Is a foreign employer subject to the Act Respecting Labour Standards (the “ARLS”) merely because one of its employees performs work from home in Quebec? In a much-anticipated decision released on November 5, 2026, in Marchetta c. Petros 724 inc.1, the Quebec Court of Appeal answered that question in the negative and dismissed the appeal of an employee who sought to have the ARLS applied to her employment relationship with her U.S. employer. Lavery wishes at the outset to underscore the significant contribution made to the debate by the Canadian Association of Counsel to Employers / Association canadienne des avocats d’employeurs (“CACE”). In a context where the employer did not participate in the appeal, CACE obtained leave to intervene as amicus curiae (“friend of the court”) in order to assist the Court on the interpretation of section 2 of the ARLS and on the issues relating to its territorial scope. This decision is of particular importance to foreign employers that employ individuals working remotely from Quebec or domiciled there, a situation that has become increasingly common with the rise of remote work and the dematerialization of tasks made possible by technological tools. It also highlights the private international law issues raised by determining the laws applicable in such contexts. The practical impact of these issues is all the more significant given that the ARLS provides employees with recourses and remedies that differ from those generally available in most North American jurisdictions. In particular, the ARLS allows employees with at least two years of uninterrupted service to seek a reinstatement order from the Administrative Labour Tribunal (the “ALT”) in the context of contesting a dismissal without good and sufficient cause. Background: The Territorial Scope Provided for in the ARLS To properly frame the issue, it is important to recall that section 2 of the ARLS establishes a specific territorial connecting-factor regime that differs from those found in other provincial statutes governing labour and employment standards in Canada. Section 2 of the ARLS establishes both connecting factors relating to the employee and a distinct connecting factor relating to the employer. As regards the employee, the provision applies more specifically to an employee who performs work both in Quebec and outside Quebec, as well as to an employee who, while domiciled or resident in Quebec, performs work outside Quebec. In both situations, however, the ARLS further requires that the work be performed for “an employer whose residence, domicile, undertaking, head office or office is in Québec.” That specific wording was central to the analysis in Marchetta. Marchetta in Brief In this case, the employee, who held the position of financial consultant, performed most of her work remotely from her home in Quebec, using her own computer and personal telephone. She worked for a U.S. employer that had no head office, residence, domicile, office or other official presence in Quebec, and in respect of which no activity in Quebec had been established. The employee’s services were provided exclusively for the benefit of U.S. clients, and she only occasionally travelled to the United States to meet with some of them. The evidence also did not support a finding that the employee’s home served as a place of business for the employer. The employee was advised in December 2018 that her employment was being terminated following the company’s sale of a substantial portion of its Canadian assets. She then filed a complaint with the Commission des normes, de l’équité, de la santé et de la sécurité du travail (the “CNESST”) alleging dismissal without good and sufficient cause and contesting the termination of her employment. The complaint was subsequently referred to the ALT. In an initial decision, the ALT upheld the complaint and ordered the employee’s reinstatement, despite the jurisdictional arguments raised by the employer. Following an application for administrative review, however, the ALT revised that first decision and dismissed the complaint, among other grounds because the ARLS did not apply territorially and the termination of employment resulted from a genuine layoff. The Superior Court subsequently upheld that second decision in judicial review proceedings. Seized of the matter, the Court of Appeal in turn confirmed that the Superior Court had committed no reviewable error in concluding that the mere fact that the employee performed her work from her home was not sufficient, in and of itself, to establish that the employer maintained an office or carried on an enterprise in Quebec within the meaning of the ARLS. The Court of Appeal confirmed that, to reach such a conclusion, there must be at least some evidence showing that the employer intended to use the employee’s residence or home to conduct its business. More specifically, such evidence must reveal a certain degree of organization of the place where the employee works, making it possible to conclude that it constituted a foothold for the employer in Quebec for some of its activities, whether concrete or in development. The Court nevertheless acknowledged that a different finding could be warranted in other circumstances, even in the absence of an establishment in Quebec, including in cases where the evidence shows that the employer carries on activities in Quebec or uses the employee’s home to conduct its business. For example, the case law reviewed referred to situations where: the employee acted as a salesperson or representative in Quebec from a home office used as the employer’s business address, with certain related costs borne by the employer;2 the employer paid for the installation of business telephone lines, Internet or fax services at the employee’s home, provided the equipment necessary to perform the work, and stored documentation or promotional materials there for its clients, some of whom were located in Quebec;3 although working largely from home, the employee nevertheless carried out concrete market development, representation or public relations activities in Quebec for the employer’s benefit.4 Key Considerations for Foreign Employers The decision confirms that, while the physical location where the work is performed remains relevant to the analysis, the specific connecting factors set out in the ARLS must still be met before a foreign employer is subject to it. In that regard, there is no automatic rule: remote work from Quebec alone is not sufficient. The analysis will depend closely on the evidence and on the concrete organization of the employment relationship. In our view, it is also worth emphasizing that the analysis may evolve over the course of the employment relationship. The absence of activities in Quebec at the time of hiring does not preclude a sufficient territorial connection from arising later if the employer’s activities or how the work is organized change. Foreign employers should, therefore, pay close attention to the evolution of their activities and how work is organized throughout the employment relationship. It should also be noted that this decision is specific to the ARLS’s scope and to the circumstances in which it may be found inapplicable. This does not, however, mean that other Quebec laws that may govern the employment relationship, including the Civil Code of Québec, are therefore inapplicable. Accordingly, each situation requires a case-by-case analysis based both on the applicable legislative framework and on the characteristics of the employment relationship, including the duties and responsibilities performed, the clients served, and the arrangements for expense reimbursement and the provision of equipment. Particular attention should also be paid to the drafting of employment agreements and policies applicable to employees hired in Quebec to work remotely. Finally, the Marchetta decision forms part of a trilogy of judgments released the same day by the Quebec Court of Appeal concerning remote work and the notion of establishment. These decisions raise important issues for employers in Quebec. Our Labour and Employment Law team is currently reviewing this trilogy, and a more detailed bulletin on its key takeaways and practical implications will follow in the coming days. 2026 QCCA 1461. Ladouceur et Almico Plastics Canada inc., D.T.E. 90T-490 (T.A.). Commission des normes du travail c. Micros System Inc., 2009 QCCS 6083. Boisvert et Marnier-Lapostolle Chile Spa, 2018 QCTAT 4718.

The tariffs imposed by the United States on certain Canadian products disrupt more than just trade. They also have tangible consequences for several Quebec businesses, affecting margins, competitiveness, continuity of operations, financing and sometimes solvency. The impact of U.S. tariffs varies from company to company. Some businesses are able to absorb them to some extent, particularly if the exchange rate is in their favour or if competition allows them some leeway to pass on a portion of the cost to their U.S.-based customers. Meanwhile, other companies are seeing their U.S. market access suddenly compromised, forcing them to reconsider their business model. Ultimately, there is no one-size-fits-all solution here. In order to carry out a thorough analysis of the situation, businesses must consider their position from contractual, commercial, financial and strategic standpoints simultaneously. Contracts, prices and U.S. market dependence Since the first tariffs were implemented, certain strategies have proven useful in curbing exposure. From a contractual standpoint, key actions include: Analyzing supply, distribution and sales contracts to determine who actually bears the tariff risk Reviewing Incoterms, pricing clauses, adjustment mechanisms, termination rights and force majeure clauses Realistically assessing the ability to pass a cost increase on to customers Assessing the extent to which the business depends on the U.S. market for both its sales and its inputs There is, however, one legal caveat: the imposition of tariffs does not, in and of itself, grant the right to invoke force majeure or to terminate a contract simply because it has become less profitable. It all depends on the precise wording of the clause, the factual context and how predictable the risk of tariff imposition was at the time the contract was concluded. Margins, prices and supply chains In many sectors, businesses first feel the effect of tariffs through price fluctuations. Some companies have enough leeway to pass on the tariff burden to their U.S.-based customers by raising their prices accordingly. In other sectors, particularly where margins are already slim or where a Canadian manufacturer’s product is becoming less competitive, the impact is more severe: loss of market share, declining sales volumes and almost immediate liquidity problems. It is often at this stage that executives must consider more substantive solutions, such as diversifying sales into alternative markets, reconfiguring supply chains, partially relocating manufacturing operations or establishing production capacity within the United States. Businesses may also need to consider renegotiating certain financing sources or commercial terms. While these options may be worth considering, they require time, liquidity and an execution capability, which not all companies possess. Cash flow, financing and warning signs of financial strain When a company is heavily dependent on its U.S. sales, tariffs can exacerbate existing issues. Bankers look out for certain warning signs such as: An excessive concentration of revenue originating from the United States A persistent decline in volume or margins Extended payment terms Pressure on working capital Contracts that have become inherently unprofitable A weakened refinancing capacity The lack of a short-term commercial alternative should also be taken seriously. In this type of scenario, delaying action could mean missing out on solutions that were still available just a few weeks or months prior. Restructuring and insolvency When commercial and operational adjustments are no longer enough, the restructuring mechanisms provided for under bankruptcy and insolvency laws can offer temporary relief and facilitate restructuring. Depending on the circumstances, this approach can be used to stabilize the situation in the short term, negotiate with creditors, revise certain commitments that have become unsustainable, preserve part of the company’s value or prepare for a turnaround based on a business model that is less dependent on the U.S. market. However, resorting to such restructuring options is not just a formality.They entail costs, constraints and risks that can sometimes pose a serious threat to a business’s very survival. Before considering them, it’s important to clarify core objectives, identify must-protect assets and lock down critical contracts. Mapping out how the restructuring will ripple through to shareholders, lenders, suppliers and customers is equally vital. While these mechanisms are often a last resort, considering them only after all other doors have closed severely limits businesses’ room to maneuver. Competition law and collaborations Faced with tariff pressure, some companies may be tempted to partner with other players in their market to pool resources or reorganize their supply chains. The idea may be economically sound, but it must be handled with caution from a legal standpoint. Competition law risks may arise as soon as competitors exchange sensitive information or adjust their business conduct jointly. For this reason, any such collaboration should be carefully structured, and it is highly recommended that the parties consult a legal expert who is familiar with the applicable competition law provisions before venturing into this territory. Mergers & Acquisitions and company valuations Tariffs also affect company valuations and transaction dynamics. For sellers whose products are subject to the new tariffs, the higher the tariff exposure, the more likely it is that their company’s valuation will be affected or that they will defer a divestiture or acquisition in anticipation of more favourable conditions. For buyers, the tariff issue has become a key consideration in the due diligence process. They must determine: What proportion of the target company’s revenue comes from its U.S. sales Whether the target company is actually able to absorb or pass on the additional costs resulting from the tariffs that it now has to pay Viable workarounds The time and capital needed to implement them In practice, the higher the tariff exposure and the cloudier the mitigation strategy, the more likely it is that the buyer will ask for a price reduction or demand contractual protections. Acting before problems take root U.S. tariffs do not pose the same risks for every company, but they present many with the same challenge: the need to act early. For some businesses, the answer mainly lies in the contracts they have concluded. For others, it will be a matter of taking commercial, operational or transactional measures. For the most vulnerable companies, the priority will be to preserve value and swiftly consider the available restructuring options. Rather than simply assessing the immediate tariff impact, the key is determining whether businesses have enough time, flexibility and liquidity to adapt before problems take root.

Expropriation is one of the most substantial powers a municipality has to achieve its public-interest objectives.1 The legislature has granted municipalities broad authority, allowing them to acquire any immovable, part of an immovable or servitude needed for “any municipal purpose” or for “industrial purposes.”2 Because municipalities have such latitude, the courts generally exercise judicial restraint and intervene only in cases of bad faith, injustice or abuse of process.3 That is why the decision in 9428-2506 Québec inc. v. Ville de Drummondville (“the Drummondville case”) is so noteworthy. The Court struck down the expropriation in the case, finding that the city administration had acted in bad faith even though it had complied with all formal requirements.4 In light of the court’s decision, this article examines the key factors that served to rebut the presumption that the city had exercised its power of expropriation in good faith. 1. Substitution for the owner The Court began by pointing out that a municipality cannot use its power of expropriation to substitute itself for an owner to pursue a project the owner already plans to develop. In the Drummondville case, the city wanted to develop an industrial park, but the plaintiff was already pursuing its own industrial project on the land in question. To justify its intervention, the city claimed that zoning restrictions prevented the land from being developed for industrial purposes. However, the Court dismissed the justification as [translation] “a pure pretext,”5 concluding that the city had unlawfully substituted itself for the plaintiff without demonstrating the necessity of acquiring the land for its own project.6 2. Expropriation as a bargaining tool The Court also reiterated that expropriation cannot be used as a pressure tactic in out-of-court settlement negotiations with a property owner. In the Drummondville case, the Court found that the city had used its expropriation power not out of genuine necessity, but as leverage to force the owner to reduce the size of its property, which constituted an unlawful use of that power.7 The Court denounced the expropriate-first-negotiate-later strategy, reiterating that [translation] “expropriation is not a bargaining tool.”8 3. Expropriation to benefit a third party Lastly, the Court stressed that the power of expropriation must always serve the public interest. A municipality cannot use expropriation for an improper collateral purpose that does not benefit the community.9 In the Drummondville case, the Court concluded that the city had provided no valid justification for disclosing a confidential expropriation plan to a third party three years before serving the notices of expropriation.10 In the Court’s view, the unwarranted disclosure of confidential information to a single party resulted in unfair treatment of other developers who lacked access to the information.11 Other facts, including the city’s disregard for its own wetland conservation studies to advance the third party’s project, further supported the finding of bad faith on the city’s part.12 Conclusion Ultimately, the Drummondville case serves as a reminder that good faith is crucial in exercising the power of expropriation and that, while good faith is presumed, the presumption can be rebutted by the circumstances surrounding the exercise of the power. Conduct revealing an improper, abusive or discriminatory purpose—as well as a municipality unwarrantedly substituting itself for an owner and resorting to expropriation as a bargaining tool—can demonstrate bad faith13. On October 2, 2026, the city appealed the decision.14 The final chapter in this case has yet to be written. For a more detailed discussion of expropriation, seeThe ABCs of Expropriation: an Overview of the Different Regimes, by Anne-Marie Asselin, Senior Associate. Cities and Towns Act, CQLR c. C-19 s. 570(1)(c); Act respecting municipal industrial immovables, CQLR c. I-0.1 s. 2(1) and s. 6(1). Pierre ISSALYS and Denis LEMIEUX, L’action gouvernementale : précis de droit des institutions administratives, 2020, Montréal, Éditions Yvon Blais, para. 3.19. 2026 QCCS 3363, para. 330. Ibid., para. 180. Ibid., paras. 201–202. Ibid., paras. 245 and 247–248. Ibid., para. 249. 9379-1242 Québec inc. v. Ville de Sept-Îles, 2024 QCCS 3611, para. 16. 2026 QCCS 3363, supra note 1, paras. 273–274. Ibid, para. 283. Ibid., paras. 309–310 and 328. Ibid., para. 330. Application for leave to appeal and notice of appeal, October 2, 2026, (C.A.) 500-09-032224-263.