Members of the union representing Zellers workers in Ontario have ratified a new three-year collective agreement. (Sean Kilpatrick/Canadian Press)

Unionized workers at Zellers stores in Ontario have ratified a new contract that provides more severance as the retailer shuts down stores and resells others to non-union buyers — U.S. discount retail giants Target and Wal-Mart.

The United Food and Commercial Workers local 175, which represents 1,500 employees at 12 Zellers stores, said Monday the three-year deal increases wages and boosts severance pay if the stores shut down.

Four of the Zellers stores covered by the deal — in Toronto, Oshawa and Brantford — will be converted into Targets as part of the U.S. retailer's Canadian expansion strategy.

A fifth unionized store, in Windsor, Ont., which was also bought by Target, will convert to a Sobeys supermarket. Target has signed an agreement with Sobeys to supply food to its department stores.

The U.S. retail giant announced last year that it would spend $1.83 billion to take over the leases of as many as 220 Zellers stores from Zellers' owner the Hudson Bay Trading Co.

Target (NYSE:TGT), known for offering designer fashion collaborations at discount chain prices, plans to open its first Canadian stores in 2013.

The company said Monday that its deal for the Zellers locations is a real estate transaction and not an acquisition of the business.

The union has started a national campaign asking Target to guarantee that Zellers workers will continue to be employed at the stores changing over and is also asking Target to abide by all of the provisions of the new agreement.

If Target does not agree, Zellers' 10,000 full-time employees and 18,000 part-time workers will lose their jobs when the Zellers stores close.

Target said only that it will give the Zellers employees an opportunity to apply for jobs at its Canadian stores.

Target is looking for about 100 staff by the end of the year, and more than 500 by the time it officially opens in 2013. The retailer plans to open 125 to 135 Target stores beginning in 2013 with each store expected to employ 150 to 200 staff.

In the U.S., Target has been successful at defeating union election petitions in the past, even in union strongholds like Detroit.

Wal-Mart, an employer that has a rocky relationship with unions, will take over 39 other current Zellers locations across Canada.

Over the past decade, the UFCW has failed several times to unionize Wal-Mart stores. In 2004, the company shuttered a Canadian store after it became the first in North America to win union certification. In 2000, 11 workers in the meatpacking department at a store in Jacksonville, Tex., voted to join the UFCW. Soon after, Walmart began stocking only pre-wrapped meats, effectively eliminating the positions.

UFCW Canada represents more than 250,000 members and represents Zellers workers at 15 stores in Ontario, Quebec and British Columbia.

Target has purchased the leasehold interests of 189 sites currently operated by Zellers Inc. and it says about $10 million to $11 million will be invested to remodel each outlet.

The locations include 45 in Ontario, 19 in Quebec ,15 in British Columbia, 13 in Alberta, five in Manitoba, two each in Saskatchewan, Nova Scotia and Newfoundland and Labrador and one each in New Brunswick and PEI.

Target already has more than 355,000 employees and is the second-biggest discount retailer in the U.S. after Wal-Mart.

Target is expanding to Canada in a similar way Wal-Mart did in 1994, when it bought the chain of Woolco department stores in Canada, refurbished them and renamed them under the Wal-Mart banner.