Labour Relations lawyers advise employers, organized labour and individual employees in grievance and arbitration proceedings under federal and provincial law. They appear before courts and labour relations boards, negotiate collective agreements, assist with workforce planning including downsizing, appear in interest arbitrations and on judicial reviews of arbitration and board decisions.
When Target decided to come to Canada, it eschewed a greenfield approach involving the construction of new stores partly to avoid the daunting maze of land use regulation in Canada.
So regulatory hearings and public demonstrations were likely not part of the package that Target expected when it instead spent $1.825 billion to buy 220 Zellers leaseholds in 2011. After all, as Target's lawyers recently told the BC Labour Relations Board, the US retailing giant is doing everything it can to avoid being identified with Zellers' stores or image to the point where it doesn't even have any interest in Zellers' customer lists.
What Target has discovered is that where entry to Canada involves the transfer of any significant asset from a similar unionized Canadian business, Canadian labour laws can make it quite difficult for US retailers and others to shed collective bargaining obligations binding the transferor. Indeed, at press time, Target was embroiled in a successorship hearing that has already taken up five days before the BC Labour Relations Board. The evidence in the case will doubtlessly focus on whether Target's real goal in purchasing the lease relating to the former Zeller's store at Burnaby's Brentwood Mall was to get control of the location that was the subject of the lease.
In these types of cases, union lawyers frequently argue that the location is so crucial as to be the main or a primary asset of the business. And if what is really being transferred is a main asset of the business, the Labour Board may well conclude that there has been a sale of the business within the meaning of the labour legislation. If there has been such a sale of the business, most jurisdictions in Canada mandate that the deemed buyer of the business must assume any collective bargaining agreement that bound the seller.
The upshot is that the five unionized Zellers locations, including four in Ontario, that Target is poised to open under its own brand, are proving to be a thorn in the side of the US giant's Canadian plans — especially since the United Food and Commercial Workers Union, which represents unionized Zellers employees, has announced that it will also seek successorship declarations from the Ontario Labour Relations Board.
Whether or not the UFCW will succeed in either Ontario or BC, however, is unclear, as deciding whether the transfer of the lease amounted to the transfer of a business involves a very complicated analysis.
The more parts of a business flow through, the more likely there is to be a sale of business. The converse is equally true. That's why Target has consistently pointed out that there was no transfer of merchandise, systems, employees, logos or goodwill; that Target will be spending at least $10 million on remodelling each site; and that Target has a customer base that is younger and more free-spending than Zellers' patrons.
A comparison between the merchandise mix and customer base of Target and Zellers may also be critical to determining whether a sale of a business has occurred. So could the categorization of a location as a destination store as opposed to a local community-based business. Further complicating the matter is the possibility that the Ontario and BC Labour Boards may reach different results for each of the five unionized premises.