The Quebec Labour Standards Commission has found that simply acquiring leasehold interests does not necessarily mean the acquiring company is a successor employer.
In January 2011, Target Canada made its entry into Canada by acquiring the leasehold interests of 220 Zellers locations, with approximately 150 leases ultimately being retained across the country. Following this transaction, Zellers ceased the majority of its Quebec operations in December 2012. Target opened its first stores in Quebec in September 2013 after extensive renovations to the Zellers locations.
A successor employer?
As reported in the media, during the summer of 2013 a number of former Zellers employees filed unjust dismissal complaints against Target with the Quebec Labour Standards Commission after receiving letters confirming they had not been hired by Target during its job fairs.
These claims were based on the premise that Target was a successor employer: under various legislation regarding employment and labour standards, the sale, in whole or in part, of a business from one employer to another does not put an end to the existing employment relationships. The employees took the position that Target, having acquired Zellers’ leasehold interests, was the successor employer of Zellers and its decision not to hire them was tantamount to an unjust dismissal.
Under Quebec's Act respecting labour standards, an employee with more than two years of uninterrupted service with the same employer can file a complaint if he believes that he has not been dismissed for just and sufficient cause. If successful before the Quebec Labour Relations Board (QLRB) — the tribunal which decides if the dismissal was made for just and sufficient cause — the employee can seek to be reinstated in his former position.
As in all cases, the commission must first determine whether the complaint is admissible before referring the matter to the QLRB. In order to assess the admissibility of the complaints, the commission verified whether the former employees:
• had worked for the same employer for at least two years
• were employees as defined by the Act respecting labour standards
• worked for an employer falling under provincial jurisdiction
• did not have an equivalent recourse under a collective agreement or other law
• filed their complaints in the 45 days following their alleged dismissal.
Following its analysis of the complaints and file, in the fall of 2013 the commission determined the complaints were inadmissible. Indeed, it concluded there was no evidence that Target continued or had the intention of continuing Zellers’ business. In other words, there was no indication Target was the successor employer of Zellers.
The complainants did not request a reconsideration of the commission’s decision and, as such, Target has since received confirmation that the commission has closed its file in the matter. Therefore, the QLRB will not hear this matter.
The commission’s position is in line with a recent decision rendered by the British Columbia Labour Relations Board, whereby Target was not deemed a successor employer for labour relations purposes of a Zellers establishment carrying on a business at the Brentwood Mall in Burnaby, B.C. In light of these outcomes, it would certainly seem that the simple acquisition of leasehold interests does not trigger the application of successorship rights.
Geneviève Lay is an associate with Norton Rose Fulbright in Montreal, practising employment and labour law. She can be reached at (514) 847-4494 or firstname.lastname@example.org.