Supreme Court Judgments

                                                 SUPREME COURT OF CANADA

Between:

Isidore Garon ltée

Appellant

v.

Syndicat du bois ouvré de la région de Québec inc. (C.S.D.)

Respondent

‑ and ‑

Jean-Pierre Tremblay, in his capacity as arbitrator of grievances

Intervener

and between:

Fillion et Frères (1976) inc.

Appellant

v.

Syndicat national des employés de garage du Québec inc. (C.S.D.)

Respondent

Official English Translation

Coram: McLachlin C.J. and Bastarache, Binnie, LeBel, Deschamps, Fish and Charron JJ.

______________________________

Isidore Garon ltée v. Tremblay; Fillion et Frères (1976) inc. v. Syndicat national des employés de garage du Québec inc., [2006] 1 S.C.R. 27, 2006 SCC 2

Isidore Garon ltée                                                                                            Appellant

v.

Syndicat du bois ouvré de la région de Québec inc. (C.S.D.)                      Respondent

and

Jean‑Pierre Tremblay, in his capacity as grievances arbitrator                   Intervener

- and -

Fillion et Frères (1976) inc.                                                                              Appellant

v.

Syndicat national des employés de garage du Québec inc. (C.S.D.)          Respondent

Indexed as:  Isidore Garon ltée v. Tremblay; Fillion et Frères (1976) inc. v. Syndicat national des employés de garage du Québec inc.

Neutral citation:  2006 SCC 2.

File Nos.:  30171, 30172.

2005:  February 16; 2006:  January 27.

Present:  McLachlin C.J. and Bastarache, Binnie, LeBel, Deschamps, Fish and Charron JJ.

on appeal from the court of appeal for quebec

Labour relations — Grievances — Jurisdiction of arbitrator — Notice of termination — Incorporation of general law rules into collective agreement — Unionized employees laid off after business closed — Notice of termination of employment complying with minimum statutory employment standards — Grievances claiming additional termination pay based on general law — Whether arbitrators have jurisdiction to determine whether notice given meets requirements of Civil Code of Québec — Whether notice of termination provided for in art. 2091 of Civil Code of Québec applies to collective labour relations scheme — Civil Code of Québec, S.Q. 1991, c. 64, arts. 2091, 2092.

G and F notified their employees that they would cease operating their businesses and gave each of them a notice that complied with the time requirement established by the Act respecting labour standards (“A.L.S.”).  There was no clause in either collective agreement dealing with the closing of the business, although G’s agreement did provide that the employer had to give notice as provided for in the A.L.S. in the event of a layoff for more than six months.  By way of grievances, the unions representing both groups of employees contended that the notice of termination was not given in reasonable time within the meaning of art. 2091 of the Civil Code of Québec (“C.C.Q.”) and claimed compensation equivalent to four weeks’ salary per year of service for each employee.  The arbitrators dismissed the employers’ preliminary objections, finding that they had jurisdiction to decide the grievances and to determine whether the notice given met the requirements of arts. 2091 and 2092 C.C.Q.  In the Superior Court, F’s application for judicial review was allowed, while G’s was dismissed.  The Court of Appeal set aside the first Superior Court decision and affirmed the second.  It concluded that the arbitrators had jurisdiction to hear the grievances because the rule set out in arts. 2091 and 2092 had been implicitly incorporated into the collective agreements.

Held (McLachlin C.J. and LeBel and Fish JJ. dissenting):  The appeals should be allowed.

Per Bastarache, Binnie, Deschamps and Charron JJ.:  If a rule is incompatible with the collective labour relations scheme, it cannot be incorporated into the collective agreement and must be disregarded.  If the rule is found to be compatible and if it is a supplementary or mandatory norm, the arbitrator will have jurisdiction to apply it.  The fact that individual contracts are subordinate to the collective scheme allows collective interests to be reconciled with individual interests in situations where it is possible for the latter to subsist without hindering the proper conduct of collective relations.  The mechanism of incorporating compatible mandatory norms and the use of implicit conditions ensure that the collective scheme is a coherent legal scheme.  Thus, not everything set out in the C.C.Q. is implicitly incorporated into collective agreements — only that which is compatible. [24‑30]

In this case, the arbitrators do not have jurisdiction to hear the grievances filed by the unions.  There are three reasons why the rule in art. 2091 C.C.Q. is incompatible with the collective labour relations scheme.  First, the conditions of employment of unionized employees are bargained collectively in advance by the union and the employer, while the notice provided for in the C.C.Q. is agreed on as an individual matter when employment is terminated.  Notice of termination is undeniably a condition of employment, and apart from the minimum standards laid down by the A.L.S., its length is a matter to be determined in the bargaining process between the union and the employer.  The parties’ failure to specify in the collective agreement what will happen if the business closes does not make the general law relating to individual contracts of employment applicable.  The consensual aspect and individual nature of the art. 2091 notice of termination and the time when its sufficiency is determined, namely after the employment is terminated, are three essential features of the C.C.Q.’s rule that show that it is incompatible with the collective scheme.  Second, the right of employees to claim reasonable notice of termination under the general law is the counterpart of the employer’s right to terminate the employment relationship by providing pay in lieu of notice, without having to show good and sufficient cause.  Since the employer’s right to dismiss is limited in the collective labour relations context and reinstatement is the most common remedy, it follows that the employee’s right under art. 2091 to reasonable notice is inapplicable.  Lastly, the legislative history of art. 2091 also leads to the conclusion that the legislature did not intend to incorporate the notice provided for in the article into the collective scheme.  The proposal made before the C.C.Q. was enacted that the new Code serve as the general framework for all labour relations, whether individual or collective, was rejected.  The courts should not impose their vision where the legislature has chosen not to impose the rule set out in art. 2091 C.C.Q. in the context of the collective scheme.  [9] [32] [35‑47] [51‑57]

Per McLachlin C.J. and LeBel and Fish JJ. (dissenting):  Although the certification of a union in a company transforms the dynamics of labour relations, as employees lose their freedom of contract, this does not mean that the rules of the C.C.Q. regarding individual contracts of employment cease to apply and are no longer part of the implicit content of the collective agreement.  An individual contract continues to exist after a union is certified and a collective agreement is in place.  Because labour legislation, as prolix and complex as it may be, does not cover all aspects of labour relations, even in a collective context, the rules of the C.C.Q. supplement that legislation and make up for any silences or gaps in the collective agreement.  The rights arising out of an individual contract of employment and the rights protected by the collective scheme can be harmonized in a manner consistent with the hierarchy of legal rules.  [115] [133] [140] [175]

In principle, the collective agreement contains all the conditions of employment expressly included by the parties during the collective bargaining process, but the parties’ ability to freely negotiate the substantive standards that will govern them is limited by the obligation to respect, or incorporate into the agreement, the rights and values protected by the charters and the legal rules imposed by the legislature, including certain general principles of law, particularly those that are of public order.  There are several Quebec statutes containing labour law provisions that are of public order, including the A.L.S., which sets out minimum standards that all collective agreements must meet, and the C.C.Q.  Under arts. 2091 and 2092 C.C.Q., an employee is entitled to reasonable notice of termination and may not renounce that right.  Since arts. 2091 and 2092 C.C.Q. are of directive public order and since the collective agreement cannot contain provisions that are contrary to public order (s. 62 of the Labour Code), an arbitrator hearing a grievance on such a matter must assess the sufficiency of the compensation paid in lieu of notice of termination in light of the C.C.Q.  [141] [177] [190]

Here, the arbitrators appointed in the two cases have jurisdiction to hear the grievances.  There is nothing to prevent employees governed by a collective agreement from being entitled to reasonable notice under the C.C.Q.  Far from being incompatible with the collective labour law scheme, arts. 2091 and 2092 C.C.Q. supplement it and provide a remedy to employees who lose their jobs without being adequately compensated by their employer.  Two situations can arise.  Where, as in G’s case, the collective agreement contains a provision referring to the notice of termination to which employees will be entitled if the business closes or in some other situation, the arbitrator must determine whether the measure provided for in the agreement (here, the reference to the notice of termination provided for in the A.L.S.) complies with art. 2091.  If the arbitrator finds that the union’s grievance is justified, the arbitrator can then require the notice of termination that he or she considers reasonable.  Where, on the other hand, as in F’s case, the agreement is silent about the compensation in lieu of notice of termination to be paid to employees if the business closes, the arbitrator must determine whether, having regard to art. 2091, the minimum notice of termination provided for in s. 82 A.L.S. is sufficient or whether the circumstances of the case call for a longer period. [189] [192‑193]

Cases Cited

By Deschamps J.

Referred to:  Weber v. Ontario Hydro, [1995] 2 S.C.R. 929; New Brunswick v. O’Leary, [1995] 2 S.C.R. 967; Parry Sound (District) Social Services Administration Board v. O.P.S.E.U., Local 324, [2003] 2 S.C.R. 157, 2003 SCC 42; McGavin Toastmaster Ltd. v. Ainscough, [1976] 1 S.C.R. 718; Noël v. Société d’énergie de la Baie James, [2001] 2 S.C.R. 207, 2001 SCC 39, aff’g [1998] R.J.Q. 2270; Syndicat catholique des employés de magasins de Québec Inc. v. Compagnie Paquet Ltée, [1959] S.C.R. 206; Canadian Pacific Railway Co. v. Zambri, [1962] S.C.R. 609; St. Anne Nackawic Pulp & Paper Co. v. Canadian Paper Workers Union, Local 219, [1986] 1 S.C.R. 704; Hémond v. Coopérative fédérée du Québec, [1989] 2 S.C.R. 962; McLeod v. Egan, [1975] 1 S.C.R. 517; Douglas/Kwantlen Faculty Assn. v. Douglas College, [1990] 3 S.C.R. 570; Cuddy Chicks Ltd. v. Ontario (Labour Relations Board), [1991] 2 S.C.R. 5; Voice Construction Ltd. v. Construction & General Workers’ Union, Local 92, [2004] 1 S.C.R. 609, 2004 SCC 23; Standard Broadcasting Corp. v. Stewart, [1994] R.J.Q. 1751; Garcia Transport Ltée v. Royal Trust Co., [1992] 2 S.C.R. 499; Alberta Union of Provincial Employees v. Lethbridge Community College, [2004] 1 S.C.R. 727, 2004 SCC 28; Graphic Communications Union Local 255‑C v. Quebecor Jasper Printing Ltd. (2002), 333 A.R. 204, 2002 ABQB 959; Asbestos Corp. v. Cook, [1933] S.C.R. 86.

By LeBel J. (dissenting)

Parry Sound (District) Social Services Administration Board v. O.P.S.E.U., Local 324, [2003] 2 S.C.R. 157, 2003 SCC 42; Canadian Broadcasting Corp. v. Canada (Labour Relations Board), [1995] 1 S.C.R. 157; Canadian Merchant Service Guild v. Gagnon, [1984] 1 S.C.R. 509; Noël v. Société d’énergie de la Baie James, [2001] 2 S.C.R. 207, 2001 SCC 39; Weber v. Ontario Hydro, [1995] 2 S.C.R. 929; St. Anne Nackawic Pulp & Paper Co. v. Canadian Paper Workers Union, Local 219, [1986] 1 S.C.R. 704; Regina Police Assn. Inc. v. Regina (City) Board of Police Commissioners, [2000] 1 S.C.R. 360, 2000 SCC 14; New Brunswick v. O’Leary, [1995] 2 S.C.R. 967; Quebec (Commission des droits de la personne et des droits de la jeunesse) v. Quebec (Attorney General), [2004] 2 S.C.R. 185, 2004 SCC 39; Syndicat catholique des employés de magasins de Québec Inc. v. Compagnie Paquet Ltée, [1959] S.C.R. 206; McGavin Toastmaster Ltd. v. Ainscough, [1976] 1 S.C.R. 718; Hémond v. Coopérative fédérée du Québec, [1989] 2 S.C.R. 962; CAIMAW v. Paccar of Canada Ltd., [1989] 2 S.C.R. 983; Association catholique des institutrices du district n^o 16 Inc. v. Commissaires d’écoles pour la municipalité de la paroisse de St‑Athanase, [1947] B.R. 703; Quebec (Commission des normes du travail) v. Campeau Corp., [1989] R.J.Q. 2108; McLeod v. Egan, [1975] 1 S.C.R. 517; Garcia Transport Ltée v. Royal Trust Co., [1992] 2 S.C.R. 499; Doré v. Verdun (City), [1997] 2 S.C.R. 862; Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986; Farber v. Royal Trust Co., [1997] 1 S.C.R. 846; Centre hospitalier Régina Ltée v. Labour Court, [1990] 1 S.C.R. 1330; Tremblay v. Syndicat des employées et employés professionnels‑les et de bureau, section locale 57, [2002] 2 S.C.R. 627, 2002 SCC 44; Alberta Union of Provincial Employees v. Lethbridge Community College, [2004] 1 S.C.R. 727, 2004 SCC 28; Dupré Quarries Ltd. v. Dupré, [1934] S.C.R. 528; Rock Forest (Ville) v. Gosselin, [1991] R.J.Q. 1000; Schacter v. Centre d’accueil Horizons de la jeunesse, [1997] R.J.Q. 1828; Allen v. Alberta, [2003] 1 S.C.R. 128, 2003 SCC 13.

Statutes and Regulations Cited

Act respecting collective agreement decrees, R.S.Q., c. D‑2, s. 11.

Act respecting industrial accidents and occupational diseases, R.S.Q., c. A‑3.001, ss. 4, 256, 257, 259.

Act respecting labour standards, R.S.Q., c. N‑1.1, ss. 1(4), (7), (10), 40, 52, 55, 60, 78, 82, 83, 93, 94, 128.

Act respecting occupational health and safety, R.S.Q., c. S‑2.1, ss. 4, 227.

Act to add the reformed law of obligations to the Civil Code of Québec, Draft Bill, 2nd Sess., 33rd Leg., 1988, art. 2157.

Act to amend the Act respecting labour standards and other legislative provisions, S.Q. 2002, c. 80, s. 49.

Act to secure handicapped persons in the exercise of their rights with a view to achieving social, school and workplace integration, R.S.Q., c. E‑20.1.

Canadian Charter of Rights and Freedoms .

Charter of human rights and freedoms, R.S.Q., c. C‑12.

Charter of the French language, R.S.Q., c. C‑11, ss. 41 to 50.

Civil Code of Lower Canada, art. 1668.

Civil Code of Québec, S.Q. 1991, c. 64, preliminary provision, arts. 9, 11 et seq., 1373, 1377 et seq., 1385, 1386, 1388, 1417, 1418, 1426, 1434, 1439, 2091, 2092, 2085 to 2097.

Interpretation Act, R.S.Q., c. I‑16, ss. 41.3, 41.4.

Labour Code, R.S.Q., c. C‑27, ss. 1(a), (d), (f), (k), (l), 21, 22, 32, 41, 43, 45, 47, 47.2, 53, 58, 62, 63 to 67, 100.12, (a), (f), 100 to 102, 107, 109, 139, 139.1, 140.

Minimum Wage Act, R.S.Q., c. S‑1.

National Holiday Act, R.S.Q., c. F‑1.1.

Public Service Act, R.S.Q., c. F‑3.1.1.

Authors Cited

Baudouin, Jean‑Louis, et Pierre‑Gabriel Jobin.  Les obligations, 6^e éd. Cowansville, Qué.:  Yvon Blais, 2005.

Béliveau, Nathalie‑Anne.  Les normes du travail.  Cowansville, Qué.:  Yvon Blais, 2003.

Bich, Marie‑France.  “Contrat de travail et Code civil du Québec — Rétrospective, perspectives et expectatives”, dans Service de la formation permanente du Barreau du Québec, Développements récents en droit du travail.  Cowansville, Qué.:  Yvon Blais, 1996, 189.

Bich, Marie‑France.  “Du contrat individuel de travail en droit québécois: essai en forme de point d’interrogation” (1986), 17 R.G.D. 85.

Blouin, Rodrigue, et Fernand Morin.  Droit de l’arbitrage de grief, 5^e éd.  Cowansville, Qué.:  Yvon Blais, 2000.

Doucet, René.  “La résiliation du contrat de travail en droit québécois” (1974), 9 R.J.T. 249.

Gagnon, Robert P.  Le droit du travail du Québec, 5^e éd.  Cowansville, Qué.:  Yvon Blais, 2003.

Gagnon, Robert P., Louis LeBel et Pierre Verge.  Droit du travail, 2^e éd.  Ste‑Foy, Qué.:  Presses de l’Université Laval, 1991.

Laporte, Pierre.  La réintégration du salarié: Nouvelles perspectives.  Montréal:  Wilson & Lafleur, 1995.

McLeod, Neil R.  “Severance Pay at Arbitration:  A Union Viewpoint”, in William Kaplan et al., eds., Labour Arbitration Yearbook 1998.  Toronto:  Butterworths – Lancaster House, 1998, 269.

Morin, Fernand.  “Effets combinatoires de deux codes:  Code du travail et Code civil du Québec” (1994), 49 Relat. ind. 227.

Morin, Fernand.  “Le contrat de travail: fiction et réalité!”, dans Service de la formation permanente du Barreau du Québec, Développements récents en droit du travail.  Cowansville, Qué.:  Yvon Blais, 2005, 179.

Morin, Fernand.  “Pertinence, cohérence et conséquences de l’arrêt Parry Sound”, dans Service de la formation permanente du Barreau du Québec, Développements récents en droit du travail.  Cowansville, Qué.:  Yvon Blais, 2004, 29.

Morin, Fernand, et Jean‑Yves Brière.  Le droit de l’emploi au Québec, 2^e éd.  Montréal:  Wilson & Lafleur, 2003.

Nadeau, Denis.  “L’arrêt Morin et le monopole de représentation des syndicats: assises d’une fragmentation” (2004), 64 R. du B. 161.

Otis, Louise.  “L’ordre public dans les relations de travail” (1999), 40 C. de D. 381.

Québec.  Ministère de la Justice.  Commentaires du ministre de la Justice — Le Code civil du Québec: Un mouvement de société, t. I et II.  Québec:  Publications du Québec, 1993.

Verge, Pierre.  “Faut‑il ‘nommer’ le contrat de travail?” (1988), 29 C. de D. 977.

Verge, Pierre.  “Le contrat de travail selon le Code civil du Québec:  pertinence ou impertinence?” (1993), 24 R.G.D. 237.

APPEAL from a judgment of the Quebec Court of Appeal (Rothman and Rousseau‑Houle JJ.A. and Biron J. (ad hoc)), [2004] R.J.Q. 58, [2004] R.J.D.T. 15, [2003] Q.J. No. 18478 (QL), affirming a decision of Martin J., D.T.E. 2001T‑220, dismissing an application for judicial review of an interim arbitration decision, [2001] R.J.D.T. 304.  Appeal allowed, McLachlin C.J. and LeBel and Fish JJ. dissenting.

APPEAL from a judgment of the Quebec Court of Appeal (Rothman and Rousseau‑Houle JJ.A. and Biron J. (ad hoc)), [2003] Q.J. No. 18474 (QL), SOQUIJ AZ‑50210482, reversing a decision of Alain J., [2001] R.J.Q. 700, [2001] R.J.D.T. 615, [2001] Q.J. No. 1169 (QL), allowing an application for judicial review of an interim arbitration decision.  Appeal allowed, McLachlin C.J. and LeBel and Fish JJ. dissenting.

Robert Dupont, Suzanne Thibaudeau and Laurent Lesage, for the appellant Isidore Garon ltée.

Guy Dion, Jasmin Marcotte, Sébastien Gobeil and Benoît Mailloux, for the appellant Fillion et Frères (1976) inc.

Georges Marceau and Johanne Drolet, for the respondents.

No one appeared for the intervener.

English version of the judgment of Bastarache, Binnie, Deschamps and Charron JJ. delivered by

1                                   Deschamps J. — A number of unionized employees who had been dismissed filed a grievance in which they claimed termination pay under art. 2091 of the Civil Code of Québec, S.Q. 1991, c. 64 (“C.C.Q.”).  The employer had given notice of termination of employment in accordance with s. 82 of the Act respecting labour standards, R.S.Q., c. N‑1.1 (“A.L.S.”).  The issue is whether art. 2091 C.C.Q. applies to the collective labour relations scheme.  For the reasons set out below, my opinion is that it does not.

1.     Facts

2                                   The appellants in both cases before us closed their businesses.  On November 24, 1997, Fillion et Frères (1976) inc. (“Fillion”) notified all its employees that it would cease operating its car dealership by January 16, 1998 at the latest; some of the employees’ jobs were to be terminated on December 19, 1997 and the rest on January 16, 1998.  The collective agreement then in effect at Fillion did not provide for what would happen if the business closed.  On April 15, 1999, Isidore Garon ltée (“Garon”) informed all its employees that it would close its hardware business on June 19, 1999 due to financial problems.  There was no clause in Garon’s collective agreement dealing with the closing of the business; however, the agreement did provide that, in the event of a layoff for more than six months, the employer would have to give notice as provided for in the A.L.S.

3                                   The notice given by both employers complied with the time requirement established by s. 82 A.L.S.  However, the unions representing both groups of employees claimed that the notice of termination was not given in reasonable time within the meaning of art. 2091 C.C.Q.  They claimed compensation equivalent to four weeks’ salary per year of service for each employee.

2.      Decisions Below

4                                   Before the arbitrators, the employers made some preliminary objections.  They argued that the arbitrators had no jurisdiction to decide the grievances absent a connection with the collective agreement.  In their interim decisions, the arbitrators found that they had jurisdiction to determine whether the notice given met the requirements of arts. 2091 and 2092 C.C.Q. Denis Tremblay, the arbitrator who heard the grievance against Fillion, relied on Weber v. Ontario Hydro, [1995] 2 S.C.R. 929, and New Brunswick v. O’Leary, [1995] 2 S.C.R. 967.  He found that the C.C.Q. can complement the collective agreement where the agreement is silent on a matter that concerns the employees and their employer.  Jean‑Pierre Tremblay, the arbitrator who heard the grievance filed by Garon’s employees, found that he could determine whether the reference in clause 8.02(c) of the collective agreement to the notice provided for in s. 82 A.L.S., and the nine weeks’ notice of termination given by the employer, met the reasonableness test in arts. 2091 and 2092 C.C.Q. ([2001] R.J.D.T. 304).

5                                   The appellants applied for judicial review of the interim arbitration decisions.  Fillion’s application was allowed, while Garon’s was dismissed.  The different outcomes can be attributed to differences between the collective agreements in question.  Alain J. quashed the arbitration decision rendered in the Fillion case ([2001] R.J.Q. 700).  In his opinion, since the collective agreement was silent regarding the closing of the business and notice of termination, the grievance was not arbitrable, as the effect of Weber and O’Leary was not to give grievances arbitrators jurisdiction over disputes not arising out of the interpretation and application of the collective agreement.  He said that an arbitrator will have the power to interpret a statute pursuant to s. 100.12 of the Labour Code, R.S.Q., c. C‑27 (“L.C.”), only where there is an arbitrable grievance.  Accordingly, the arbitrator could not interpret arts. 2091 and 2092 C.C.Q. to settle the dispute between the parties because he did not have jurisdiction to hear the grievance.  In the Garon case, Martin J. declined to quash the arbitrator’s interim decision (D.T.E. 2001T-220).  He relied on the clause in the collective agreement referring to the provisions of the A.L.S. in the event of a layoff for more than six months, and he found that the grievance arose out of the interpretation and application of the collective agreement and that s. 100.12 L.C. allows an arbitrator to rely on a law of general application, such as the C.C.Q., to decide a grievance.  Both judgments were appealed.

6                                   The Court of Appeal found that the rule set out in arts. 2091 and 2092 C.C.Q. had been implicitly incorporated into the collective agreements.  It relied on this Court’s recent decision in Parry Sound (District) Social Services Administration Board v. O.P.S.E.U., Local 324, [2003] 2 S.C.R. 157, 2003 SCC 42, and concluded that the arbitrators had jurisdiction to hear the grievances ([2004] R.J.Q. 58 and [2003] Q.J. 18474 (QL)).

7                                   The employers appealed to this Court.

3.      Analysis

8                                   The issue in this appeal is whether the notice of termination provided for in the C.C.Q. applies under the collective labour relations scheme.  The articles in question 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.

9                                   For half a century, the interplay between the rights arising out of an individual employment relationship and the rights arising out of collective labour relations has been marked by two trends in the case law, which appear to have met head on in this appeal.  According to the first line of cases, the general law and individual negotiation have no place in matters relating to conditions of employment in the collective labour relations context (3.1).  In the second line of cases, the minimum employment standards set out in various employment‑related statutes, the substantive rights and freedoms provided for in human rights legislation and the principles of the Canadian Charter of Rights and Freedoms  have been incorporated into collective agreements (3.2).  To determine which of the rules from the case law — exclusion or inclusion — will guide the decision in the instant case, the basis for those rules must be explained.  I will begin with an overview of the two lines of cases.  This will reveal the common thread that can be used to reconcile the two trends (3.3) and will make it possible to identify three reasons why the rule in art. 2091 C.C.Q. is incompatible with the collective scheme:  the conditions of employment of unionized employees are bargained collectively by the union and the employer, while the notice provided for in the C.C.Q. is agreed on as an individual matter when employment is terminated (3.4.1); the notice of termination to which an employee is entitled in the context of an individual contract of employment is connected with the employer’s right to dismiss an employee, whereas this right is limited by the collective agreement under the collective scheme (3.4.2); and the legislative history of the provision shows that the legislature did not intend to make all the rules relating to individual contracts of employment applicable to the collective scheme (3.4.3).

3.1      First Line of Cases:  Exclusion of the General Law and Shelving of Individual Rights in the Collective Labour Relations Context

10                               The first line of cases recognizes the autonomy of labour law, which is statute law of a social nature and which, as a result, supplants the general law:

The common law as it applies to individual employment contracts is no longer relevant to employer‑employee relations governed by a collective agreement which, as the one involved here, deals with discharge, termination of employment, severance pay and a host of other matters that have been negotiated between union and company as the principal parties thereto. 

(McGavin Toastmaster Ltd. v. Ainscough, [1976] 1 S.C.R. 718, at p. 725)

In a recent case, Noël v. Société d’énergie de la Baie James, [2001] 2 S.C.R. 207, 2001 SCC 39, the Court reaffirmed this conclusion:

A collective framework supersedes the traditional contractual process, which is based on individual relations between the employer and its employees.  [para. 43]

11                               Like collective labour relations law itself, this line of cases is a reaction to the economic liberalism underlying the general law of contracts:  P. Verge, “Le contrat de travail selon le Code civil du Québec: pertinence ou impertinence?” (1993), 24 R.G.D. 237, at p. 242; see also F. Morin and J.‑Y. Brière, Le droit de l’emploi au Québec (2nd ed. 2003), at pp. 74 and 1461.  In seeking to equalize the balance of power between employers and employees, freedom of contract is dispensed with, and exclusive representation by the union and predominance of the collective agreement replace individual negotiation between an employer and an employee:  Syndicat catholique des employés de magasins de Québec Inc. v. Compagnie Paquet Ltée, [1959] S.C.R. 206, at p. 212.

12                               In addition, recognizing the benefits for both the employee and the employer of continuity in the employment relationship, the courts have dispensed with the general law rules that stand in the way of that continuity.  This is the approach that this Court took in finding, in Canadian Pacific Railway Co. v. Zambri, [1962] S.C.R. 609, and McGavin Toastmaster, that the principles of breach and repudiation of contract were inapplicable in the collective labour relations context.  In both of those cases, this Court adopted an interpretation that subordinated individual rights to the collective scheme.

13                               As well, in St. Anne Nackawic Pulp & Paper Co. v. Canadian Paper Workers Union, Local 219, [1986] 1 S.C.R. 704,  at p. 718, the Court held that rights which at common law would flow from a master‑servant relationship do not qualify for enforcement in the traditional courts in the collective labour relations context.  The entire law of employer‑employee relations is subsumed in the collective labour relations scheme.

14                               Since these principles are based on respect for the integrity of the collective scheme, they apply to claims made by both employers and employees.  For example, in Hémond v. Coopérative fédérée du Québec, [1989] 2 S.C.R. 962, three long‑time employees brought an action in the Superior Court to assert their seniority rights, which they argued were vested rights.  They had been promoted to foremen positions and as a result were excluded from the bargaining unit.  Shortly after being promoted, they were demoted to labourer positions.  In the interim, a new collective agreement had been signed under which they lost their seniority when they were demoted.  They argued that the new agreement could not be set up against them and that their seniority was a personal right.  The Court rejected their argument, stating that, under a collective labour relations scheme, no seniority rights can exist as personal rights outside the collective agreement:

Seniority rights are subject to the collective bargaining process like any other employee right.  In the context of labour relations it would be singular, to say the least, for these rights to be absolutely and irremediably raised to the level of vested rights.  When a collective agreement exists, individual rights are for all practical purposes superseded.  As Laskin C.J. said at p. 725 of McGavin Toastmaster Ltd. v. Ainscough, [1976] 1 S.C.R. 718, in which the Court adopted a rule stated in Syndicat catholique des employés de magasins de Québec Inc. v. Compagnie Paquet Ltée, [1959] S.C.R. 206: “The common law as it applies to individual employment contracts is no longer relevant to employer‑employee relations governed by a collective agreement . . . .”  [p. 975]

15                               That decision was necessary to preserve the integrity of the collective labour relations scheme, which ultimately serves to protect employees.  As Mailhot J.A. of the Quebec Court of Appeal said in Noël v. Société d’énergie de la Baie James, [1998] R.J.Q. 2270, a decision affirmed by this Court:

[translation]  These nuances must not make us lose sight of the fact that labour law remains governed by its own principles.  The legislature has created a scheme of exclusive legal representation.  It must be honoured in all its dimensions.  The collectivization of labour relations protects employees and creates an appropriate balance of power in their relations with their employer.  For all practical purposes, employees who benefit from such collectivization no longer have individual rights. [p. 2275]

16                               A desire to achieve an outcome favourable to the employees in a particular case cannot dictate which principles apply.  The collective scheme must survive disputes involving individual rights and yet remain coherent.  Employees will be better protected by a harmonious scheme than by an amalgam of mutually incompatible rules.  Indeed, the objective of protecting employees is also at the heart of the second line of cases, which favours incorporating into the collective scheme the norms set out in the Charter, in human rights legislation and in certain labour relations statutes.

3.2      Second Line of Cases: Incorporation into the Collective Agreement of the Norms Set Out in the Charter, Human Rights Legislation and Certain Labour Relations Statutes

17                               The second line of cases, which originated with McLeod v. Egan, [1975] 1 S.C.R. 517, culminated in Parry Sound.

18                               In McLeod, a clause in the existing collective agreement allowed the employer to require that an employee work more than 40 hours per week.  Notwithstanding the provisions of the Employment Standards Act, which limited the work week to 48 hours, the employer had required an employee to work more than the 48 hours he had already worked.  The Court held that the employer’s right was limited by the Act:

By the operation of the statute, the right to require overtime beyond 48 hours per week from any individual employee had been taken away from the employer and became subject to the rights of the employee under s. 11(2).  [p. 524]

19                               Then, in Weber, at para. 56, quoting Lord Denning’s comment that “[t]here is not one law for arbitrators and another for the court, but one law for all”, the Court adopted the exclusive jurisdiction model for arbitrators.  In that case, the Court stated that arbitrators apply the law of the land, “be it the common law, statute law or the Charter” (para. 61).  (See also:  Douglas/Kwantlen Faculty Assn. v. Douglas College, [1990] 3 S.C.R. 570, and Cuddy Chicks Ltd. v. Ontario (Labour Relations Board), [1991] 2 S.C.R. 5.)

20                               There are two advantages to this model.  First, by basing the arbitrator’s jurisdiction on the essential character of the parties’ dispute rather than the legal framework in which it arises, the model ensures that the arbitration process “which the various labour statutes of this country have established [is not] duplicated and undermined by concurrent actions” (Weber, at para. 58).  Second, it allows employees to assert their rights in a prompt, inexpensive and informal way.  This line of cases is based on the desire to group together all employee recourses that may be submitted to an arbitrator.  The arbitrator will therefore determine the parties’ substantive rights and obligations by applying the relevant labour relations legislation.

21                               Parry Sound was decided in the same spirit.  In that case, a probationary employee who had been discharged shortly after returning from maternity leave filed a grievance alleging discrimination.  The Court had to decide whether such a grievance was authorized notwithstanding a clause in the collective agreement that allowed probationary employees to be discharged for any reason satisfactory to the employer and denied those employees access to arbitration.  To make a finding on the arbitrator’s jurisdiction, the Court had to determine whether there was a connection with the collective agreement (para. 19).  The Court stated the following (at paras. 26 and 28):

Management rights must be exercised not only in accordance with the express provisions of the collective agreement, but also in accordance with the employee’s statutory rights. . . .

                                                                   . . .

[T]he substantive rights and obligations of employment‑related statutes are implicit in each collective agreement over which an arbitrator has jurisdiction.  A collective agreement might extend to an employer a broad right to manage the enterprise as it sees fit, but this right is circumscribed by the employee’s statutory rights.

22                               These principles were also cited in Voice Construction Ltd. v. Construction & General Workers’ Union, Local 92, [2004] 1 S.C.R. 609, 2004 SCC 23, at para. 32.

23                               The respondents rely on this line of cases.

3.3      Reconciling the Two Lines of Cases

24                               The solutions adopted in the two lines of cases may seem contradictory:  on the one hand, the general law is excluded because the collective scheme takes precedence; on the other, certain external norms are implicitly included in the collective agreement.  However, this impression does not stand up to analysis.  While the first line of cases addresses the supplanting of individual rights that are incompatible with collective labour relations, the second relates primarily to the arbitrator’s power to apply provisions that are implicitly included in a collective agreement.  In the first line of decisions, the right relied on is incompatible with the collective scheme, while in the second, the norm is not only compatible with the collective agreement, but is also incorporated into it.  For example, in Parry Sound, the application of the Ontario Human Rights Code to the employee was not disputed.  The issue was the arbitrator’s power to apply it.  Parry Sound did not reverse Paquet, McGavin, Hémond or Noël.  The principle that emerges from that case is that, if a rule is incompatible with the collective labour relations scheme, it cannot be incorporated and must be disregarded, as was the case in McGavin, Hémond and Noël.  If the rule is found to be compatible and if it is a supplementary or mandatory norm, as in McLeod, Weber and Parry Sound, the arbitrator will have jurisdiction to apply it.

25                               Before determining whether the norm is supplementary or mandatory, its compatibility must be ascertained.  How do we determine whether a provision or rule is compatible?  What rights are supplanted by the collective scheme?  Underlying the first line of cases is the desire to give precedence to collective bargaining for all conditions of employment.  If the right claimed can be characterized as a condition of employment, it cannot be negotiated individually by the employer and the employee.  The union alone performs this task, and it must do so for the employees collectively.

26                               What is a condition of employment?  The question was asked by this Court in Paquet.  The provision at issue was characterized as a condition of employment on the basis that it had a real connection with the contract of employment (p. 211).  Since, in that case, check‑off was directly related to the regulation of employer‑employee relations, the Court held that the provision was a condition of employment.  Because of the monopoly on representation, no room was left for individual negotiation.  All employees, whether or not they were members of the union, were subject to check‑off.

27                               The precedence given to the collective scheme is sometimes taken to mean that freedom of contract is abrogated once a collective agreement is concluded: Paquet, at p. 212.  However, it is clear that the employment relationship arises only when the employee accepts the employer’s offer to hire him or her.  There is therefore no source in either Canadian case law or legislation for the theory that individual contracts are completely abolished in the context of the collective scheme.  The individual contract does not cease to exist, but is simply suspended.  When a union’s certification is revoked, the individual contract becomes effective again and once again becomes the only tool for managing the employment relationship.  If it no longer existed, the employee would have to be rehired, which is not the case.  When the collective scheme ends, this does not terminate the employment relationship.  During the term of the collective agreement, however, the individual contract of employment cannot be relied on as a source of rights.

28                               Not everything is set out in the collective agreement, of course.  For instance, the agreement usually does not define the general law concepts on which the rules agreed to by the union and the employer are based.  The collective agreement does not operate in a vacuum.  The general law is relevant for the purposes of interpreting the conditions of employment contained in the agreement.

29                               The fact that individual contracts are subordinate to the collective scheme allows collective interests to be reconciled with individual interests in situations where it is possible for the latter to subsist without hindering the proper conduct of collective relations.  My approach differs from that of LeBel J., who adopts the position taken by Professor Morin, in which the hierarchy of sources is reversed.  In Professor Morin’s view, the individual contract subsists and the C.C.Q. applies, subject to any valid exceptions expressly set out in the Labour Code, in other legislation and in the collective agreement: F. Morin, “Effets combinatoires de deux codes: Code du travail et Code civil du Québec” (1994), 49 Relat. ind. 227, at p. 245.  Thus, in his view, the collective agreement is superimposed on the individual contract.  With respect, this position presupposes, for Quebec, an approach to collective labour relations law that disregards this Court’s decisions and is contrary to the position adopted in Parry Sound.  According to that case, the collective agreement provides a framework into which mandatory norms are incorporated.  Furthermore, I do not think that this solution is necessary, as LeBel J. says, since the mechanism of incorporating compatible mandatory norms and the use of implicit conditions ensure that the collective scheme is a coherent legal scheme.  Also, as I will explain later, the approach advocated by Professor Morin and adopted by my colleague was proposed before the enactment of the C.C.Q. but was rejected.

30                               Thus, not everything set out in the C.C.Q. is implicitly incorporated into collective agreements — only that which is compatible.  In the case at bar, the question is whether or not the provisions in issue are compatible.

31                               To find the common thread, we must, as in McLeod, identify a connection between the arbitrator’s jurisdiction and a condition of employment that is expressly set out in or implicitly incorporated into the collective agreement.  The arbitrator has jurisdiction over all disputes that can be connected with the collective agreement through their factual context and will decide those disputes by referring to the express or implicit rules of the agreement.  However, a rule cannot be incorporated into the collective agreement where, as in McGavin, Hémond and Noël, the rule does not lend itself to such incorporation, which, in my opinion, is the case here.

3.4 Incompatibility of Compensation Under Article 2091 of the Civil Code With the Collective Scheme

32                               The rules governing collective labour relations constitute a body of law whose governing principles are distinct from the rules that serve as foundations for the individual contract of employment in Quebec civil law.  The very nature of notice of termination demonstrates that it is not compatible with a context in which a collective agreement exists.  Notice of termination is essentially agreed to on an individual basis when employment is terminated, whereas collective conditions of employment are necessarily agreed to in advance by the union and the employer.  The way termination of employment is dealt with under the two schemes also demonstrates the gulf that divides them.  The right to notice of termination is the counterpart of the employer’s right to dismiss an employee bound by an individual contract.  This right is incompatible with the collective labour relations context.  Moreover, the legislative history provides additional confirmation that the courts should not impose their vision where the legislature has chosen not to impose the rule set out in art. 2091 C.C.Q. in the context of the collective scheme.

3.4.1 Individual Agreement on Notice of Termination and Collective Bargaining of Conditions of Employment

33                               While Quebec’s general law of contracts is still influenced by the consensual approach that originally characterized it, the law relating to collective labour relations prohibits such an approach where conditions of employment are concerned (except, of course, where the collective agreement authorizes specific agreements).

34                               In the civil law, a contract is formed by the exchange of consents (art. 1385 C.C.Q.), which involves the acceptance of an offer (art. 1386 C.C.Q.) that contains all the essential elements of the proposed contract (art. 1388 C.C.Q.).  A contract may be modified only with the agreement of the parties (art. 1439 C.C.Q.).  Article 2085 C.C.Q., which deals specifically with the contract of employment, incorporates these concepts:

2085.   A contract of employment is a contract by which a person, the employee, undertakes for a limited period to do work for remuneration, according to the instructions and under the direction or control of another person, the employer.

According to the very language of this article, agreement must be reached on conditions of employment to enter into a contract of employment.  It cannot be said that a contract of employment exists if there is no agreement on remuneration.  This goes to the root of the contract.

35                               Likewise, notice of termination is undeniably a condition of employment.  At a time when employment is regarded as a source of personal fulfilment, suspension and termination of employment are important aspects of the conditions of employment.  Like the terms and conditions that apply to disciplinary dismissal, the conditions for administrative or discretionary dismissal are clearly connected with the contract of employment.

36                               The right to notice provided for in art. 2091 C.C.Q. is a personal right, and what it consists of depends on the individual circumstances of the employee who claims it.  As Baudouin J.A. said in Standard Broadcasting Corp. v. Stewart, [1994] R.J.Q. 1751 (C.A.):

[translation] What constitutes reasonable notice of termination under a contract with an indeterminate term is basically a question of fact that will turn on the circumstances of the specific case, and it will be assessed on the basis of a number of known parameters: the nature and importance of the position; whether the employee left another job to take the position; the employee’s age, years of service and experience; how easy or difficult it is to find an identical or similar position; subsequent efforts to find work; and whether or not there were serious grounds for the dismissal. [Footnote omitted; p. 1758.]

37                               Not only must notice of termination be determined individually, but the employee may not agree on it in advance.  Because of the imperative rule set out in art. 2092 C.C.Q., notice of termination must be assessed at the time it takes effect, that is, when the employment terminates (see Garcia Transport Ltée v. Royal Trust Co., [1992] 2 S.C.R. 499, at pp. 530‑31).

38                               Under a collective scheme, on the other hand, conditions of employment are not negotiated individually by the employer and the employee.  Three of this Court’s decisions, McGavin, Hémond and Noël, state the rule that “[c]ertification, followed by the collective agreement, takes away the employer’s right to negotiate directly with its employees” and to “negotiat[e] different conditions of employment with individual employees” (Noël, at para. 42).  The objective of this prohibition and of its corollary, exclusive union representation, is to improve the employee’s position in the balance of power with the employer.  Collective conditions of employment are even negotiated for future employees.  Relativity of contract, one of the linchpins of the civil law contract, is excluded by the role assigned to the union.  In the collective scheme, the employee agrees to work under the conditions negotiated by the union, which is not the employee’s mandatary but is designated by law to negotiate conditions of employment.

39                               Apart from the minimum standards laid down by the A.L.S., the length of notice of termination is therefore a matter to be determined in the bargaining process between the union and the employer.  As N. R. McLeod states:

While the parties to collective bargaining have frequently chosen in the past to leave termination rights unstated, or have been content to be governed by minimum statutory provisions that have overriding application to all employees, whether unionized or not, the failure to expressly address severance pay does not change its status as a proper subject for collective bargaining.  The omission of a provision for severance pay in the collective agreement does not convert it into a right governed by common law principles extraneous to the collective agreement.

(“Severance Pay at Arbitration: A Union Viewpoint”, in W. Kaplan et al., eds., Labour Arbitration Yearbook 1998 (1998), 269, at p. 274)

40                               The parties’ failure to specify in the collective agreement what will happen if the business closes does not make the general law relating to individual contracts of employment applicable:

[T]he theory of the residual common law right of employees to pay on termination of employment cannot be reconciled with the principle that severance is properly the subject matter of collective bargaining.  Labour relations boards have prohibited employers from unilaterally implementing severance pay programs.  They have stated that the terms associated with the severance of employment are fundamental conditions of employment and are within the exclusive purview of the trade union to bargain.  Furthermore, to allow the employer to act unilaterally in this area would be to unfairly diminish the effectiveness of the union and undermine its role as bargaining agent. . . . [p. 274]

41                               The terms and conditions applicable to termination of employment therefore fall within the natural scope of union‑employer bargaining on conditions of employment.  McGavin illustrates the obverse of the problem before us here.  In that case, it was in fact severance pay provided for in the collective agreement that the employees were claiming and that the employer refused to pay, arguing that a repudiation of the collective agreement had terminated the employees’ rights.  The decision shows that the terms and conditions applicable to termination of employment are a valid part of the conditions of employment included in a collective agreement, which, by definition, is agreed to on behalf of all employees before the employment is terminated.  This is a clear case in which the collective scheme supplants the individual contract of employment.

42                               In short, the notice of termination required by art. 2091 C.C.Q. cannot be incorporated into a collective agreement.  It is a condition of employment determined on an individual basis, and it cannot be negotiated in advance or negotiated by a third party and then imposed on the employee.

43                               The respondents would like to read the preliminary provision of the C.C.Q. as indicating that the C.C.Q. must apply to every employment relationship.  The preliminary provision reads as follows:

The Civil Code of Québec, in harmony with the Charter of human rights and freedoms and the general principles of law, governs persons, relations between persons, and property.

The Civil Code comprises a body of rules which, in all matters within the letter, spirit or object of its provisions, lays down the jus commune, expressly or by implication.  In these matters, the Code is the foundation of all other laws, although other laws may complement the Code or make exceptions to it.

44                               In my opinion, the argument is not persuasive.  For the C.C.Q. to take precedence, there must be a matter that falls within the letter, spirit or object of its provisions.  It seems to me that the argument based on the preliminary provision of the C.C.Q. relies on circular reasoning.

45                               Moreover, the claims filed in the Fillion and Garon cases illustrate the internal contradiction between the individualized notice based on the individual’s specific characteristics and employment experience on the one hand and the collective labour relations context on the other.  The claims filed by the unions do not recognize the individual nature of the right provided for in art. 2091 C.C.Q.  The unions are not asking the arbitrator to determine or assess the appropriate notice of termination for each employee based on each employee’s personal circumstances.  Rather, they are claiming four weeks’ notice per year of service for each and every employee, regardless of their individual situations.  Under the C.C.Q., the claims have to be made by the employees themselves and must be based primarily on the specific characteristics of each employee.  The unions’ claims therefore violate the spirit of art. 2091 C.C.Q.

46                               Imposing an obligation to determine reasonable notice within the meaning of art. 2091 C.C.Q. on an individual basis would also violate the spirit of the collective labour relations scheme.  Some commentators go so far as to say that for an employer to offer its employees different, individualized conditions of employment without negotiating with the union would constitute an unfair labour practice:  see McLeod, at p. 270.

47                               If the rule that all conditions of employment must be negotiated by the union and the employer is considered in parallel with the rule that notice of termination is basically individual and cannot be waived by the employee, it is clear that the two schemes are incompatible.  The consensual aspect and individual nature of notice of termination and the time when its sufficiency is determined, namely after the employment is terminated, are three essential features of the C.C.Q.’s rule that show that notice of termination is incompatible with the collective scheme.  Under a collective scheme, this condition of employment is negotiated with the union, not the employee, is negotiated for all employees or for various classes of employees, not individually, and is agreed on when the collective agreement is entered into, not when the employment is terminated.  But there are other considerations.

3.4.2      Conflicting Approaches to Continuity of Employment

48                               The approach taken to the continuity of the employment relationship is another fundamental difference between the law governing individual employment relationships and the law governing collective labour relations.  The latter seeks to preserve the continuity of the employment relationship, which is not the aim of the C.C.Q.

49                               Reinstatement is normally what arbitrators order where the employer‑employee relationship is still viable: Alberta Union of Provincial Employees v. Lethbridge Community College, [2004] 1 S.C.R. 727, 2004 SCC 28, at para. 56.  In addition, in the case of dismissal or prolonged layoff, the certification is not revoked and the collective agreement is not terminated.  Thus, employees who are laid off can exercise any residual rights they may have under the collective agreement, such as the right of recall; likewise, should the undertaking they work for be alienated or operated by another, dismissed employees can benefit from the protection of s. 45 L.C., because the certification and the collective agreement survive.

50                               The approach taken to the termination of an individual contract of employment is completely different.  As P. Verge writes:

[translation] Not only does [the Civil Code] thus not favour relationships for an indeterminate term, but, taking quite a liberal approach, it also preserves the employer’s power (and, formally, the employee’s power, although it is not really identical) to terminate a contract for an indeterminate term by giving the employee reasonable notice of termination (art. 2091), provided, according to general principles, that there is no abuse of rights. 

(“Le contrat de travail selon le Code civil du Québec: pertinence ou impertinence?”, at p. 245)

51                               The right of employees to claim reasonable notice of termination under the C.C.Q. is the counterpart of the employer’s right to terminate the employment relationship by providing pay in lieu of notice, without having to show good and sufficient cause.  The fact that it is possible to resiliate a contract of employment by giving notice, without having to provide reasons, emerges, a contrario, from art. 2094 C.C.Q.:

2094.   One of the parties may, for a serious reason, unilaterally resiliate the contract of employment without prior notice.

52                               Articles 2091 and 2094 C.C.Q. provide statutory recognition of the employer’s power to resiliate the contract of employment unilaterally; they make it possible to sever the employment relationship definitively, and they exclude the obligation to reinstate:  M.‑F. Bich, “Contrat de travail et Code civil du Québec — Rétrospective, perspectives et expectatives”, in Développements récents en droit du travail (1996), 189, at p. 284.

53                               Since the employer’s right to dismiss is limited in the collective labour relations context and, on the contrary, reinstatement is the most common remedy, it follows that the employee’s right to reasonable notice is inapplicable in such circumstances.  This is, in fact, the reasoning applied in the other provinces of Canada, where an employee governed by a collective agreement cannot claim compensation based on the common law right to reasonable notice:  Graphic Communications Union Local 255‑C v. Quebecor Jasper Printing Ltd. (2002), 333 A.R. 204, 2002 ABQB 959, at paras. 14 and 16.

54                               Given the fundamental differences between the general law of contracts and the law governing collective labour relations, and with a view to preserving the coherence of the different labour law schemes, care must be taken, where provisions of the C.C.Q. are incompatible with the collective labour relations scheme, not to apply them to that scheme.  Articles 2091 and 2092 C.C.Q. are examples of rules that are incompatible with the collective scheme.

55                               The legislative history of art. 2091 C.C.Q. also leads to the conclusion that the legislature did not intend to incorporate the notice provided for in the article into the collective scheme.

3.4.3    Legislative History of Article 2091 C.C.Q.

56                               Article 2091 C.C.Q. codifies the case law developed under the Civil Code of Lower Canada (“C.C.L.C.”).  The predecessor of art. 2091, art. 1668 C.C.L.C., provided for notice of termination for only certain classes of employees:  domestics, labourers and so on.  The length of the notice varied depending on the period of service.  To fill the gaps left by the Code for other classes of employees, the Quebec courts developed the rule that either of the parties to a contract of employment with an indeterminate term could terminate it at any time by giving reasonable notice to the other party:  Asbestos Corp. v. Cook, [1933] S.C.R. 86.  The new Civil Code codifies this rule in art. 2091 and does not change its substance:  Commentaires du ministre de la Justice — Le Code civil du Québec: Un mouvement de société (1993), vol. II, at p. 1315.

57                               If the legislature had intended notice of termination to apply under the collective scheme, it would have been a simple matter for it to act on some of the recommendations made before the C.C.Q. was enacted.  One such proposal was that the C.C.Q. act as the general framework for all labour relations, whether individual or collective.  The draft bill introduced in 1987, An Act to add the reformed law of obligations to the Civil Code of Québec, contained the following proposal:

2157.   A contract of employment may be supplemented by an order or decree, ordinance, regulation or collective agreement.

58                               This proposal was criticized on the basis that a collective agreement does not supplement a contract of employment.  The collective agreement [translation] “is the source of the employee’s entire negotiated employment scheme”:  P. Verge, “Faut‑il ‘nommer’ le contrat de travail?” (1988), 29 C. de D. 977, at p. 981.  The language of art. 2091 C.C.Q. does not embrace this all‑encompassing view of contracts of employment.  On the contrary, the spirit of the new article is incompatible with the collective scheme.  The additional protection provided by art. 2092 C.C.Q. and the concept of public order it incorporates show that the purpose of the provision is to protect employees who are in an inferior bargaining position.

59                               To say that an employee is isolated or vulnerable when he or she is represented by a union would be an affront to organized labour.  It appears, rather, that the Quebec legislature chose to reject the superimposition proposed in the draft Civil Code because it was aware, generally, of the situation in Quebec and, more specifically, of the criticism made when the 1987 draft was introduced.

60                               I think it is relevant to note that the protection provided by arts. 2091 and 2092 C.C.Q. does not appear to come under directive public order as LeBel J. seems to suggest.  In my opinion, this protection is similar to the protection considered by the Court in Garcia Transport.  The distinction between directive public order and protective public order is relevant in determining what sanction applies.  A clause that is contrary to directive public order is absolutely null (art. 1417 C.C.Q.) and may not be confirmed (art. 1418 C.C.Q.).  Since this question is not directly in issue here, it need not be examined in detail.  I will simply point out that the purpose of the protection is more to protect vulnerable workers and restore contractual fairness than to protect the collective interest (on the distinction between directive and protective public order, see J.‑L. Baudouin and P.‑G. Jobin, Les obligations (6th ed. 2005), at paras. 146‑47).  Furthermore, the vulnerable party is sufficiently protected by the rules associated with protective public order, since that party cannot renounce his or her right before it crystallizes:  Garcia Transport.  Also, a finding that there are provisions of directive public order would mean that the parties could not negotiate a final settlement, since the reasonableness of any such settlement would always be reviewable by a judge.

61                               That being said, the rules governing the collective scheme remain distinct from those applicable to individual contracts.  The provisions of the C.C.Q. apply only where there is no incompatibility.  Where there is no incompatibility and the provision can be considered to be implicitly included in the collective agreement, an arbitrator will have jurisdiction to decide disputes relating to it.  The Quebec legislature has set out the standards of general application in the A.L.S., which expressly governs both schemes:  ss. 1(4) and 93 A.L.S.  If, at the time of the reform, the legislature had intended to give a scope such as this to the provisions of the C.C.Q. that apply to contracts of employment, it would have kept the criticized wording or at least have been as explicit as in the A.L.S.  An opportunity in fact arose when the A.L.S. was amended (S.Q. 2002, c. 80, s. 49) by adding the division entitled “Notice of Collective Dismissal”.  If the legislature had intended individualized notice to be the norm in cases of collective dismissal, it would have specified this at the time and would not have established a collective standard.  Where the legislature has chosen not to merge the two schemes, I believe that it is not the role of this Court to do so.

4.      Conclusion

62                               Harmonizing the rules of the general law with the rules of the collective scheme remains a necessity to which individual interests must yield.  This is a matter on which there is universal agreement.  Even an author who advocates giving pre‑eminence to the individual contract of employment in the collective labour relations context stresses this point:

[translation] Harmonizing all these legal rules — the rules in the C.C.Q. and in employment‑related statutes and the acts thereunder — requires that special attention be given to their respective purposes and functions within the corpus of employment law.  An employment‑related statute cannot validly be adapted without first considering the implications of the changes for employment law as a whole. 

(F. Morin, “Le contrat de travail: fiction et réalité!”, in Développements récents en droit du travail (2005), 179, at p. 186)

63                               This case clearly demonstrates that there is no reason to exclude every connection with the civil law.  However, the facts of the case illustrate the need to identify the factors from which it can be concluded that a particular provision of the C.C.Q. can be incorporated into a collective agreement.  The analysis must be sufficiently thorough to determine the long‑term disadvantages that may result from inappropriately importing a provision.  Only this concern with preserving the internal coherence of the two schemes will ensure that they can function harmoniously.  Although the provisions of the C.C.Q. regarding notice of termination may be more advantageous than the provisions of the A.L.S. in specific cases, all the provisions of the C.C.Q. cannot be implicitly incorporated into the collective agreement.  In the absence of such incorporation, the arbitrator has no jurisdiction to hear the grievances.

64                               For these reasons, I would set aside the judgments of the Court of Appeal, restore the Superior Court’s judgment in the Fillion case, set aside the Superior Court’s judgment in the Garon case and allow the motions to quash the arbitration decisions, with costs throughout.

English version of the reasons of McLachlin C.J. and LeBel and Fish JJ. delivered by

LeBel J. (dissenting) —

I.       Introduction

A.     Nature of the Case

65                               This appeal concerns an application for judicial review of two arbitration awards.  This Court must determine whether a grievances arbitrator has jurisdiction to hear a claim under art. 2091 of the Civil Code of Québec, S.Q. 1991, c. 64 (“C.C.Q.”), for termination pay following the closing of a business and the layoff of its staff where there is no express reference to termination pay in the applicable collective agreement.  With respect, I would find that the arbitrators have jurisdiction and would affirm the decisions of the Quebec Court of Appeal to this effect.

B.       Origin of the Case

1.    Isidore Garon ltée

66                            For several years, the appellant Isidore Garon ltée (“Garon”) operated a hardware business specializing in the sale of construction materials.  It had signed a collective agreement expiring on June 30, 2000 with the respondent Syndicat du bois ouvré de la région de Québec inc.

67                            On April 15, 1999, the appellant informed its employees that the business would be shut down for economic reasons on June 19, 1999 and gave them nine weeks’ notice of termination of employment (Exhibit R‑2).  In so doing, it was complying with clause 8.02c) of the collective agreement, which provided that the Act respecting labour standards, R.S.Q., c. N‑1.1 (“A.L.S.”), s. 82, would apply in the event of a layoff for six consecutive months or more.

68                            On April 28, 1999, the respondent union filed a collective grievance (Exhibit R‑4) under the collective agreement on behalf of the 12 employees who had been dismissed, claiming additional compensation under art. 2091 C.C.Q.  That provision gives the parties to a contract of employment with an indeterminate term the right to resiliate it unilaterally, subject to reasonable notice of termination:

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.

69                            On May 3, 1999, the appellant replied that it would not take action on the grievance.  The business was then closed as scheduled on June 19, 1999.

2.     Fillion et Frères inc.

70                            The appellant Fillion et Frères (1976) inc. (“Fillion et Frères”) operated a new and used motor vehicle sales and repair dealership in the Québec area.  It was bound to the respondent Syndicat national des employés de garage du Québec inc. by a collective agreement expiring on November 2, 1997.

71                            On November 20, 1997, Fillion et Frères resiliated its sales and service agreement with the Ford manufacturing company.  A few days later, on November 24, 1997, the appellant informed its employees that the business would gradually cease operating and would close for good on January 16, 1998.  It gave them notice of termination of employment the same day.  A first group of employees, composed of Daniel Giroux, Jocelyn Trépanier and Roger Nadeau, would be laid off on December 19, 1997.  The second group, composed of Stéphane Giroux, Jean‑François Fillion, Roger Laplante, Denys Fillion and Denis Buteau, would then be laid off on January 16, 1998 (Exhibit S‑10).

72                            On December 3, 1997, the respondent union was informed that the business had resiliated its sales and service agreement with Ford and that the employees had received notice of termination of employment in accordance with s. 82 A.L.S. (Exhibit S‑11).  On January 16, 1998, the business did indeed cease operating completely.  The same day, the respondent union filed a collective grievance (Exhibit S‑2) under the collective agreement on behalf of the eight employees who had been dismissed, claiming additional compensation under art. 2091 C.C.Q.  All the employees covered by the collective grievance, except Denys Fillion, then filed individual grievances (Exhibits S‑3 to S‑9).

C.     Judicial History

1.     Isidore Garon ltée

a.     Grievance Arbitration

73                            The parties chose Jean‑Pierre Tremblay to be the arbitrator.  When the arbitration began, the appellant Garon made a preliminary objection, arguing that the arbitrator did not have jurisdiction to settle the grievance because the claim was based solely on the C.C.Q. and did not expressly or inferentially arise out of the collective agreement.  It added that the rules on individual contracts of employment set out in the C.C.Q. could not be incorporated into the collective agreement and were inapplicable in a context in which a collective agreement was in force.

74                            In his award dated October 31, 2000, the arbitrator dismissed the employer’s objection and found that he had jurisdiction to decide the grievance ([2001] R.J.D.T. 304).  In his view, the grievance was based on the collective agreement, which provided that the applicable notice of termination was that set out in s. 82 A.L.S.  As a result, the determination of the reasonableness of that notice under arts. 2091 et seq. C.C.Q. was within his exclusive jurisdiction.  He found that clause 10.09 of the collective agreement and s. 100.12(a) of the Labour Code, R.S.Q., c. C‑27 (“L.C.”), conferred broad jurisdiction on him, giving him the incidental authority to interpret and apply the provisions of the C.C.Q.  Finally, he added that arts. 2091 et seq. C.C.Q. were of public order and that he had to apply them pursuant to s. 62 L.C.  As of yet, however, the arbitrator has not decided whether the employees were entitled to compensation in the circumstances of the case.

b.   Judicial Review in the Superior Court

75                            On December 6, 2000, the appellant filed an application for judicial review of the arbitration award.  On February 6, 2001, Martin J. dismissed the application and confirmed that the arbitrator had jurisdiction, since s. 100.12(a) L.C. provides that an arbitrator may have recourse to any law of general application to settle a grievance under a collective agreement (D.T.E. 2001T-220).

2.   Fillion et Frères inc.

a.   Grievance Arbitration

76                               On February 22, 2000, the appellant Fillion et Frères announced that it wanted to make two preliminary objections before the arbitrator relating to the admissibility of the grievances.  First, it argued that the arbitrator had no jurisdiction to hear the grievances because no provision of the collective agreement applied expressly or inferentially to the case.  Second, it submitted that the grievances were prescribed because they had been filed more than 15 business days after the employer’s decision.

77                               In his award dated August 25, 2000, the arbitrator, Denis Tremblay, stated that this Court’s recent decisions had extended the jurisdiction of arbitrators to the point where everything that actually arose out of the employer‑employee relationship was now within the jurisdiction of a grievances arbitrator, regardless of the legal basis for the claim.  Since the collective agreement was silent about notice of termination, the arbitrator found that s. 82 A.L.S. had been properly applied but that its supplementary role could not deprive the parties of a claim under arts. 2091 and 2092 C.C.Q.  He found that those provisions of the C.C.Q. had to be regarded as having been incorporated into the collective agreement because they were of public order.  In his view, the arbitrator thus retained inherent jurisdiction to interpret and apply them as if they were an integral part of the agreement.  In this context, he was of the opinion that a connecting clause in the collective agreement was not necessary.  On the question of prescription, he concluded from his interpretation of clause 6.02 of the collective agreement that time had started to run on the day the business closed, not when the employer informed the employees of the closure.  As of yet, however, the arbitrator has not decided the grievances on their merits.

b.     Judicial Review in the Superior Court

78                               The appellant Fillion et Frères filed an application for judicial review of that award solely as regards the jurisdiction of the grievances arbitrator.  On March 9, 2001, Alain J. allowed the application and found that the arbitrator did not have jurisdiction ([2001] R.J.Q. 700).  The trial judge’s view was that the dispute in this case did not arise out of the interpretation, application, administration or violation of the collective agreement because that agreement was silent about notice of termination.  The employer’s obligation was therefore limited to what was set out in the public order provisions of the A.L.S.  As a result, there were no grounds for a grievance.

3.     Quebec Court of Appeal

79                               The Court of Appeal heard the two appeals at the same time and rendered its decisions on December 9, 2003.  It found that a dispute will be arbitrable only if its essential character comes within the jurisdiction of a grievances arbitrator.  However, in its view, this principle does not mean that an arbitrator has the power to apply and interpret only express provisions of a collective agreement.

80                               Since arts. 2091 and 2092 C.C.Q. are of public order, the Court of Appeal concluded that they were implicitly incorporated into the collective agreements pursuant to s. 62 L.C.  Accordingly, it held that the arbitrators had jurisdiction to hear and decide the grievances at issue.  It therefore dismissed Garon’s appeal ([2004] R.J.Q. 58) and allowed the appeal by the union in the Fillion et Frères case ([2003] Q.J. 18474 (QL)).  It ordered that both cases be referred back to the respective arbitrators to be decided on their merits.

4.     Appeal to This Court

81                               On May 6, 2004, the appellants were granted leave to appeal to this Court from the judgments of the Quebec Court of Appeal ([2004] 1 S.C.R. viii and x).

II.      Analysis

A.     Issue

82                               This appeal concerns the extent of a grievances arbitrator’s jurisdiction to apply art. 2091 C.C.Q. when there is a collective agreement in force following the certification of an association of employees under the L.C.  To establish this, we must consider the nature of the connection between a collective agreement and an individual employment relationship under a collective labour relations scheme to determine whether an arbitrator can rule on the application of art. 2091 C.C.Q.  In other words, does the collective nature of the relationship established by a collective agreement exclude the individual rights granted under art. 2091 C.C.Q. from the implicit content of the agreement and thus from the jurisdiction of the grievances arbitrator?

B.      Positions of the Parties

1.     Employers

a.     Isidore Garon ltée

83                               Relying on the judge‑made principle that the general law as it applies to individual contracts of employment is no longer relevant to employer‑employee relations governed by a collective agreement, the appellant Garon submits that arts. 2091 and 2092 C.C.Q. cannot apply or provide a basis for the collective grievance.  It argues that the creation of the collective labour relations scheme excludes the general law rules that apply to individual contracts of employment where those rules interfere or are incompatible with the scheme.  In this case, the appellant believes that arts. 2091 and 2092 C.C.Q. are inapplicable because they confer rights that are incompatible with the scheme established by the L.C. and the collective agreement.  It notes, for example, that art. 2091 C.C.Q. recognizes the parties’ right to resiliate an individual contract of employment unilaterally without a serious reason, provided that reasonable notice of termination is given, whereas clauses 10.09(2) and 11.01 of the collective agreement and s. 100.12(f) L.C. provide for the reinstatement of an employee who has been dismissed without a good and sufficient reason.

84                               The appellant adds that the employee’s right to reasonable notice of termination is inseparable from the employer’s right to resiliate the contract of employment unilaterally.  The negation of one necessarily negates the other.  Finally, the appellant is of the view that arts. 2091 and 2092 C.C.Q. are not of public order and do not create mandatory labour standards, even though art. 2092 provides that employees may not renounce the rights given to them by art. 2091.

b.     Fillion et Frères inc.

85                               The appellant Fillion et Frères also argues that the general law applicable to individual contracts of employment, as set out in the C.C.Q., does not apply when the parties are governed by the collective labour relations system, primarily because the legal schemes in question are incompatible.  It further submits that the general law remains inapplicable even where the collective agreement is silent on a particular point, as in this appeal.

86                               While the appellant acknowledges that a grievance may be arbitrable in the absence of an express provision in the collective agreement, it points out that the essential character of the dispute must expressly or inferentially arise out of the interpretation, administration or performance of the collective agreement.  In this case, the appellant argues, the grievances are based solely on the provisions of the C.C.Q. and are therefore not arbitrable.

87                               Finally, the appellant argues that the A.L.S. contains all the minimum, absolute standards of public order that apply to all employees, whether unionized or not, and that must be adhered to and applied by all employers under Quebec law (ss. 1(4) and 93 A.L.S.).  Accordingly, it submits, when the legislature chose to put art. 2091 in the C.C.Q. rather than the A.L.S., it deliberately gave only non‑unionized employees the right to reasonable notice when their employment is terminated.

2.     Unions

88                            The respondent unions filed a joint factum in this Court.  They argue that arts. 2091 and 2092 C.C.Q. are of public order and that the clauses of the collective agreement therefore cannot derogate from them (art. 9 C.C.Q.; s. 62 L.C. and s. 41.4 of the Interpretation Act, R.S.Q., c. I‑16).  As a result, an arbitrator can apply and interpret those provisions to ensure that the collective agreement complies with them.  The respondents add that, even where the collective agreement is silent on the matter, the provisions in question are deemed to be included in the agreement and the employer is obliged to comply with them in exercising its general management right, which is sufficient to make the grievance arbitrable.

89                            The respondents argue that the individual contract of employment subsists between an employee and an employer even when there is a collective agreement.  Accordingly, the provisions relating to individual contracts of employment are applicable to matters not covered by the collective agreement.  In addition, since neither the expiry of the collective agreement nor the exercise of the right to strike or to lock out ends the employment relationship, the individual contract of employment remains a contract with an indeterminate term unless the parties expressly provide otherwise.  Finally, since the A.L.S. establishes only a minimum standard, an employee can claim more under art. 2091 C.C.Q. if that minimum does not represent reasonable notice of termination in the circumstances.  This is because the right to reasonable notice is a rule of public order.

C.     Standard of Judicial Review

90                            This appeal raises the question of whether the arbitrator has the power to apply arts. 2091 and 2092 C.C.Q. to decide the grievances.  This is a question of law relating to the arbitrator’s jurisdiction.  Accordingly, as the parties recognized in this Court, the applicable standard of review is correctness (see Parry Sound (District) Social Services Administration Board v. O.P.S.E.U., Local 324, [2003] 2 S.C.R. 157, 2003 SCC 42, at paras. 21‑22 and 83, and Canadian Broadcasting Corp. v. Canada (Labour Relations Board), [1995] 1 S.C.R. 157, at para. 49).

D.     Legislative Framework

91                            Labour law is governed by numerous legal rules from various sources, which can be classified based on the role they play.  Some of them deal with collective labour relations and allow conditions of employment to be determined through collective bargaining.  Others address individual employment relationships, that is, the specific relationship between a worker and an employer.  Still others guarantee minimum conditions of employment.

92                            It is important to begin by identifying the many rules that make up the legislative framework applicable to the parties’ legal situation so that the application of these standards can be harmonized by determining how they interact to maintain the coherence of Quebec’s labour law scheme.  This discussion will therefore deal solely with the rules at issue in this appeal.

1.      Collective Labour Relations

93                               In the sectors that come under the constitutional jurisdiction of the National Assembly of Quebec, collective labour relations are governed primarily by the L.C.  It contains, inter alia, the legal rules that govern the establishment of conditions of employment through collective bargaining and ensure that the resulting collective agreements are applied.  The scope of the L.C. is limited, however, by the definitions of “employer” and “employee” in ss. 1(k) and (l) L.C.

94                               The C.C.Q. and a number of specific statutes, including the A.L.S., may influence the content and result of collective bargaining.  However, the application of these legal rules, which often relate to individual employment relationships, may vary with the collective labour relations context.  We will return to this question when dealing with the effects of a collective agreement on individual employment relationships.

a.     Certification

95                               Certification, which is now granted by the Commission des relations du travail, authorizes an association of employees (s. 1(a) L.C.) to represent a group of employees, the appropriate bargaining unit, for the purpose of establishing a collective employment scheme.  Whether a union is certified ultimately depends on its representative nature, since it must have the support of a majority of the employees who make up the bargaining unit (ss. 21 and 32 L.C.).

96                               Certification gives the union an exclusive right of representation.  The union thus becomes the only party authorized to represent all present and future employees in the bargaining unit for an indeterminate period (ss. 22, 41 and 43 L.C.).  The exclusivity of union representation is also the basis for the union’s other rights, including the right to receive the union dues the employer must collect (s. 47 L.C.).

97                               In return, the union assumes a duty of fair representation, that is, it “shall not act in bad faith or in an arbitrary or discriminatory manner or show serious negligence in respect of employees comprised in a bargaining unit represented by it, whether or not they are members” (s. 47.2 L.C.).  This duty must be discharged in all the union’s collective representation activities, whether during bargaining or in applying a collective agreement (see Canadian Merchant Service Guild v. Gagnon, [1984] 1 S.C.R. 509, and Noël v. Société d’énergie de la Baie James, [2001] 2 S.C.R. 207, 2001 SCC 39).

b.     Collective Agreement

98                               The L.C. defines a “collective agreement” as “an agreement in writing respecting conditions of employment made between one or more certified associations and one or more employers or employers’ associations” (s. 1(d) L.C.).  As the main source of the substantive norms governing the parties’ relationship, it is the “law of the parties”.  It is binding on all present and future employees contemplated by the certification during its term, as specified by the agreement or by statute (ss. 65, 66 and 67, para. 1 L.C.).

99                               The concept of conditions of employment is a very broad one, covering hiring, the performance of work and the consideration received for it, as well as termination of employment and union rights.  However, s. 62 L.C. limits the parties’ freedom to bargain by rendering null any provisions of a collective agreement that are contrary to public order or prohibited by law.  We will elaborate on the nature, effects and content of the collective agreement in the sections that follow.

100                           When a collective agreement is reached, the right to strike and to lock out is temporarily suspended (ss. 58, 107 and 109 L.C.) to ensure the stability of the parties’ relationship for the term of the agreement.  Thus, neither the union nor the employer can unilaterally alter the conditions of employment of the employees in the bargaining unit before the collective agreement expires and the right to strike and to lock out is acquired.

c.     Grievance Arbitration

101                        Section 100, para. 1 L.C. provides that disputes respecting the interpretation and application of collective agreements in force must be submitted to the grievance arbitration procedure:

100.  Every grievance shall be submitted to arbitration in the manner provided in the collective agreement if it so provides and the certified association and the employer abide by it; otherwise it shall be referred to an arbitrator chosen by the parties or, failing agreement, appointed by the Minister.

Section 1(f) L.C. defines a “grievance” as “any disagreement respecting the interpretation or application of a collective agreement”.  In other words, whenever the rights claimed arise out of the collective agreement, grievance arbitration is the exclusive forum with the requisite jurisdiction to enforce those rights, unless the parties are able to reach a settlement.  The difficult problem that then arises, to which the courts have devoted a great deal of attention, is how to identify situations and rights that arise out of the collective agreement and are therefore within the jurisdiction of an arbitrator.

102                        In Weber v. Ontario Hydro, [1995] 2 S.C.R. 929, McLachlin J., writing for the majority, developed a test for determining “when employees and employers are precluded from suing each other in the courts by labour legislation providing for binding arbitration” (para. 37).  McLachlin J. accepted the exclusive jurisdiction model, under which, if “the dispute, in its essential character, arises from the interpretation, application, administration or violation of the collective agreement” (para. 52), then “the claimant must proceed by arbitration and the courts have no power to entertain an action in respect of that dispute” (para. 50).

103                        The reasoning of McLachlin J. in that case expanded on the reasoning of Estey J. in St. Anne Nackawic Pulp & Paper Co. v. Canadian Paper Workers Union, Local 219, [1986] 1 S.C.R. 704, in which the Court had refused to allow actions to be brought in the courts to claim damages arising out of an illegal strike called by a union in violation of a collective agreement.  Such actions would make it impossible to achieve the objectives of the collective labour relations scheme established by the legislature:

The collective agreement establishes the broad parameters of the relationship between the employer and his employees.  This relationship is properly regulated through arbitration and it would, in general, subvert both the relationship and the statutory scheme under which it arises to hold that matters addressed and governed by the collective agreement may nevertheless be the subject of actions in the courts at common law. . . .  The more modern approach is to consider that labour relations legislation provides a code governing all aspects of labour relations, and that it would offend the legislative scheme to permit the parties to a collective agreement, or the employees on whose behalf it was negotiated, to have recourse to the ordinary courts which are in the circumstances a duplicative forum to which the legislature has not assigned these tasks. [pp. 718‑19]

104                        To determine whether the dispute arises out of the collective agreement, two factors must be considered: (1) the nature of the dispute and (2) the ambit of the collective agreement.  In Weber, McLachlin J. stated that in St. Anne Nackawic the Court had insisted that “the analysis of whether a matter falls within the exclusive arbitration clause must proceed on the basis of the facts surrounding the dispute between the parties, not on the basis of the legal issues which may be framed” (para. 43).  In Regina Police Assn. Inc. v. Regina (City) Board of Police Commissioners, [2000] 1 S.C.R. 360, 2000 SCC 14, however, the Court found it appropriate to point out, in comments by Bastarache J., that only those disputes which expressly or inferentially arise out of the collective agreement are capable of being excluded from the jurisdiction of the civil courts:

While McLachlin J. embraced the exclusive jurisdiction model, she emphasized that the existence of an employment relationship, per se, does not grant an arbitrator the jurisdiction to hear or decide a dispute.  Only those disputes which expressly or inferentially arise out of the collective agreement are foreclosed to the courts: see Weber, at para. 54. [para. 24]

105                        The principles established in Weber have been reaffirmed and applied by this Court on numerous occasions  (New Brunswick v. O’Leary, [1995] 2 S.C.R. 967; Regina Police Assn.; Parry Sound; Quebec (Commission des droits de la personne et des droits de la jeunesse) v. Quebec (Attorney General), [2004] 2 S.C.R. 185, 2004 SCC 39 (“Morin”)).  In Morin, however, the decision of the majority of this Court imposed a restriction on the model that assigns exclusive jurisdiction to the grievances arbitrator, finding that the Quebec Human Rights Tribunal had concurrent jurisdiction over cases involving alleged discrimination in the formation of the collective agreement and the alleged invalidity of the agreement on that ground.

106                        Since Morin, certain authors have discussed how the majority in that case applied the principles established in Weber (see D. Nadeau, “L’arrêt Morin et le monopole de représentation des syndicats: assises d’une fragmentation” (2004), 64 R. du B. 161).  Their criticism is that, by finding that employees could directly challenge the validity of certain provisions of the collective agreement, this Court failed to have regard to the basic test, namely whether a dispute expressly or inferentially arises out of the agreement.  From this perspective, the solution adopted in Morin would thus be irreconcilable with the principles, frequently recognized by this Court, of the union’s monopoly on representation and the exclusive jurisdiction of the grievances arbitrator (see, inter alia, Syndicat catholique des employés de magasins de Québec Inc. v. Compagnie Paquet Ltée, [1959] S.C.R. 206; McGavin Toastmaster Ltd. v. Ainscough, [1976] 1 S.C.R. 718; Hémond v. Coopérative fédérée du Québec, [1989] 2 S.C.R. 962; and Noël).  Despite the concerns that have been expressed, however, Morin does not provide any indication that this Court intended to fundamentally change the approach it established in Weber.

107                        The procedure and rules of evidence that apply to grievance arbitration are set out in very general terms in ss. 100 to 102 L.C.  Subject to a few restrictions, arbitrators have the authority under s. 100.2, para. 1 L.C. to determine the rules of procedure and evidence that will apply.  Section 100, para. 3 L.C. states that, except where provided to the contrary, the rules in the L.C. relating to grievance arbitration prevail over any incompatible provisions of any collective agreement.  Arbitrators are also subject to the standards imposed by the charters, the provisions of public order in the C.C.Q. and the rules of natural justice.

108                        Section 100.12 L.C. lists the powers of arbitrators in the exercise of their duties.  In particular, para. (a) gives arbitrators the important power to “interpret and apply any Act or regulation to the extent necessary to settle a grievance”, a power that is highly relevant to these appeals.  The arbitration award, which is declared to be without appeal, binds the parties and, where such is the case, any employee concerned (s. 101 L.C.).  It is also protected by the privative clauses set out in ss. 139, 139.1 and 140 L.C.

2.      Individual Relationships

109                        Under the general law, the rules governing individual employment relationships apply to the conditions on which such a relationship exists, continues, is carried out and is terminated. The relationship is between one person (the employee) and another person (the employer) under whose direction he or she works.  When the civil law of Quebec was reformed in 1994, the C.C.Q. codified the legal framework for this relationship in arts. 2085 to 2097.  The relationship is established by the formation of a contract of employment, which is defined in art. 2085 C.C.Q.:

2085.     A contract of employment is a contract by which a person, the employee, undertakes for a limited period to do work for remuneration, according to the instructions and under the direction or control of another person, the employer.

Of course, this nominate contract is also subject to the general rules of contracts (arts. 1377 et seq. C.C.Q.).

110                        Pursuant to art. 9 C.C.Q., a contract of employment, like any other agreement, cannot derogate from the provisions of the C.C.Q. that are of public order.  In accordance with the preliminary provision of the C.C.Q., various employment‑related statutes set out other applicable rules that complement or make exceptions to the C.C.Q. or establish minimum standards to be met.  Where the contract of employment between the parties is silent, the conditions of employment and the rights and obligations of the employer and the employee will therefore be determined by those various statutes and the rules found in the C.C.Q.

3.      Minimum Standards

111                        The freedom of contract originally favoured by the general law intensified the inevitable imbalance of power that existed when conditions of employment were being established by an employee and an employer.  Its consequences compelled the legislature to pass many statutes laying down minimum thresholds below which the parties could not negotiate.  The standards set out in those statutes are the starting point for negotiating more advantageous conditions.

112                        The A.L.S., which is of critical importance because of its scope and social significance, is one of those remedial statutes.  It is the product of a reform that the Quebec legislature began in 1974 by creating a task force to review the Minimum Wage Act, R.S.Q., c. S‑1, which had established a large number of mandatory conditions of employment.  The final result of that reform was the Act respecting labour standards, which was passed and assented to in 1979.  Major amendments were subsequently made to that statute, including a reduction in the period of uninterrupted service needed to file a complaint regarding dismissal without good and sufficient cause (see N.‑A. Béliveau, Les normes du travail (2003), at pp. 1‑6).  Section 93 A.L.S. provides that an exception to the Act may be made only where one of its provisions so allows, although s. 94 A.L.S. authorizes the parties to a contract of employment or collective agreement to negotiate more advantageous conditions.  These provisions confirm that these legal standards are minimum standards of public order.  This means that a collective agreement can grant an employee a more advantageous condition of employment than is provided for in the A.L.S. but cannot deprive the employee of such a condition, or it will be absolutely null.

113                        However, the definitions of “employer” and “employee” in the A.L.S., which apply to both collective labour relations and individual employment relationships (ss. 1(7) and (10) A.L.S.), are broader in scope than the L.C.’s definitions of the same concepts.  As a result, the A.L.S. applies to employees who do not have the status of employees under the L.C. and therefore cannot benefit from the collective representation scheme established by the L.C.  The A.L.S. provides for many minimum conditions of employment, including the minimum wage (s. 40), the length of the regular workweek (s. 52), overtime pay (s. 55), paid statutory general holidays (s. 60) and the right to a weekly rest period (s. 78).

114                        A number of other statutes establish minimum standards, but they are not at issue in this appeal (see, for example: Act respecting industrial accidents and occupational diseases, R.S.Q., c. A‑3.001; Act respecting collective agreement decrees, R.S.Q., c. D‑2; Act to secure handicapped persons in the exercise of their rights with a view to achieving social, school and workplace integration, R.S.Q., c. E‑20.1; National Holiday Act, R.S.Q., c. F‑1.1; Public Service Act, R.S.Q., c. F‑3.1.1; and Act respecting occupational health and safety, R.S.Q., c. S‑2.1).

E.       Nature and Effects of a Collective Agreement

115                        When a collective agreement comes into force, it naturally affects the content of the legal relationship between the employer and its employees.  This appeal concerns the hierarchy and nature of the rights protected by labour law rules, and the jurisdiction of an arbitrator.  Our interpretation of this Court’s decisions on these points leads us to conclude that the rights arising out of an individual contract of employment and the rights protected by the collective scheme can be harmonized in a manner consistent with the hierarchy of legal rules.

1.      State of the Case Law

116                        Paquet was the first decision that discussed the nature of a collective agreement and its effects on the existence of individual contracts of employment.  In that case, this Court had to determine whether a compulsory check‑off clause for union dues (Rand Formula) that applied to all employees in the bargaining unit, whether or not they were union members, could lawfully be included in a collective agreement as a condition of employment (s. 47 L.C. now provides that the employer has a legal obligation to withhold union dues).

117                        Judson J., writing for the majority, began by determining the union’s status in negotiating and signing the collective agreement.  In his view, the certified association was a contracting party and not merely the mandatary of the employees in the bargaining unit:

If the relation between employee and union were that of mandator and mandatary, the result would be that a collective agreement would be the equivalent of a bundle of individual contracts between employer and employee negotiated by the union as agent for the employees.  This seems to me to be a complete misapprehension of the nature of the juridical relation involved in the collective agreement.  The union contracts not as agent or mandatary but as an independent contracting party and the contract it makes with the employer binds the employer to regulate his master and servant relations according to the agreed terms. [Emphasis added; p. 214.]

118                        In Paquet, at p. 212, Judson J. stressed the importance of the union’s exclusivity as the sole negotiator for the employees in the bargaining unit:

The union is, by virtue of its incorporation under the Professional Syndicates’ Act and its certification under the Labour Relations Act, the representative of all the employees in the unit for the purpose of negotiating the labour agreement.  There is no room left for private negotiation between employer and employee.  Certainly to the extent of the matters covered by the collective agreement, freedom of contract between master and individual servant is abrogated.  The collective agreement tells the employer on what terms he must in the future conduct his master and servant relations.

119                        In subsequent decisions, this Court sought to interpret Judson J.’s comments that “[t]here is no room left for private negotiation” and that “freedom of contract . . . is abrogated” by suggesting that individual contracts of employment were abolished once a collective agreement was reached.  The interpretations of those comments must be considered in the context of a complete analysis of the complex ties between an individual employment relationship and a collective agreement under a collective labour relations scheme.

120                        McGavin Toastmaster is one of the decisions cited in support of the theory that individual contracts are abolished.  In that case, an illegal strike by employees had precipitated the closure of a business.  The employer, claiming that the employees had violated their individual contracts of employment by participating in the illegal strike and had thus terminated their employment, refused to pay them the severance pay provided for in the collective agreement.  The issue was therefore whether the strike had terminated the employment relationship.  This Court found that the very nature of the collective labour relations scheme precluded such a result.  In the opinion of Laskin C.J., the collective agreement could not be treated as “a mere appendage of individual [employment] relationships” (p. 724).  He refused to accept a general law (common law) rule that would have contradicted a fundamental principle of the collective labour relations scheme established by the legislature:

The reality is, and has been for many years now throughout Canada, that individual relationships as between employer and employee have meaning only at the hiring stage and even then there are qualifications which arise by reason of union security clauses in collective agreements.  The common law as it applies to individual employment contracts is no longer relevant to employer‑employee relations governed by a collective agreement which, as the one involved here, deals with discharge, termination of employment, severance pay and a host of other matters that have been negotiated between union and company as the principal parties thereto. [p. 725]

121                        Since the subject matter of the dispute was governed by the provisions of the collective agreement and by specific legislation applicable to collective labour relations, the Chief Justice concluded that the general law could not be applied to support the position that the individual contracts of employment had been terminated because the strike was illegal and had resulted in the employees’ work not being performed:

Neither this Act [the Mediation Services Act] nor the companion Labour Relations Act could operate according to their terms if common law concepts like repudiation and fundamental breach could be invoked in relation to collective agreements which have not expired and where the duty to bargain collectively subsists.  [pp. 726‑27]

122                        In St. Anne Nackawic, in which the employer claimed damages for the harm it suffered as a result of the shutdown of its business caused by an illegal strike by employees in one of the bargaining units, the question of the relationship between the collective labour relations scheme and the general law arose once again.  Since the legislation included a binding arbitration clause, it was necessary to determine whether the ordinary courts had jurisdiction to hear the claim.

123                        Estey J., writing for this Court, reaffirmed that the collective agreement and collective labour relations legislation take precedence over the rules of general law:

From the above survey of the cases, a general consensus is evident.  The courts have no jurisdiction to consider claims arising out of rights created by a collective agreement.  Nor can the courts properly decide questions which might have arisen under the common law of master and servant in the absence of a collective bargaining regime if the collective agreement by which the parties to the action are bound makes provision for the matters in issue, whether or not it explicitly provides a procedure and forum for enforcement. [Emphasis added; p. 720.]

124                        A few years later, in Hémond, this Court had to decide whether foremen who returned to a bargaining unit were entitled to the seniority rights provided for in the agreement that had been in effect at the time they left the unit.  Those rights had not been incorporated into the agreement that was in effect when they rejoined the bargaining unit.  Recognizing that the agreement regulated the content of the individual employment relationships, Gonthier J. adopted the comments of Laskin C.J. in McGavin Toastmaster and Judson J. in Paquet, adding:

When a collective agreement exists, individual rights are for all practical purposes superseded.  [p. 975]

125                        In CAIMAW v. Paccar of Canada Ltd., [1989] 2 S.C.R. 983, the Court had to decide whether the terms and conditions of employment set out in a collective agreement continued to apply when the agreement expired.  The union’s argument was that the individual contracts of employment resumed operation when the collective agreement expired.  After stating that the conclusion that “individual contracts of employment no longer arise if the parties are in a collective bargaining relationship” was “inescapable since the decision . . . in McGavin Toastmaster” (p. 1006), La Forest J. concluded that the “collective agreement displaced the common law of individual employment” (p. 1007), even where the agreement was no longer in existence, as long as the union remained certified:

The operative factor, it seems to me, is the ongoing duty on the parties to bargain collectively and in good faith.  So long as that obligation remains, then the tripartite relationship of union, employer and employee brought about by the Code displaces common law concepts.  The termination of the collective agreement has no effect on the obligation of the parties to bargain in good faith imposed by [the British Columbia Labour Code].  The union retains its certification as the representative of the employees whether a collective agreement is in force or not.  The scheme of the Labour Code, requiring the union and the employer to bargain collectively as the expiry of a collective agreement approaches (ss. 62 and 63) does not leave any room for the operation of common law principles. [pp. 1007‑8]

126                        More recently, in Noël, this Court had to determine whether an employee could personally appeal against an arbitration award.  Noting that only the union had the authority to do this pursuant to the principle of exclusive representation in Quebec law, this Court confirmed that the collective scheme takes precedence over the individual framework:

A collective framework supersedes the traditional contractual process, which is based on individual relations between the employer and its employees. [para. 43]

127                        While some of the passages reproduced above have been used to support positions that rule out the survival of the individual contract when labour relations are governed by a collective scheme, I do not think they need to be given this scope in present‑day Quebec labour law.  Some of the comments made by this Court in the decisions in question have often been quoted out of context and without regard to all the circumstances in which they were made.  Moreover, the position that the C.C.Q.’s rules regarding individual contracts of employment become totally irrelevant in the context of a collective agreement would have consequences that are sometimes strange or that are difficult to reconcile with what is needed for the proper functioning and coherence of the labour relations system in Quebec.  I will return to this point.

128                        It is true that individual contracts cannot derogate from the provisions of the collective agreement in a manner that defeats the effects of the collective labour relations scheme, since those provisions take precedence in determining the actual content of the conditions of employment, subject to provisions of public order.  In the decisions discussed above, this Court favoured recognizing the certified union’s exclusive right of representation and the regulatory effect of the collective agreement in relation to individual contracts of employment.  For example, it is correct to say that the collective scheme leaves no room for individual negotiation between employer and employee.  The certified association’s exclusivity as the employees’ representative must remain intact at all times (Paquet and Noël).  Other important principles must also be adhered to at all times: the duty to bargain collectively and in good faith (Paccar), the binding nature of grievance arbitration (St. Anne Nackawic), the effect of the right to strike being exercised and the return to work (McGavin Toastmaster), and the requirement that there be only one collective agreement which, during its term, is binding on all the workers included in the bargaining unit (Hémond). 

129                        However, recognizing the certified union’s exclusivity and assigning a regulatory function to the collective agreement does not resolve the question of the implicit obligational content of that agreement and, in some cases, the employment relationships to which it applies.  Nor does it completely resolve the question of how this scheme relates to the general law set out in the C.C.Q. and the principles of the civil law system it governs.  A number of judgments support the position that Quebec’s collective labour law scheme does not completely preclude the application of the general law but rather preserves at least a supplementary role for it when specific statutes and the collective agreement do not provide answers to the questions asked.

130                        In 1947, the Quebec Court of Appeal stated this view in Association catholique des institutrices du district n^o 16 Inc. v. Commissaires d’écoles pour la municipalité de la paroisse de St‑Athanase, [1947] B.R. 703.  At that time, it stressed the principle that the collective agreement has a regulatory effect:

[translation] It is apparent from the trial judge’s reasons that he saw an inconsistency between a collective labour agreement and the provisions of the Education Act stating that teachers must be hired by individual contract.  This is clearly a mistake.  A collective labour agreement is not a collective contract of employment.  It does not take the place of a contract of service but rather establishes conditions of employment that will be deemed to be part of the individual contracts of employment.  [p. 712]

131                        In a case involving the application of the provisions of the A.L.S. relating to notice of dismissal, Quebec (Commission des normes du travail) v. Campeau Corp., [1989] R.J.Q. 2108, the Quebec Court of Appeal recognized the position that the individual contract of employment and the collective agreement coexist.  Referring to the opposing position, Chevalier J. (ad hoc) stated the following:

[translation] With respect, I find this reasoning to be incorrect.  It confuses the concepts of collective agreement and individual contract of employment and is based on the principle that they cannot coexist.  In short, this reasoning presupposes that, when a collective agreement comes into force, it supplants every individual agreement that may exist at the time and prevents any future employee from contracting with the employer on any subject whatsoever, even on a subject for which the collective agreement makes no provision.

Rather strangely, supporters [of this position] . . . rely, inter alia, on the same two decisions of the Supreme Court of Canada, in which they claim to find justification for their conclusions: Syndicat Catholique des Employés de Magasins de Québec Inc. v. Cie Paquet Ltée and McGavin Toastmaster Ltd. v. Ainscough.

A careful examination of these two decisions will persuade the reader that the Supreme Court did not reject the idea that the individual contract and the collective agreement can coexist.  [Citations omitted; pp. 2112‑13.]

132                        Chevalier J. also referred to comments made by Professor René Doucet in an article entitled “La résiliation du contrat de travail en droit québécois” (1974), 9 R.J.T. 249.  In that article, Professor Doucet challenged the position that the individual contract ceases to have effect in the context of a collective bargaining scheme:

[translation] . . . a collective agreement is not a collective contract of employment or a combination of individual contracts.  It therefore does not terminate or take the place of the individual contract of employment.  That contract continues to be the normal method of becoming an employee.  The hiring of an employee, and the termination of his or her employment, are matters governed by the individual contract of employment.  The collective agreement establishes standards, working conditions and procedures that must be followed by the parties and are binding on the employees.  Those standards, conditions and procedures may cancel or alter the terms set out in the individual contract of employment, but that contract remains in effect to the extent that it has not been so altered by the collective agreement.

According to the case law, the conditions of employment set out in the collective agreement are deemed to be part of individual contracts.  This does not mean they are incorporated into the individual contract of employment.  That contract subsists as the instrument that ties the employee to the business and thus as an act by which the employee adheres to the rules found in the collective agreement. [p. 263]

133                        The impact of the collective agreement on the individual employment relationship is indeed substantial.  However, there remains, at the very least, an individual act under which the employee is hired, and its effect, in any case, survives should the certification and the collective agreement cease to have effect.

2.      Impact on Individual Relationships

134                        Several of the fundamental principles that structure collective labour law significantly change the dynamics of the individual relationships previously established between the employer and the employees.  The legislative framework governing the collective labour relations scheme discussed above creates three basic institutions that confirm the unique nature of that scheme: certification, which gives the union an exclusive right of representation, the collective agreement, which becomes the law of the parties, and grievance arbitration, which is the preferred forum for resolving disputes.

135                        Since the certified union now has a monopoly on representation and bargaining, the employee and the employer can no longer agree on conditions that differ from those set out in the collective agreement.  The principle of freedom of contract in the workplace, which applies in conformity with the framework established by the C.C.Q. and specific statutes, becomes totally irrelevant.  The L.C., which now governs the parties, that is, the employer and the certified association, requires them to negotiate diligently and in good faith (s. 53).  To negotiate conditions of employment individually becomes legally impossible.

136                        However, defining the true nature of a collective agreement continues to be a delicate task, despite all the efforts made by the courts.  In Parry Sound, this Court attempted to define it as follows:

. . . this willingness to consider factors other than the parties’ expressed intention is consistent with the fact that collective bargaining and grievance arbitration has both a private and public function.  The collective agreement is a private contract, but a contract that serves a public function: the peaceful resolution of labour disputes. [Reasons of Iacobucci J., at para. 30 (emphasis in original).]

                                                                   . . .

Although these labour agreements are entered into under the collective bargaining framework established by the Labour Relations Act, 1995, they are essentially private contracts of significant public importance.  [Reasons of Major J., at para. 95.]

137                        The collective agreement is binding on the certified union and the employer during its term.  The collective will of the union replaces the individual will of the employees, whose employment scheme becomes the agreement.  The collective agreement also establishes temporary peace in the company.  Once it is signed and comes into force, the use of pressure tactics such as strikes and lock‑outs is prohibited during its term.  This stability in labour relations is one of the primary objectives of the collective scheme.  It is in the interest of the workers as well as the employer and the company’s customers.  McGavin Toastmaster illustrates the importance of this objective: general law remedies cannot be used to argue that the collective agreement has been repudiated, even where there has been a breach of an obligation as fundamental as the prohibition against striking.

138                        As I noted above, one of the institutions that is most characteristic of collective labour relations is obviously the grievance arbitration procedure.  Disagreements respecting the interpretation and application of the collective agreement will therefore fall under the jurisdiction of an arbitrator, not of the ordinary courts.

139                        However, it is important to properly distinguish two concepts: the survival of the individual contract of employment and the employee’s residual freedom of contract.  Although employees are not allowed to participate individually in negotiating a contract with the employer under the collective scheme, this does not mean that no such contract exists.

140                        An individual contract continues to exist after a union is certified and a collective agreement is in place.  This result is necessary because it explains the legal basis of the various obligations imposed on the employer and the employee, and also because labour legislation, as prolix and complex as it may be, does not cover all aspects of labour relations, even in a collective context.  The rules of the C.C.Q. supplement that legislation and make up for any silences or gaps in the collective agreement.

F.      Content of the Collective Agreement

141                        In principle, of course, the collective agreement contains all the conditions of employment expressly included by the parties during the collective bargaining process.  However, the parties’ ability to freely negotiate the substantive standards that will govern them is limited by the obligation to respect, or incorporate into the agreement, the rights and values protected by the charters and the legal rules imposed by the legislature, including certain general principles of law, particularly those that are of public order.

1.      Parry Sound and the Implicit Content of the Collective Agreement

142                        In Parry Sound, the majority of this Court favoured a broad view of the content of the collective agreement, despite its silence, by implicitly incorporating certain statutory rules into it.  That was an Ontario case, of course, and the statutes applied were not the same as the ones being examined in this appeal.  However, the legislative framework that governs this appeal does not prevent us from drawing significant analogies with the situation considered in Parry Sound and the principles established in that decision.

143                        In Parry Sound, a probationary employee was discharged when she returned from maternity leave.  Alleging that she had been discriminated against in violation of the collective agreement, she filed a grievance against her employer.  Before the arbitrator, the employer argued that the grievance was not arbitrable because the collective agreement gave the employer a management right that allowed it to discharge a probationary employee for any reason satisfactory to it.  Also, the agreement expressly provided that the discharge of a probationary employee was not subject to the grievance procedure.  The issue in the appeal was therefore “whether the substantive rights and obligations of the Human Rights Code are incorporated into a collective agreement” (para. 14).

144                        Relying on McLeod v. Egan, [1975] 1 S.C.R. 517, Iacobucci J., writing for the majority, found that the substantive rights and obligations of the Human Rights Code are incorporated into each collective agreement over which an arbitrator has jurisdiction:

Under a collective agreement, the broad rights of an employer to manage the enterprise and direct the work force are subject not only to the express provisions of the collective agreement, but also to statutory provisions of the Human Rights Code and other employment‑related statutes.  [para. 23]

145                        In McLeod, an employee had filed a grievance after his employer disciplined him for refusing to work in excess of 48 hours in a week.  The collective agreement did not expressly limit the employer’s management right and therefore did not prevent the employer from requiring an employee to work more than 48 hours per week.  Unlike the arbitrator, who had dismissed the grievance, this Court held that the employer’s management rights were limited not only by the collective agreement but also by mandatory legislative provisions.

146                        In Parry Sound, Iacobucci J. also recognized that the collective agreement may give the employer a broad right to manage the operations of the business.  However, that power is limited by the employees’ statutory rights even where the collective agreement is silent on the subject.

As a practical matter, this means that the substantive rights and obligations of employment‑related statutes are implicit in each collective agreement over which an arbitrator has jurisdiction.  A collective agreement might extend to an employer a broad right to manage the enterprise as it sees fit, but this right is circumscribed by the employee’s statutory rights.  The absence of an express provision that prohibits the violation of a particular statutory right is insufficient to conclude that a violation of that right does not constitute a violation of the collective agreement.  Rather, human rights and other employment‑related statutes establish a floor beneath which an employer and union cannot contract.

As a result, the substantive rights and obligations of the parties to a collective agreement cannot be determined solely by reference to the mutual intentions of the contracting parties as expressed in that agreement.  Under McLeod, there are certain terms and conditions that are implicit in the agreement, irrespective of the mutual intentions of the contracting parties.  More specifically, a collective agreement cannot be used to reserve the right of an employer to manage operations and direct the work force otherwise than in accordance with its employees’ statutory rights, either expressly or by failing to stipulate constraints on what some arbitrators regard as management’s inherent right to manage the enterprise as it sees fit.  The statutory rights of employees constitute a bundle of rights to which the parties can add but from which they cannot derogate.  [paras. 28‑29]

147                        Iacobucci J. therefore refused to give effect to clause 8.06(a) of the collective agreement, which provided that the discharge of a probationary employee was not  subject to the grievance procedure.  In his opinion, the incorporation of s. 5(1) of the Human Rights Code into the collective agreement implicitly gave this class of employees the right to equal treatment without discrimination.  The discriminatory discharge of a probationary employee therefore violated the collective agreement.  Since the Ontario legislation required that every collective agreement contain a binding arbitration clause for all differences arising under the agreement, clause 8.06(a) was void as contrary to the legislation (para. 35).

148                        In the opinion of Iacobucci J., the power of an arbitrator to interpret and apply human rights legislation and other employment‑related statutes confirmed their incorporation into the collective agreement (s. 48(12)(j) of the Labour Relations Act, 1995, S.O. 1995, c. 1, Sch. A, to the same effect as s. 100.12(a) L.C.).  Although the grievance must be arbitrable for an arbitrator to have this power, it is sufficient if the dispute inferentially arises out of the collective agreement:

But even if it is true that a dispute must be arbitrable before an arbitrator obtains the power to interpret and apply the Human Rights Code, it does not thereby follow that an alleged contravention of an express provision of a collective agreement is a condition precedent of an arbitrator’s authority to enforce the substantive rights and obligations of employment‑related statutes. [Emphasis in original; para. 48.]

149                        However, Parry Sound did not incorporate all the substantive rights and obligations set out in all employment‑related statutes into all collective agreements.  What it included in them was legislation that was, in light of Iacobucci J.’s comments, of public order.

150                        Parry Sound thus took a broad approach to defining a grievance and, as a result, a broad view of the scope of an arbitrator’s exclusive jurisdiction.  From then on, [translation] “the right to arbitral review would arise whenever a violation of provisions of public order was validly raised in relation to all employees governed by a collective agreement” (F. Morin, “Pertinence, cohérence et conséquences de l’arrêt Parry Sound”, in Service de la formation permanente du Barreau du Québec, Développements récents en droit du travail (2004), 29, at p. 34).

151                        As Parry Sound illustrates, fundamental rights and freedoms figure prominently in the public order provisions of employment‑related statutes that are incorporated into the collective labour law scheme.  In Quebec, the rights and values guaranteed by the Canadian Charter of Rights and Freedoms  and the Charter of human rights and freedoms, R.S.Q., c. C‑12, are therefore necessarily part of the implicit obligational content of collective agreements.  Since this case does not deal with the applicability of such rights, I will limit my analysis to the other sources that, because they are of public order, are imposed on the parties to collective agreements in Quebec and become part of the implicit obligational content of those agreements.

2.   Obligational Content of Collective Agreements in Quebec

a.   Public Order

152                        In Quebec, the parties’ freedom to negotiate the conditions of employment included in a collective agreement is limited, first of all, by statutory provisions of public order, as set out in s. 62 L.C.:

62. The collective agreement may contain any provision respecting conditions of employment which is not contrary to public order or prohibited by law.

Thus, as the Quebec Court of Appeal pointed out in the judgment under consideration here, the principle of incorporation of rules of public order recognized in Parry Sound is already found in the Quebec legislation:

[translation] In Quebec labour law, the implicit incorporation of rules of public order is expressly provided for in s. 62 of the Labour Code. [para. 43]

Where a clause in a collective agreement is inconsistent with a provision of public order, the clause will be null, although the collective agreement will not be invalidated (s. 64 L.C.).  In actual fact, s. 62 L.C. restates a rule that applies to the entire Quebec legal system and is found in the Interpretation Act (ss. 41.3 and 41.4).  In Quebec labour law, the rules set out in provisions of public order are either minimum standards to which the parties can add by agreement or standards that are deemed to be incorporated as is into every collective agreement and that cannot be derogated from.  However, Quebec civil law does recognize more than one kind of public order.  The first distinction is between political and moral public order and social and economic public order.

153                        The first category contains the rules made in the interest of society.  Generally speaking, an individual cannot waive the application of these rules, since they were not made in favour of the individual only (see Garcia Transport Ltée v. Royal Trust Co., [1992] 2 S.C.R. 499).  For example, rules of political and moral public order defend the state and individuals against certain individual actions (see J.‑L. Baudouin and P.‑G. Jobin, Les obligations (6th ed. 2005), at para. 144).  Thus, the C.C.Q. prohibits certain contracts relating to the human body, which are sanctioned by absolute nullity (arts. 11 et seq. C.C.Q.; art. 1417 C.C.Q.).

154                        Social and economic public order is generally characterized by state legislative intervention relating to the production, distribution or consumption of goods and services in order to prevent or mitigate the effects of social or economic imbalances in certain types of contractual activity (Baudouin and Jobin, at para. 145).  A distinction is usually made between rules of directive social and economic public order, which cannot be waived and whose violation is sanctioned by absolute nullity, and rules of protective social and economic public order, which are subject to relative nullity because the beneficiary of such a provision can waive its benefits.

155                        Labour law is a field in which the legislature has established a considerable number of rules of social and economic public order.  As is probably the case in other provinces, the Quebec legislature has established a complex legal framework designed to remedy what is seen as an unequal balance of power between the employer and the employee.  Statutes have therefore been passed setting out minimum labour standards and thus limiting the parties’ freedom of contract (see L. Otis, “L’ordre public dans les relations de travail” (1999), 40 C. de D. 381, at p. 384).  We have already explained that the A.L.S. (ss. 93 and 94) and ss. 100 to 102 L.C. relating to grievance arbitration (s. 100, para. 3) are of public order.  The L.C. and several specific statutes contain many other provisions of public order that apply in the collective labour relations context, including: ss. 47, 47.2 and 63 L.C.; ss. 41 to 50 of the Charter of the French language, R.S.Q., c. C‑11; s. 4 of the Act respecting industrial accidents and occupational diseases; s. 11 of the Act respecting collective agreement decrees; ss. 4 and 227 of the Act respecting occupational health and safety.

156                        The distinction between protective and directive economic public order is sometimes a fine one.  The first of these categories is generally considered to include statutes whose essential role is to protect individuals.  Statutes that set out rules to protect individuals but whose primary objective relates to the interests of society as a whole would fall into the second category.  However, as Baudouin and Jobin state in Les obligations:

[translation] . . . these ideas of directive public order and protective public order are sometimes difficult to clearly distinguish, since the statute may sometimes, in protecting individuals, seek also to regulate a set of social or economic relationships.  [para. 147]

Since employees generally cannot renounce the protection conferred on them, and since the purpose of legislative intervention is usually to give labour law an economic direction that will benefit society as a whole, such statutes are, in general, more likely to fall into  the category of directive social and economic public order.

157                        Generally speaking, for a statute or one of its provisions to be of public order, it must say so expressly.  The C.C.Q. does not take this approach, however, since it simply provides that civil rights must be exercised in accordance with the rules of the Code that are of public order, without specifically identifying the rules in question (art. 9 C.C.Q.).  How a provision is characterized will therefore depend on how the language of the provision is interpreted and what role is assigned to it in the structure of legal institutions.

b.   General Law (Jus Commune)

i.    Applicability of the C.C.Q.

158                        As stated in its preliminary provision, the C.C.Q. recognizes the fundamental nature of the civil law as the jus commune of Quebec and of the C.C.Q. as the foundation of many specific laws:

The Civil Code of Québec, in harmony with the Charter of human rights and freedoms and the general principles of law, governs persons, relations between persons, and property.

The Civil Code comprises a body of rules which, in all matters within the letter, spirit or object of its provisions, lays down the jus commune, expressly or by implication.  In these matters, the Code is the foundation of all other laws, although other laws may complement the Code or make exceptions to it.

159                        In Doré v. Verdun (City), [1997] 2 S.C.R. 862, Gonthier J. referred to the fundamental nature of the C.C.Q. as the jus commune of Quebec in commenting on the preliminary provision of the C.C.Q.:

This provision explicitly states that the Civil Code is the jus commune of Quebec.  Thus, unlike statute law in the common law, the Civil Code is not a law of exception, and this must be taken into account in interpreting it.  It must be interpreted broadly so as to favour its spirit over its letter and enable the purpose of its provisions to be achieved.  [para. 15]

160                        In an article entitled “Effets combinatoires de deux codes: Code du travail et Code civil du Québec” (1994), 49 Relat. ind. 227, Professor F. Morin also analyses the first paragraph of this provision.  His view is that the specificity of collective labour relations law does not require that this field of law be removed from the general body of Quebec private law.  Indeed, it deals with the same kinds of legal relations involving persons, property and contracts:

It should be remembered that labour law, just like its component related to collective labour relations, is concerned with persons (employee and employer), relations between these same persons and the properties to which these relations are directed or which result from these relations. [p. 234; English translation taken from an English summary of the article, entitled “The Combined Effects of the New Québec Civil Code and the Québec Labour Code”, at p. 249 of the same volume.]

161                        With regard to the second paragraph of the preliminary provision, the relevant question is whether the L.C. and the collective scheme in labour law are matters within the letter, spirit or object of the provisions of the C.C.Q.  The commentaries of the Minister of Justice on the C.C.Q. include remarks that are relevant to this point: 

[translation] One of the objectives of this paragraph is to promote a dynamic interpretation of the Civil Code and encourage the use of its provisions to interpret and apply other legislation and fill any gaps in that legislation, where it relates to matters or makes use of concepts or institutions that come under the Civil Code.  [Emphasis added.]

(Commentaires du ministre de la Justice — Le Code civil du Québec: Un mouvement de société (1993), vol. I, at p. 1)

162                        The principle stated here by the preliminary provision can easily and legitimately be applied to Quebec’s collective labour law scheme.  Even when interpreted and applied as a whole, the collective agreement and the L.C. are not sufficient to create a complete, coherent legal framework.  As a result, the rules and principles stated in the C.C.Q. must often be used to interpret and implement Quebec’s labour law scheme, even in its collective aspects.

ii.    Need to Apply the C.C.Q.

163                        Some provisions of the C.C.Q. are not merely useful but essential in defining the content of collective labour relations.  Rights and obligations inherent in all employment relationships, and even in collective relations, are thus made explicit by the C.C.Q.  Despite the significant role it plays, the L.C. does not set out all the rules that govern collective labour relations in Quebec.  Nor is it a completely autonomous legal scheme.  The collective agreement between the parties establishes a set of contractual standards within the enterprise, but it too does not cover all aspects of an employment relationship.  Some aspects, such as the employer’s power of direction and control, and personnel management, usually remain the prerogative of the employer, whether or not the collective agreement so provides.  Even more fundamentally, the creation of the employment relationship between an employee and an employer is not provided for in the L.C. or, frequently, in the collective agreement.  For the employer‑employee relationship to be recognized, it must materialize through a juridical act that retains its individual nature, subject to the collective agreement provisions that sometimes govern it.  The relationship between the employer and the employee is therefore necessarily created by an individual act.

164                        What is included in a collective agreement is the result of the collective bargaining process, but the agreement does not necessarily provide for everything.  Since collective agreements are dependent on a process in which the parties may fail to address some aspects of their relationship, some omissions are inevitably found in them.  As F. Morin and J.‑Y. Brière write in Le droit de l’emploi au Québec (2nd ed. 2003):

[translation] . . . employment law must be able to draw on a general and generous source that can serve as a basis for remedying its inevitable interstices, omissions and silences. [p. 268]

165                        The provisions of the C.C.Q. relating to contracts of employment (arts. 2085 to 2097) illustrate this need.  Although some collective agreements reproduce the basic obligations set out in those articles, others do not.  If those provisions were inapplicable, the effects would be incongruous.  There would then be no basis for the employer’s power of control over the employee (art. 2085 C.C.Q.) or the employer’s obligation to pay the remuneration fixed and take all appropriate measures to prevent the risk of harm (art. 2087 C.C.Q.).  The employee’s obligation to act faithfully and honestly and to show discretion (art. 2088 C.C.Q.) provides another example: employers would be surprised and concerned if it was not an implicit part of their employees’ obligations.

166                        Other provisions of the C.C.Q. may also prove essential to the proper conduct of collective labour relations.  For example, the principles of the general theory of obligations and the common rules of contract interpretation may apply to collective agreements.

167                        In this context, pursuant to art. 1434 C.C.Q., the agreement binds the parties “not only as to what they have expressed in it but also as to what is incident to it according to its nature and in conformity with usage, equity or law”.  The interpretation of the agreement must also take into account “the nature of the contract, the circumstances in which it was formed, the interpretation which has already been given to it by the parties or which it may have received, and usage” (art. 1426 C.C.Q.).  In short, the general law makes certain legal rules that are necessary for implementing the collective agreement part of the implicit content of the agreement, notwithstanding its silence.

c.   Harmonizing the Legal Sources of the Collective Bargaining Scheme

168                        Parry Sound demonstrated the need for provisions of public order that protect employees, in that case fundamental rights and freedoms, to be “incorporated” into collective agreements.  In the context of the C.C.Q., the use of the term “incorporate”, while helpful in conceptualizing the way the various sources are integrated, is not entirely accurate.  It is more appropriate to say that the various sources of labour law are harmonized to form a complete legal framework:

[translation] The parties negotiate the specific terms and conditions of their employment scheme, which is superimposed on, supplements or extends the conditions of employment initially guaranteed to everyone by the charters and employment‑related statutes.  As a result of this harmonization of the legal rules from two different sources, it becomes possible to achieve the aims of the law: order, stability, consistency and fairness for both parties and for the employees concerned. 

(Morin, “Pertinence, cohérence et conséquences de l’arrêt Parry Sound”, at p. 39)

169                        Harmonizing the various sources that make up Quebec labour law inevitably involves establishing a hierarchy.  It must be determined when the rules established by a collective agreement or the rules set out in legislation will take precedence.

170                        In the context of the C.C.Q., art. 9, which draws a distinction between provisions of public order and provisions that supplement intention, is at the basis of this hierarchy.  Thus, a juridical act, such as a collective agreement, cannot derogate from the rules of the C.C.Q. that are of public order.  There is also a similar provision among the general provisions on obligations (art. 1373 C.C.Q.).  For the purposes of the C.C.Q., therefore, this rule is the corollary of s. 62 L.C., which specifically states that the provisions of a collective agreement may not be contrary to public order.  In accordance with the principle of freedom of contract on which the Quebec law of obligations is based, the parties are free to derogate from rules that are not of public order.  Since there is no general rule for determining which articles of the C.C.Q. are of public order, each provision will have to be considered individually, when it must be applied, to establish its nature.

d.   Notice of Termination of a Contract of Employment: A Matter of Public Order

171                        As we have seen, arts. 2085 to 2097 C.C.Q. govern contracts of employment.  Such contracts may be for a fixed term or an indeterminate term (art. 2086 C.C.Q.), but art. 2085 C.C.Q. prohibits a contract for life.  When a contract is for an indeterminate term, either party may terminate it unilaterally without a serious reason, provided that the other party is given reasonable notice of termination (arts. 2091 and 2094 (a contrario) C.C.Q.). 

172                        Compensation will usually, especially when the employer terminates the contract, be paid in lieu of notice of termination of employment.  Such compensation will represent the employee’s earnings for the length of the notice of termination.  To determine the length of the notice period, a court must take account of the circumstances of each case, the character of the employment, the employee’s length of service, the employee’s age and the availability of similar employment having regard to the employee’s experience, training and qualifications (see Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986, at p. 999; Farber v. Royal Trust Co., [1997] 1 S.C.R. 846, at para. 48).

173                        Under art. 2092 C.C.Q., employees may not renounce their right to obtain compensation for any injury they suffer where the notice of termination is not reasonable.  Since such compensation is vital and is considered an essential element of the contract of employment, the legislature has made it a matter of public order for employees, who are very often in a vulnerable position when they lose their jobs.

174                        Since its wording excludes any possibility of renunciation, art. 2092 C.C.Q. must be regarded as a provision of directive social and economic public order.  It should be noted that the right to reasonable notice of termination is of public order only for employees.  Although the legislature could have provided that neither party could renounce the right and thus confirmed that an employee’s departure can also cause injury to an employer, it chose to have this apply only to employees.

G.     Application of the Legal Principles to the Facts at Issue

175                        The outcome of this case depends on how the various sources of collective labour law in Quebec are harmonized.  It is true to say that the certification of a union in a company transforms the dynamics of labour relations.  Indeed, the employees lose their freedom of contract.  However, this in no way means that the rules of the C.C.Q. regarding individual contracts of employment cease to apply and are no longer part of the implicit content of the collective agreement.

1.   Jurisdiction of the Arbitrator — Connection Between the Individual Claim and Collective Relations

176                        Under s. 100.12(a) L.C., a grievances arbitrator has the power to interpret and apply any statute to the extent necessary to settle a grievance.  This Court’s decision in Parry Sound clearly established that an arbitrator has jurisdiction to interpret the provisions of employment‑related statutes that are implicitly included in a collective agreement.  Obviously, not all the substantive rights set out in labour legislation are implicitly included in collective agreements; only those from which an employer cannot derogate are so included.  For example, in Parry Sound, the employer could not deprive one of its employees of the protection against discrimination guaranteed in the Human Rights Code.  This Court wrote:

The statutory rights of employees constitute a bundle of rights to which the parties can add but from which they cannot derogate.  [para. 29]

177                        In Quebec, as we have seen, the substance of the principles stated in Parry Sound is provided for in legislation: s. 62 L.C. renders null any provision of a collective agreement that is contrary to public order.  Along with the charters, as I have noted, there are several Quebec statutes containing labour law provisions that are of public order.  In particular, the A.L.S. sets out minimum standards that all collective agreements must meet.  In addition to specific statutes, the C.C.Q., which is the general foundation of all other laws, cannot be disregarded.  The C.C.Q. contains provisions of public order that apply directly to labour relations.  Under arts. 2091 and 2092 C.C.Q., an employee is entitled to reasonable notice of termination and may not renounce that right.  It must therefore be determined whether the right is incompatible with the collective labour relations scheme, in which case the union could not assert the right for the benefit of the employees it represents.

2.   Collective Nature of the Dismissal and Individual Assessment of Its Consequences

178                        In the appellants’ submission, the employee’s right under the C.C.Q. to notice of termination, which is agreed on individually with each employee, is incompatible with the collective labour relations scheme, which is characterized by collective conditions of employment agreed on in advance by the union and the employer.  In advancing this argument, the appellants are mistaken as regards the nature of the collective labour relations scheme and of the very diverse rules that govern termination of the employment relationship or the right to employment.

179                        The fact that the union bargains on behalf of all employees rather than only one is not the deciding factor in these cases.  Bargaining in a unionized workplace is not done solely for the employees as a whole.  For example, the collective scheme does not imply that a collective agreement cannot legitimately establish differences among classes of employees based on relevant objective factors such as seniority, training or the nature of their work, subject to the prohibitions against discrimination found in the Quebec Charter (see R. P. Gagnon, Le droit du travail du Québec (5th ed. 2003), at p. 484).  As the respondents point out, the collective labour relations scheme was created to equalize the balance of power in negotiating conditions of employment, not to require that those conditions be identical for all employees.  In addition, the implementation of a collective agreement often requires both individual action and collective action.  Some grievances are individual, while others are collective (see R. Blouin and F. Morin, Droit de l’arbitrage de grief (5th ed. 2000), at pp. 169‑70).

180                        Moreover, a union often has to negotiate on behalf of an employee on an individual basis, for example in a dismissal case.  In fact, unions are sometimes criticized for failing to take account of the specific interests of certain employees and thus neglecting their duty of representation set out in s. 47.2 L.C.  In Centre hospitalier Régina Ltée v. Labour Court, [1990] 1 S.C.R. 1330, this Court, per L’Heureux‑Dubé J., wrote the following:

. . . even when the union is acting as a defender of an employee’s rights (which in its estimation are valid), it must take into account the interests of the bargaining unit as a whole in exercising its discretion whether or not to proceed with a grievance.  The union has a discretion to weigh these divergent interests and adopt the solution which it feels is fairest.  However, this discretion is not unlimited.  Simply saying that the union has the right or power to “sacrifice” any grievance, which it feels is valid at that stage, during negotiations with the employer, in order to obtain a concession of better working conditions or other benefits for the bargaining unit as a whole, would be contrary to the union’s duty of diligent representation of the employee in question.  On the other hand, completely rejecting the possibility that the union and the employer may settle a great many grievances in negotiations for a new collective agreement, or on other occasions, would be to ignore the reality of labour relations.  [Emphasis added; p. 1349.]

I relied on L’Heureux‑Dubé J.’s comments to state the following in a recent decision of this Court:

. . . when carrying out its duty of representation in collective bargaining, a certified union often has to deal with the consequences of the history and problems of the group it represents.  Interests may have been created, legal situations may have crystallized, commitments may have been made.  In such a situation, even though the duty of representation is carried out in the present, but from the perspective of the foreseeable future of the agreement to be negotiated, the union will sometimes have to take those interests or rights into account when deciding on the approaches to which the agreement will give form and effect for the future.  [Emphasis added.]

(Tremblay v. Syndicat des employées et employés professionnels‑les et de bureau, section locale 57, [2002] 2 S.C.R. 627, 2002 SCC 44, at para. 21)

181                        In the collective labour relations context, therefore, the parties will not inevitably negotiate conditions that apply uniformly to all employees, without regard for individual situations.  It is the union’s exclusive right to represent the employees that is the crucial element of the collective labour law scheme, not the number of employees on whose behalf the union acts.  This Court recognized the importance of the principle that the union has a monopoly on representation in McGavin Toastmaster, Hémond and Noël.  The answers to the questions at issue in those cases could have jeopardized the integrity of the principle that the certified association is the employees’ sole representative.  It is in this sense that a situation involving incompatibility with the collective labour relations scheme would arise.  The outcome of this appeal does not call this principle into question: it is the union itself that is claiming the right to reasonable notice of termination on behalf of the employees it represents.

3.   Right to Reinstatement and Right to Reasonable Notice of Termination

182                        In the appellants’ submission, allowing employees covered by a collective agreement to claim the right to reasonable notice of termination under art. 2091 C.C.Q. would not only be incompatible with the collective labour law scheme but would also challenge a historical trade‑off between the rules of that scheme and the rules applicable to individual contracts of employment.  According to this argument, the employee’s right to reasonable notice of termination is the counterpart of the employer’s power to terminate the contract without a serious reason.  Since an employer under a collective scheme can be required to reinstate an employee (s. 100.12(f) L.C.) and can no longer terminate the contract unilaterally, the appellants submit that it would be inconsistent to give employees the right to reasonable notice of termination under the C.C.Q.  Unfortunately, this argument unduly simplifies the nature and effects of the connections between the individual employment relationship and collective labour relations. 

183                        The appellants’ position presupposes that all employees working in a collective labour relations setting have a right to reinstatement and that the employer’s disciplinary power is always subject to the requirement of good and sufficient cause.  This is not the case, however.  For example, temporary or probationary employees generally do not have the same protection against dismissal without good and sufficient cause.  This Court’s decision in Parry Sound provides a very clear example of a situation in which a unionized employee did not have such protection because of her status as a probationary employee.  Does this mean that all such employees can never have the right to reasonable notice of termination, even though the employer cannot be required to reinstate them and the counterpart argument no longer applies?

184                        Although reinstatement is, as a general rule, the remedy preferred by grievances arbitrators in the case of employees who are protected against dismissal without good and sufficient cause, it will not be imposed automatically.  Financial compensation will sometimes be substituted for reinstatement in situations where the employee’s return might poison the work environment.  This Court confirmed the legitimacy of choosing such a remedy in a recent decision (Alberta Union of Provincial Employees v. Lethbridge Community College, [2004] 1 S.C.R. 727, 2004 SCC 28).

185                        The circumstances of the instant case also illustrate the limitations of the appellants’ argument.  When a business closes, the question whether employees should be reinstated is no longer relevant.  All that remains to be discussed is compensation for termination.  The historical trade‑off relied on by the appellants, namely that the right to reasonable notice of termination is the necessary counterpart of the power to terminate the contract of employment unilaterally, is therefore no longer at issue.

186                        Moreover, the argument that there is incompatibility because of the difference in continuity of employment between the individual and collective schemes presupposes not only that employees who work in a collective setting are certain to be reinstated, which is not the case, but also that the principles of labour law preclude reinstatement outside that setting.  This premise is also inaccurate.  Under the A.L.S., any employee who is credited with more than two years of service for an employer and is dismissed without good and sufficient cause can challenge his or her dismissal and seek to be reinstated in the company (s. 128, para. 1(1)).  In Le droit de l’emploi au Québec, Morin and Brière explain the scope of this remedy:

[translation] The objective of this measure is to give employees who are not governed by a collective agreement an effective mechanism to obtain reinstatement.  In light of this objective, reinstatement must be the preferred remedy and should readily be granted. . . .  To depart from the principle of reinstatement, the Commission must have exceptional circumstances before it. . . . [Citations omitted; p. 1237.]

For many employees, the incorporation of the principle of reinstatement into the A.L.S. has a significant impact.  Section 128 A.L.S. considerably reduces the discretion that the C.C.Q. gives employers to terminate a contract of employment unilaterally by paying compensation equivalent to reasonable notice of termination.  This change confirms the intention of the Quebec legislature to extend reinstatement to the realm of individual employment relationships.

187                        There are other Quebec statutes that provide for the reinstatement of employees outside the context of a collective agreement.  The Act respecting industrial accidents and occupational diseases (ss. 256, 257 and 259) does so in cases where an employer dismisses a worker because he or she has suffered an employment injury or exercised one of the rights provided for in that statute.

188                        Finally, some Quebec authors even argue that the classic civil law view that mandatory performance of a contract of employment is impossible because of the personal nature of the contract, a view supposedly confirmed by this Court in Dupré Quarries Ltd. v. Dupré, [1934] S.C.R. 528, is no longer relevant with the advent of large‑scale business and the increase in the number of depersonalized jobs in which the worker’s identity is of little significance (see M.‑F. Bich, “Du contrat individuel de travail en droit québécois: essai en forme de point d’interrogation” (1986), 17 R.G.D. 85; R. P. Gagnon, L. LeBel and P. Verge, Droit du travail (2nd ed. 1991), at pp. 139‑40 and 164‑67; P. Laporte, La réintégration du salarié: Nouvelles perspectives (1995)).  While it has not adopted this argument, the Quebec Court of Appeal has not been unreceptive to questioning the basis of that decision (see Rock Forest (Ville) v. Gosselin, [1991] R.J.Q. 1000, and Schacter v. Centre d’accueil Horizons de la jeunesse, [1997] R.J.Q. 1828).

189                        In short, the incompatibility argument made by the appellants regarding the application of the mechanisms of reinstatement and protection against dismissal without good and sufficient cause does not provide an accurate picture of the parties’ situation.  The employee’s right to reasonable notice of termination is not the essential counterpart of the employer’s power to terminate the contract of employment unilaterally.  There is therefore nothing to prevent employees governed by a collective agreement from being entitled to reasonable notice under the C.C.Q.  Far from being incompatible with the collective labour law scheme, arts. 2091 and 2092 C.C.Q. supplement it and provide a remedy to employees who lose their jobs without being adequately compensated by their employer.

4.   Assessment by an Arbitrator of the Effects and Sufficiency of the Collective Measure

190                        Since arts. 2091 and 2092 C.C.Q. are of directive public order and since the collective agreement cannot contain provisions that are contrary to public order (s. 62 L.C.), an arbitrator hearing a grievance on such a matter must assess the sufficiency of the compensation paid in lieu of notice of termination in light of the C.C.Q.

191                        In Regina Police Assn. and in Allen v. Alberta, [2003] 1 S.C.R. 128, 2003 SCC 13, this Court confirmed that arbitrators have broad jurisdiction over labour disputes.  In Parry Sound, this Court stated that their jurisdiction extends to assessing the sufficiency and validity of the clauses of the collective agreement in light of the public policy provisions of other employment‑related statutes.  In Quebec, as we saw above, the legal framework of collective labour relations derives from a variety of sources and frequently makes use of the rules of the civil law proper.  It is therefore entirely appropriate and essential that grievances arbitrators be able to take account of the provisions of public order in the C.C.Q. that are relevant to the application of collective agreements.

192                        As the instant appeals illustrate, two situations can arise before an arbitrator.  In the first, the collective agreement contains a provision referring to the notice of termination to which employees will be entitled if the business closes or in some other situation.  This is the case of the collective agreement with the appellant Garon.  An arbitrator asked to decide a grievance in such circumstances will have to determine whether the measure provided for in the agreement (here, the reference to the notice of termination provided for in the A.L.S.) complies with art. 2091 C.C.Q.  If the arbitrator finds that the union’s grievance is justified, the arbitrator will then be able to require the notice of termination that he or she considers reasonable.

193                        The collective agreement with the appellant Fillion et Frères is an example of the second situation, in which the agreement is silent about the compensation in lieu of notice of termination to be paid to employees if the business closes.  Where there is no provision to this effect, an arbitrator asked to decide a grievance will have to determine whether, having regard to art. 2091 C.C.Q., the minimum notice of termination provided for in s. 82 A.L.S. is sufficient or whether the circumstances of the case call for a longer period.

194                        To summarize, in both these cases, the grievances arbitrator will have to determine whether the measures provided for in the collective agreement comply with the provisions of public order set out in other employment‑related statutes.  The arbitrator will then be acting within his or her exclusive jurisdiction in applying the collective agreement and the implicit content thereof, as the Quebec Court of Appeal recognized.

III.    Disposition

195                        For all these reasons, I would dismiss the appeals and affirm the decisions of the Quebec Court of Appeal.  Costs should be awarded to the respondents.

                                                           APPENDIX

Legislative Provisions and Clauses of the Collective Agreements

A.     Civil Code of Québec, S.Q. 1991, c. 64

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.

B.      Act respecting labour standards, R.S.Q., c. N‑1.1

82. . . .

This section does not deprive an employee of a right granted to him under another Act.

83. An employer who does not give the notice prescribed by section 82, or who gives insufficient notice, must pay the employee a compensatory indemnity equal to his regular wage excluding overtime for a period equal to the period or remaining period of notice to which he was entitled.

The indemnity must be paid at the time the employment is terminated or at the time the employee is laid off for a period expected to last more than six months, or at the end of a period of six months after a layoff of indeterminate length, or a layoff expected to last less than six months but which exceeds that period.

The indemnity to be paid to an employee remunerated in whole or in part by commission is established from the average of his weekly wage, calculated from the complete periods of pay in the three months preceding the termination of his employment or his layoff.

C.       Collective Agreement dated February 29, 1996 between Isidore Garon ltée and the Syndicat du bois ouvré de la région de Québec Inc.

[translation]

4.03     Validity of the Agreement:

The nullity of any of the provisions of the agreement under any present or future statute shall not affect the validity of the other provisions of the agreement, but such provision or provisions shall be amended to give effect to the said statute.

8.01     Employees:

The Employer shall give written notice to any employee who is laid off and shall provide a copy of the said notice to the Union.

10.01   Grievance:

“Grievance” means any disagreement respecting the interpretation or application of the collective agreement.

10.03   The employee shall, alone or accompanied by the employee’s shop steward, the business agent or the Union, submit the grievance in writing to the Employer or the Employer’s designated representative within ten (10) business days after the circumstances that led to the grievance occurred or became known.

10.08   Disagreement:

Any disagreement respecting a condition or conditions of employment for which provision is not made in the agreement may be discussed and settled using the grievance procedure in the agreement.

10.09   Powers of Arbitrator:

1.‑ The arbitrator has the power to confirm a decision of the Employer that is in accordance with the provisions of the agreement or to set aside a decision of the Employer that is not in accordance with the provisions of the agreement.

If the incident that led to the grievance causes the employee to lose or be deprived of rights, wages or financial benefits provided for in the agreement, the arbitrator may order that the employee be reimbursed for such loss or deprivation in whole or in part, with or without interest at the legal rate.

2.‑ In the case of disciplinary action, the arbitrator has jurisdiction to uphold, set aside or vary the disciplinary action and order that the employee be reinstated, with all rights and privileges, in the job the employee held, with or without full or partial reimbursement for lost wages.

3.‑ The powers of the arbitrator are limited to settling grievances within the meaning of the agreement.  However, the arbitrator has no power to add, remove or amend any provision of this agreement.

4.‑ The decision of the arbitrator shall be final and binding on the parties.  It must be applied within fourteen (14) days unless another time is set by the arbitrator.

D.     Collective Agreement of December 1994 between the Corporation des concessionnaires d’automobiles de la régionale de Québec and the Syndicat national des employés de garage du Québec Inc.

[translation]

6.02     Grievance

Any grievance may be submitted for investigation and settlement in accordance with the procedure set out below:

In all cases, the employee shall first submit his or her grievance to the union, which shall decide what action to take.

First (1st) step

Any employee acting alone or through his or her shop steward or union representative, or the union, may submit a grievance in writing to the employer or the employer’s authorized representative within fifteen (15) business days of the date on which knowledge of the circumstances that gave rise to the grievance was obtained.

. . .

6.03     Collective Grievance

A collective grievance may be submitted by the union at the first step to the employer or the employer’s authorized representative within the period of fifteen (15) business days referred to in paragraph 6.02, provided that the grievance is signed by at least one of the employees concerned, by a shop steward or by the union.

6.05     Powers of the Arbitrator

1.     The arbitrator may decide the rules of evidence and procedure and has the power to confirm a decision of the employer that is in accordance with the provisions of the collective agreement or to set aside a decision of the employer that is not in accordance with the provisions of the agreement.

The arbitrator may make any decision that is necessary as a result of a violation of this agreement.  The balance of probabilities rule shall apply to the arbitrator.

If the incident that led to the grievance causes the employee concerned to lose or be deprived of rights, wages or financial benefits provided for in the agreement, the arbitrator may order that the employee be reimbursed for such loss or deprivation in whole or in part, with or without interest.

2.     In the case of grievances relating to disciplinary or non‑disciplinary sanctions, the arbitrator has jurisdiction to uphold, set aside or vary the reprimand, suspension or dismissal or to substitute therefor the decision that the arbitrator deems fair and equitable.  Where the arbitrator does not uphold the employer’s decision, the arbitrator has jurisdiction to order that the employee be reinstated with all rights in the job the employee held, with compensation not exceeding the employee’s lost wages with the employer or any lesser compensation the arbitrator may award.  However, that compensation shall be determined having regard to what the employee may have earned in other employment since being dismissed or while suspended.

3.     The powers of the arbitrator are limited to settling grievances within the meaning of the agreement.  However, the arbitrator has no power to add, remove or amend any provision of this agreement.

Appeals allowed with costs, McLachlin C.J. and LeBel and Fish JJ. dissenting.

Solicitors for the appellant Isidore Garon ltée:  Heenan Blaikie, Montréal.

Solicitors for the appellant Fillion et Frères (1976) inc.:  Fasken Martineau DuMoulin, Québec.

Solicitors for the respondents:  Melançon Marceau Grenier et Sciortino, Montréal.