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Labour - Constitution. Holland L.P. v. Labourers International Union of North America et al.
In Holland L.P. v. Labourers International Union of North America et al. (Ont Div Ct, 2026) the Ontario Divisional Court dismissed a labour JR, here regarding a dispute between Ontario and federal labour jurisdiction:[26] The starting point is the presumption that labour relations are a provincial matter engaging the provincial authority over property and civil rights under section 92(13) of the Constitution Act, 1867. That presumption can be rebutted in two circumstances: when the employment relates to a work, undertaking or business within the legislative authority of Parliament; or when the work is an integral part of a federally regulated jurisdiction (“derivative jurisdiction”): Tessier Ltee. v. Quebec, 2012 SCC 23, [2012] 2 S.C.R. 3, at paras. 17 and 18.
[27] In this case, CN and CP are clearly engaged in an interprovincial undertaking within the meaning of section 92(10)(a) of the Constitution Act, 1867. The Applicant, however, is not engaged in a direct federal undertaking. Therefore, the question is whether, by virtue of their involvement in CN and CP’s operations, the Applicant’s work should also fall under federal jurisdiction.
[28] In Tessier, the Court reviewed the case-law on the scope of derivative jurisdiction. The Court summarized that review as follows (at paras. 45-46):[45] McLachlin J., writing in dissent, framed the case differently and in a way that is of particular assistance in this case. After noting that the gathering and processing plants themselves were not inter-provincial transportation undertakings (the direct jurisdiction test), she held that they could only be subject to federal regulation if they were integral to the inter-provincial pipelines. In applying the derivative approach, she emphasized that exceptional federal jurisdiction would only be justified when the related operation was functionally connected to the federal undertaking in such an integral way that it lost its distinct provincial character and moved into the federal sphere (para. 111). Like Dickson C.J. in United Transportation Union, McLachlin J. noted that the test is flexible. Different decisions have emphasized different factors and there is no simple litmus test (paras. 125 and 128). She considered the common management of and interconnection between the facilities and the pipeline and the dependency of the pipeline on the facilities and concluded that the facilities retained their distinct non-transportation identity. They were not vital, in the requisite constitutional sense, to the inter-provincial pipeline.
[46] So this Court has consistently considered the relationship from the perspective both of the federal undertaking and of the work said to be integrally related, assessing the extent to which the effective performance of the federal undertaking was dependent on the services provided by the related operation, and how important those services were to the related work itself. [29] The parties agree that the Board correctly identified this test (see paragraph 49 of the reasons). The test is also set out in recent jurisprudence of the Court of Appeal: see Ramkey Communications Inc. v. Labourers International Union of North America, 2019 ONCA 859, 149 O.R. (3d) 1, at para. 62.
[30] In applying this test, it must also be remembered that the federal power in this area is exceptional and should be confined to situations where it is required to meet the exception embodied in section 92(10)(a) of the Constitution Act, 1867: Tessier, para. 45, Westcoast Energy Inc. v. Canada (National Energy Board), 1998 CanLII 813 (SCC), [1998] 1 S.C.R. 322.
[31] In Westcoast, McLachlin J. (dissenting) noted (at para. 116) that “[b]ecause the federal power is exceptional, it follows that it should be extended as far as required by the purpose that animates it, and no further.” Although this passage was set out in dissent, the principle has found substantial support in subsequent case-law.
[32] The parties do not take issue with these principles and are ad idem that the Board properly identified them. The Applicant takes issue with how the Board applied these principles in three ways:a. That the Board fundamentally misapplied the derivative jurisdiction principle by, among other things, erring in its’ characterization of the Applicant’s operations, creating an artificial distinction by distinguishing between the technology used by the Applicant and the work performed by the Applicant and by adopting an unreasonably narrow view of what was required for CN and CP to operate effectively;
b. Failing to consider the relationship of the federal undertaking and the Applicant’s employees from the perspective of the Applicant and not just CN and CP; and
c. Wrongly following the Quebec Court of Appeal’s decision in Madysta Telecom Ltee c. Commission des normes, de l’equite, de la sante et de la securite du travail, 2020 QCCA 183. [33] I start with the Board’s analysis of the derivative jurisdiction principles. Counsel for the Applicant argued that the approach adopted by the Board was too narrow, as it in essence reads out the concept of derivative jurisdiction. I disagree for two key reasons. First, the broad reading proposed by the Applicant would extend federal jurisdiction well beyond “the purpose that animates it”, by including maintenance and construction work that is not integral to the operation of the railway under federal jurisdiction. Just as in Ramkey, the work being done in this case is being done on the infrastructure of the railway and not its’ operation.
[34] In Ramkey, the Court set out the appropriate analytical focus in a case such as this (at para. 66):[66] Respectfully, the Divisional Court erred by considering the extent to which the delivery of telecommunications services by Rogers and other telecommunications companies like Rogers was dependent on having a functioning network line and on work of the type performed by Ramkey's construction technicians. The proper focus is the extent to which Rogers and the other telecommunications companies, to which Ramkey's construction technicians provided construction services, were dependent on the services of Ramkey's construction technicians -- the particular employees under scrutiny: Tessier, at para. 38. [35] The focus, in other words, is on CN and CP’s dependence on these services. In this case, the Board grappled with the interrelationship between the railways and the Applicant. I see no error in that analysis, particularly since CN took some of the flash-butt welding work in-house at one point in the past, and that there are other provincially regulated contractors that perform thermite welding. The companies performing thermite welding appear to be in a similar position to the provincially-regulated companies providing services to Rogers in Ramkey.
[36] The Applicant argues that they are the only business that performs flash-butt welding and, as a result, their operations are integral to the operations of CN and CP. The problem with that argument is that it distinguishes the Applicant from the other provincially regulated companies that provide thermite welding on the basis of the technology that they are using rather than the function that they are engaged in. The boundaries that determine whether a business falls under provincial or federal jurisdiction should not be drawn based on the nature of the equipment that is used to perform the work. The boundaries should be drawn on a functional basis, which means considering what work is actually performed and how it fits into the federally regulated business.
[37] In this case, the work that is actually performed is on the maintenance of the infrastructure of the railways and not on the operation of the railways themselves. This can be contrasted with the decision in Labourers International Union of North America, Local 183 v. Rail-Term Inc, 2014 CanLII 19409. In Rail-Term, the Board considered the issue of derivative jurisdiction. Rail-Term moved trailers and containers throughout the rail yard to enable trains to be loaded and unloaded. Rail-Term was found to be federally regulated under the derivative jurisdiction principle. The reasoning in Rail-Term was, simply put, that unloading the train at the end of an interprovincial trip is an integral part of the trip itself. This made the work that Rail-Term was engaged in at the yard a federal undertaking.
[38] This case also illustrates that, even on a narrow interpretation of derivative jurisdiction, there will be cases that are caught by it. The fact that derivative jurisdiction has a narrow application is part of the design of the concept, as derivative jurisdiction is not supposed to go beyond the bounds of the “purpose that animates it”.
[39] The second reason why I disagree with the Applicant’s view that the Board’s analysis of the derivative principles is too narrow focuses on the specific facts of the relationship. I acknowledge (as the Board did) that the Applicant is “on call” for CN and CP. However, neither railway directly supervises the Applicant’s employees. Instead, it provides instructions to the Applicant. The Applicant’s employees are independent from the railways, and the Board was correct in its’ conclusion that their work is “far removed” from the operation of an interprovincial railway.
[40] This brings me to the other two decisions that the Applicant relies on. Both of them are decisions of the British Columbia Labour Relations Board: Re R.F. Welch British Columbia Ltd., 1982 CarswellBC 3675 and Murrin Construction Ltd. v. CSWU, Local 1611, 2002 CanLII 53412. Both of these cases are distinguishable from the facts before us. In R.F. Welch, the employees were integrated into the railway’s operation in such a complete way that they were actually supervised by railway supervisors. Murrin is closer to the facts in this case, but it can also be distinguished on the basis that CN was far more dependent on Murrin than either CN or CP was in this case (see para. 85 of Murrin).
[41] In the end, the Board in this case conducted a holistic analysis of the various facets of the relationship between the Applicant and the Respondent. That analysis took into account the various factors required in the analysis, and in particular the extent to which the effective performance of the railways was dependent on the services provided by the Applicant. Accepting the underlying facts as found by the Board, I see no error in this analysis.
[42] Given this analysis, the second and third arguments made by the Applicant can be briefly disposed of. I reject the Applicant’s argument that the Board failed to consider the relationship between the Applicant and the federal undertaking from the Applicant’s perspective. The Board grappled with the fact that the Applicant had proprietary technology that gave the Applicant a unique ability to provide a superior service to CN and CP. However, the mere existence of this proprietary technology is not sufficient to bring what would otherwise be a provincially regulated entity under federal jurisdiction. Further, the Board considered the amount of work the Applicant did for CN and CP from the Applicant’s perspective, which was not determinative. I have set out my reasons for concluding that this would be a provincially regulated entity above.
[43] Finally, there is the Board’s alleged error in relying on the Madysta decision. It is worth setting out the Board’s conclusion about Madysta in its entirety (para. 75):75. In reaching the conclusion on the facts before me that the presumption of provincial jurisdiction has not been displaced, I also note that the Quebec Court of Appeal decision in Madysta Télécom ltée v. Commission des normes, de l’équité, de la santé et de la sécurité du travail, 2020 QCCA 183 (CanLII) at para. 86 suggests that, in order to fall under derivative federal jurisdiction, a local entity has to be an integral part of a single federal undertaking or business. In that case, the Court held that, since Madysta performed a similar amount of work for five different telecommunications companies, it was not integrated into any single federal undertaking. Similarly, in the present case, Holland did roughly the same amount of work for each of the two Class 1 railways in 2017 and a substantial amount of work for each of them in other years. As noted in Madysta, cited above, in order to fall under derivative federal jurisdiction, the entity at issue must be integral to a single federal undertaking rather than to a group of companies or to a sector. [44] As I have noted above, the analysis in these types of cases is multifactorial. The fact that the Applicant worked for more than one railway was simply one more of the factors that the Board considered when it was analyzing the factual matrix in this case. When considered in the context of the whole analysis, I do not view the Board’s reliance on Madysta as an error. . Sieluzycki v. Coca-Cola Canada Bottling Limited
In Sieluzycki v. Coca-Cola Canada Bottling Limited (Fed CA, 2023) the Federal Court of Appeal considered a JR from a Canada Industrial Relations Board (CIRB) decision that declined jurisdiction regarding the setting aside "of the CIRB’s Registrar to process the applicant’s duty of fair representation and unfair labour practice complaints" "surrounding the applicant’s job applications for position(s) with the Coca-Cola Bottling Company, Canada (Coca-Cola)".
These brief quotes are useful for delineating the federal role in employment/labour matters:[2] I see no reviewable error in the CIRB’s conclusion that it lacked jurisdiction. The labour relations of Coca-Cola do not fall within the competence of Parliament but are rather subject to provincial regulation.
[3] Labour relations in most industries are a matter of provincial competence, as the Judicial Committee of the Privy Council confirmed nearly a hundred years ago in what has been called the Labour Conventions case, Canada (AG) v. Ontario (AG) 1937 CanLII 362 (UK JCPC), [1937] UKPC 6, [1937] A.C. 326.
[4] By way of exception, Parliament has jurisdiction over the labour relations of employees who work in federal works, undertakings, or businesses, as the Supreme Court of Canada confirmed in the case commonly known as the Stevedoring Reference, Validity and Applicability of the Industrial Relations and Disputes Investigation Act, 1955 CanLII 1 (SCC), [1955] SCR 529.
[5] The Constitution Act, 1867, 30 & 31 Vict., c. 3 governs which works, undertakings, or businesses are federal in nature. Section 2 of the Canada Labour Code, R.S.C. 1985, c. L-2 (the Code) provides a useful listing of those works, undertakings, or businesses that are subject to federal regulation. Section 2 defines a federal work, undertaking, or business as meaning:federal work, undertaking or business means any work, undertaking or business that is within the legislative authority of Parliament, including, without restricting the generality of the foregoing,
entreprises fédérales Les installations, ouvrages, entreprises ou secteurs d’activité qui relèvent de la compétence législative du Parlement, notamment :
(a) a work, undertaking or business operated or carried on for or in connection with navigation and shipping, whether inland or maritime, including the operation of ships and transportation by ship anywhere in Canada,
(a) ceux qui se rapportent à la navigation et aux transports par eau, entre autres à ce qui touche l’exploitation de navires et le transport par navire partout au Canada;
(b) a railway, canal, telegraph or other work or undertaking connecting any province with any other province, or extending beyond the limits of a province,
(b) les installations ou ouvrages, entre autres, chemins de fer, canaux ou liaisons télégraphiques, reliant une province à une ou plusieurs autres, ou débordant les limites d’une province, et les entreprises correspondantes;
(c) a line of ships connecting a province with any other province, or extending beyond the limits of a province,
(c) les lignes de transport par bateaux à vapeur ou autres navires, reliant une province à une ou plusieurs autres, ou débordant les limites d’une province;
(d) a ferry between any province and any other province or between any province and any country other than Canada,
(d) les passages par eaux entre deux provinces ou entre une province et un pays étranger;
(e) aerodromes, aircraft or a line of air transportation,
(e) les aéroports, aéronefs ou lignes de transport aérien;
(f) a radio broadcasting station,
(f) les stations de radiodiffusion;
(g) a bank or an authorized foreign bank within the meaning of section 2 of the Bank Act,
(g) les banques et les banques étrangères autorisées, au sens de l’article 2 de la Loi sur les banques;
(h) a work or undertaking that, although wholly situated within a province, is before or after its execution declared by Parliament to be for the general advantage of Canada or for the advantage of two or more of the provinces,
(h) les ouvrages ou entreprises qui, bien qu’entièrement situés dans une province, sont, avant ou après leur réalisation, déclarés par le Parlement être à l’avantage général du Canada ou de plusieurs provinces;
(i) a work, undertaking or business outside the exclusive legislative authority of the legislatures of the provinces, and
(i) les installations, ouvrages, entreprises ou secteurs d’activité ne ressortissant pas au pouvoir législatif exclusif des législatures provinciales;
(j) a work, undertaking or activity in respect of which federal laws within the meaning of section 2 of the Oceans Act apply pursuant to section 20 of that Act and any regulations made pursuant to paragraph 26(1)(k) of that Act; (entreprises fédérales)
(j) les entreprises auxquelles les lois fédérales, au sens de l’article 2 de la Loi sur les océans, s’appliquent en vertu de l’article 20 de cette loi et des règlements d’application de l’alinéa 26(1)k) de la même loi. (federal work, undertaking or business) [6] It is the nature of the employer’s core business that is considered in characterizing its business or undertaking for constitutional purposes: Canadian Pacific Railway Co. v. Attorney-General of British Columbia, 1948 CanLII 18 (SCC), [1948] SCR 373. Thus, the fact that a manufacturing business employs a driver who makes deliveries outside the province does not transform the undertaking into a federal one.
[7] The contents of any collective agreement applicable to an employer and its employees is not relevant to determining whether the Code applies to them. It is rather the nature of the employer’s core business that governs. Thus, contrary to what the applicant submitted, it is not necessary to review the collective agreement applicable to the respondents to determine if the CIRB had jurisdiction over the applicant’s complaints.
[8] Nor do the Motor Vehicle Operators Hours of Work Regulations, C.R.C., c. 990 provide a basis for federal jurisdiction in this case. As explained to the applicant during the hearing, those regulations only apply to drivers whose employers are subject to federal regulation, such as interprovincial transportation companies. There are provincial regulations and legislation that apply to drivers who are employed by businesses, like Coca-Cola, whose labour relations are subject to provincial regulation.
[9] Thus, the CIRB did not err in finding it had no jurisdiction over the applicant’s complaints. I would accordingly dismiss this application.
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