Yesterday, the Supreme Court of Canada had the first opportunity to assess the constitutional consequences when employees performing federal work do not form a discrete unit and are fully integrated into a core operation that does work falling under provincial jurisdiction.

The case dealt with a crane company, Tessier Limitée, that performed some stevedoring work (the unloading or loading of vessels). Its main business, accounting for 86% of its overall revenue and 80% of its workforce, was crane operation and rental in respect of construction work and industrial maintenance. The business was an integrated one, in the sense that crane operators who worked at a construction site one day might assist in unloading ships the next day.

Stevedoring work is, on its own, considered federal work. On its own, the other work is clearly under provincial labour jurisdiction.

The Court decided that “even if the work of those employees is vital to the functioning of a federal undertaking, it will not render federal an operation that is otherwise local if the work represents an insignificant part of the employees’ time or is a minor aspect of the essential ongoing nature of the operation.” In approving decisions in earlier lower court cases, the court also helped answer how much is “minor”. Federal work comprising 25% and even 29% federal work may not be enough to fall under the federal labour jurisdiction. So, at long last, we have a test to apply.

In the words of the Court: “In short, Tessier’s essential operational nature is local, and its stevedoring activities, which are integrated with its overall operations, form a relatively minor part of Tessier’s overall operation. Not to retain provincial hegemony over these employees would subject them to federal regulation based on intermittent stevedoring, notwithstanding that the major part of Tessier’s work consists of provincially regulated activities.”

The Court however also noted that the flip-side did not apply. If Tessier itself was an inter-provincial transportation undertaking, then the percentage of its activities devoted to local versus extra-provincial transportation would not be relevant.

A number of clients perform some work that would on its own be federal work in that it is vital, essential or integral to the operation of some federal undertaking. However, it is comforting to know that doing some federal work will not put the entire integrated company under federal jurisdiction. If an operational division was segregated to do federal work with its own dedicated workforce then that could of course be carved off as a federal operation.