that effect in an earlier draft of the C.C.Q. was omitted from the final version.

On that basis, the Supreme Court allowed the appeals from both judgments of the Court of Appeal and thereby overturned both arbitral awards which had found that the employees were entitled to notice of termination pursuant to Article 2091 C.C.Q. For their part, the three dissenting justices were of the opinion that there was no incompatibility between Articles 2091 and 2092 C.C.Q. and the collective bargaining scheme and would have dismissed the employers' appeals.

CONCLUSION

With this ruling by the Supreme Court, the uncertainty that had prevailed over the obligations of Quebec employers upon terminating employees covered by collective agreements has been dispelled. Indeed, a decision to the opposite effect would have made Quebec employers subject to requirements considerably more onerous than those applicable in the rest of North America. It is now clear that Quebec employers that terminate employees covered by a collective agreement will have to abide by the following rules only:

1. The individual notice in accordance with sections 82 and following of the LSA (the length of this notice varies between one (1) and eight (8) weeks, depending on the length of uninterrupted service the employee has);
2. The notice of collective dismissal in accordance with sections  84.0.1 and following of the LSA, in cases where ten (10) or more employees of the same establishment are terminated during a period of two consecutive months (the length of this notice varies between eight (8) and sixteen (16) weeks, depending on the number of employees who are terminated);
3. Such other more advantageous provisions as may be contained in the applicable collective agreement.

In the future, therefore, it can be anticipated that unions will seek to have provisions affording more generous compensation to employees in the event of termination inserted in collective agreements.

[1]. Syndicat national des employés de garage du Québec (CSD) v. Fillion et Frères (1976) inc., arbitration award dated August 25, 2000 (Denis Tremblay, arbitrator); Syndicat du bois ouvré de la région de Québec inc. and Isidore Garon ltée, D.T.E. 2001T-74 (Jean-Pierre Tremblay, arbitrator).

[2]. These articles of the C.C.Q. read as follows:
2091.  Either party to a contract with an indeterminate term may terminate it by giving notice of termination to the other party.
The notice of termination shall be given in reasonable time, taking into account, in particular, the nature of the employment, the special circumstances in which it is carried on and the duration of the period of work.
2092.  The employee may not renounce his right to obtain compensation for any injury he suffers where insufficient notice of termination is given or where the manner of resiliation is abusive.

[3]. Isidore Garon ltée v. Tremblay (C.A.), [2004] R.J.Q. 58; the appeal was allowed for the same reasons in Fillion et Frères (1976) inc.

[4]. Isidore Garon ltée v. Tremblay; Fillion et Frères (1976) inc. v. Syndicat national des employés de garage du Québec inc., 2006 SCC 2.

[5]. The reasons for judgment were written by Deschamps J. (Bastarache, Binnie and Charron JJ. concurring); the dissenting reasons were written by LeBel J. (McLachlin C.J. and Fish J. concurring).

The purpose of this document is to provide information as to developments in the law. It does not contain a full analysis of the law nor does it constitute an opinion of Ogilvy Renault LLP or any member of the firm on the points of law discussed.

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