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FRANCHISEES: JUDGEMENT OF SUPREME COURT OF CANADA

July 2019

The Supreme Court of Canada rendered a majority decision on May 3rd 2019, which confirmed a previous decision from the Court of Appeal of Quebec (dated August 18th 2017) stating that a franchisee may be considered an artisan, thus, an employee, according to the definition of employee listed in the Act Respecting Collective Agreement Decree (L.R.Q. c. D-2).

The judgement states that the franchisee is not considered to be a self-employed worker, but, according to the business model and the situation of the franchisee, should rather be considered as an employee of the franchisor.

As a result, the franchisor being a professional employer, must fulfill all of the duties and obligations of an employer as stated in the Decree and the Act.

In addition, the Supreme Court reaches the conclusion that, in spite of the participation of the franchisee in the contractual relationship with the client, he could not benefit from the exclusion for self-employed workers stated in article 2.03 (2) of the Decree Respecting Building Service Employees, since he did not contract directly with the client.

Finally, this decision confirms that the Parity Committee has the jurisdiction regarding franchisee contracts, which allows the Committee to act more effectively on the many franchisee systems presently active in the building service industry.

In fact, the Supreme Court stated that the Decree may apply to relations of a different nature than those managed by labour contracts (for example; subcontracts or franchisee contracts). This applies even if the workers are considered as self-employed workers or independent workers according to other laws, such as fiscal laws.

Therefore, it is well acknowledged and well established that the Parity Committee has the required authority to conduct inspections and to submit claims or penal procedures, if applicable, and this, even in the case of a subcontracting or franchisee contract. In fact, as confirmed by the Supreme Court of Canada, such contracts may not be used to conceal the true relationship between an employee and his employer.

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