Peintures Industrielles Évotech c. Turmel, 2017 QCCS 1375, AZ-51382345 (CS)

We draw your attention to the decision in the matter of Peintures Industrielles Évotech vs. Turmel, and Court of Appeal case number 500-09-026780-171, which recently held that moral damages may be awarded by an arbitrator in respect of a claimant’s grievance to suddenly dismiss employees when a business moved its Québec operations to the Province of Ontario.

The paint manufacturer was in the process of negotiating the renewal of its labour contract which had expired. The company moved its inventory to an Ontario town on the border of the Province of Québec, rather than repair its Québec premises. The employees were advised together, that they would benefit from a onetime payment as legal notice for the equivalent period of eight (8) weeks, plus the termination pay envisaged in the Collective Agreement. The employees were very surprised.

The Union filed grievances contesting the decision as being contrary to the Collective Agreement. The Arbitrator ruled that the decision contravened the provisions of the Collective Agreement, and awarded moral damages of one thousand dollars ($1,000.00) per employee, plus three weeks salary per year of service for each employee; this was in addition to the eight (8) week indemnity for collective dismissal and the additional indemnity under the Collective Agreement.

The employer was further ordered to pay the sum of ten thousand dollars ($10,000.00) in damages arising from bad faith negotiations in the renewal of the labour contract. The Québec Superior Court allowed the judicial review application of the employer in part, however, reconfirmed the one thousand dollar ($1,000.00) award in moral damages. The Court modified the Arbitrator’s decision to indemnify each employee three weeks salary per year of service, considering that the Arbitrator did not take into account the duty to mitigate damages, and the indemnities already remitted by the employer. The ten thousand dollar ($10,000.00) award in damages against the employer was set aside.

Leave to Appeal was requested and granted to the employer on the 12th of June 2017 in respect of the interpretation of the Collective Agreement and the power of the Québec Superior Court to modify the conclusions of an arbitration award. Employers should be most careful when providing “closure of business” notice to their employees – to avoid a damage award.