Target Corp. is locked in a fight to prevent Zellers employees from maintaining their union status, as the discount giant pushes to keep its costs down for its foray into the competitive Canadian retail field.
Target's blueprint for Canada entails converting about 135 Zellers stores to the Target name by 2013 after letting go all the Zellers employees and starting fresh with newly hired staff – and no union. Currently about 15 of the Zellers stores are unionized.
But now, in a test case, the union has applied to the B.C. Labour Relations Board to declare Target as the "successor employer" to Zellers at an outlet in Burnaby, B.C., and keep the employees unionized.
"It could be quite a battle," said Richard Chaykowski, a professor at Queen's University's School of Policy Studies in Kingston. "Any decision a government board makes would potentially be only Round 1."
Target and its discount archrival, Wal-Mart Stores Inc., have fought the United Food and Commercial Workers for years as the union attempts to organize the retailers' employees and improve their pay and working conditions. So far, the retailers have managed to keep unions out in North America, although for brief periods the unions have succeeded in organizing some employees.
At stake is Target's low-cost operating model, which relies on competitive compensation and flexibility in scheduling shifts and assigning tasks. A move to unionize workers could hurt that model. Target is taking on the even bigger Wal-Mart, the world's largest retailer, which has generally been successful in its opposition to unions.
However, in Canada Target is now facing a well-entrenched principle in labour laws that calls for a successor company in a takeover to hold on to a union if the firm is operating in the same area.
"The whole purpose of successor rights protections are to prevent this sort of thing from happening," said Steven Barrett, a lawyer with employee law specialist Sack Goldblatt Mitchell LLP.
Lisa Gibson, a spokeswoman for Target, said the firm believes its $1.8-billion acquisition of Zellers leases "is a real estate transaction and not the acquisition of a business, technology or employees. As such, we do not believe Target is a successor employer under applicable law and do not believe that there was reasonable cause to file a successorship application."
Target will contest the union's B.C. application, she said. It's not clear how many Zellers locations could be affected by the dispute.
Starting next year, Target plans to close its Zellers stores for six to nine months for major renovations, and re-launch them – beginning in March of 2013 – as Target outlets.
Mr. Barrett said provincial successor rights provisions are designed to protect unionized employees in the case of a temporary shutdown because of an ownership change if the switch is in virtually the same area of operations. Other provinces also recognize the "fundamental" protection of successors rights, he said. "You can't let those rights disappear simply because the business gets sold."
Ivan Limpright, president of Local 1518 of the UFCW, which applied to the B.C. labour board earlier this month, said the union aims to ensure that Target honours its legal obligations and continues to employ its 120 Zellers members at Brentwood Mall in Burnaby. The successor dispute was touched off when the union recently sent Target a letter indicating its intention to negotiate a renewal of its existing contract, union spokesman Andy Neufeld said. "That's when Target challenged our successorship."
Prof. Chaykowski said unions have faced an uphill battle in organizing retail workers, partly because they are highly transient and because the sector is so competitive, with razor-thin profit margins. Target feels tremendous pressure to remain union-free to help keep costs down, he said.
In June, a Target store in New York voted against joining the largest retail union in the U.S. Labour organizers had hoped a vote to join the union would encourage other retail workers to follow suit.
While Wal-Mart has agreed to work with labour unions in some parts of the world, it has fiercely opposed unionization in North America. When workers in Jonquiere, Que., voted to unionize in 2005, Wal-Mart shut down the store. After butchers at a Jacksonville, Tex., Wal-Mart voted to unionize in 2000, Wal-Mart dropped all U.S. meat-cutting departments.