On July 24, 2015, Administrative Judge François Caron of the Commission des relations du travail (hereinafter the « Commission ») rendered his long-awaited decision on the issue of subjecting wind turbine installation to the Act respecting labour relations, vocational training and workforce management in the construction industry (hereinafter "Law R-20").1
The nature of the litigious works
On February 21, 2013, Enercon Canada Inc. (hereinafter « Enercon »), a subsidiary of a German multinational company specializing in the manufacture, sale and installation of wind turbines, referred a question to the Commission, with a view to settling a difficulty of interpretation and application of Law R-20.
The Commission was charged with the question as to whether works of installation and setting-up (‘‘montage’’) of wind turbines erected during the construction of 14 wind farms2 located in Québec were subject to Law R-20, thus requiring the parties concerned to hire workers from the construction industry and to comply with the provisions of the collective agreement governing the civil engineering and roads sector.
The installation works concerned included all the components of wind turbines, such as the tower, the rotor, the stator, the blades, the nacelle, the cabling, the electrical connections, the maintenance platform, as well as the commissioning (starting up) and the recovery of the accessories used in handling, packing and transporting the turbines. The previous preparatory work on the ground and the foundation of the wind turbines were not covered by Enercon's legal reference proceeding.
The Commission's Decision
In order to decide the issue submitted to it, the Commission applied a three-step analysis, unanimously supported by the case law. The method used results from the very definition of the term "construction" in section 1(f) of Law R-20, which reads as follows:
(f) “construction”: the foundation, erection, maintenance, renewal, repair, alteration and demolition work on buildings and civil engineering works carried out on the job site itself and vicinity including the previous preparatory work on the ground;
In addition, the word “construction” includes the installation, repair and maintenance of machinery and equipment, work carried out in part on the job site itself and in part in the shop, moving of buildings, transportation of employees, dredging, turfing, cutting and pruning of trees and shrubs and laying out of golf courses, but solely in the cases determined by regulation;
The first step in applying this test involved determining whether the works concerned constituted "construction" work within the meaning of the first paragraph. Three other queries underlay this step:
- Were these works ones of foundation, erection, maintenance, renewal, repair, alteration, demolition, or previous preparatory work on the ground, or works connected with those activities?
- Did the works relate to building or civil engineering work?
- Were the works performed on the job site itself or in its vicinity?
With respect to the first question, the Commission recalled that [translation] "the context in which the work was carried out is not limited only to work falling within the scope of the difficulty of interpretation of Law R-20. The works necessary to performing the entirety of the project must be considered and any "dissecting" must be avoided, lest proper perspective be lost" (paras. 193-194).
Considering that the scope of application of Law R-20 must be construed widely and liberally, and that the construction activities contemplated by the first paragraph of section 1(f) of Law R-20 include all ancillary activities, the Commission concluded that the works performed in building the 14 wind farms were connected with previous preparatory work on the ground, foundation and erection. In particular, the Commission viewed the installation and erection (‘‘montage’’) of the turbines as activities connected with the erection of a work.
With regard to the second question, the Commission, like the parties to the proceeding, agreed that a wind farm is a work of civil engineering. Nevertheless, Law R-20 distinguishes between civil engineering work and the equipment and machinery related thereto. The two must not be confused. Production machinery forming part of a civil engineering work is not subsumed in it and does not lose its individuality.
The Commission held that a wind turbine constitutes a piece of production machinery. The primary function of the turbine is to transform the wind's kinetic energy into electrical power. In this perspective, a wind turbine bears a striking resemblance to any turbine.
Under these circumstances, the Commission ruled that the work to which the dispute related could not be subject to Law R-20, by virtue of the first paragraph of section 1(f) of Law R-20.
The second step consisted of determining whether the works concerned were excluded from the scope of application of Law R-20, by virtue of the exceptions enumerated in section 19. Enercon had not argued that any such exception was applicable.
The Commission had to determine whether the works of installing and erecting (setting up/ ‘‘montage’’) the turbines were governed by Law R-20, by virtue of the Regulation respecting the application of the Act respecting labour relations, vocational training and workforce management in the construction industry (hereafter the "Regulation").
The relevant provisions of the Regulation for the purposes of this newsletter are the following:
The installation, repair and maintenance of production machinery are included in the word “construction” when they are carried out by construction employees in the employ of professional employers.
The installation of production machinery on the job site itself and vicinity during the construction phase of an electric power plant and related works involving such construction are also included in the word “construction”.
Contrary to Enercon's contentions, the Commission found that, like paragraph 1(f) of Law R-20, the scope of application of the Regulation should also be construed broadly and liberally.
The Commission held that a wind turbine is a piece of production machinery. Consequently, the installation of a wind turbine, in principle, would only be subject to Law R-20 where it is carried out by construction employees employed by professional employers, that is, employers whose main activity is to do construction work and who habitually employ employees for any kind of work which is the object of a collective agreement applicable in the construction industry.
However, the Regulation provides for an automatic application of Law R-20, regardless of the employer’s status, in the case of installation of ‘‘production machinery on the job site itself and vicinity during the construction phase of an electric power plant and related works involving such construction”.
In order for that provision of the Regulation to produce its effects, the evidence adduced must show a combination of the four following elements:
- Installation works or related works;
- On production machinery;
- On the job site itself or in the vicinity;
- During the construction phase of an electric power plant.
When this provision was enacted, the wind power industry was not yet a reality. Nevertheless, in the opinion of the Commission, Law R-20 and its Regulation are not frozen in time and can be adapted to a new reality if their purpose and formulation are not opposed. In consequence, the concept of "electric power plant" is sufficiently generic to embrace all types of electric plants, including those that were unknown at the time of the inclusion of this provision in the Regulation.
Adopting the conclusions of one expert engaged by the Commission de la construction du Québec, which was a respondent in these proceedings, the Commission wrote that [translation]: "the technology utilized may vary from one electric power plant to another. However, there will always be some project designed to capture a source of primary energy in order to convert or transform it into electricity, so as to add it to the electricity grid, which [translation] 'always receives the same thing – converted electric power' " (para. 292).
Accordingly, as far as the Commission is concerned, a wind farm constitutes an electric power plant, within the meaning of the Regulation.
Enercon further pleaded that the installation works excluded set-up (erection/‘‘montage’’) activity, on the ground that the second paragraph of section 1(f) of Law R-20 makes no reference to it.3 In fact, the concept of erection appears in the Regulation only with respect to building machinery:
The installation of building machinery is, in all cases, included in the word “construction” as defined in subparagraph f of the first paragraph of section 1 of the Act respecting labour relations, vocational training and workforce management in the construction industry (chapter R-20). However, the erection, repair, and the maintenance of building machinery are only included in the word “construction” when they are performed by construction employees in the employ of professional employers.
Enercon invoked the principle that a regulatory provision may not contradict a provision of the enabling legislation, in order to support its argument that erection (set-up) activities are excluded from installation.
The Commission dismissed that argument of Enercon, on the ground that erection (‘‘montage’’) activity is included in installation activity. In this regard, the Commission held that: [translation] "the Regulation does not contravene its enabling statute where it restricts the activity of installation to erection in the case of building machinery or equipment. And, since erection activity is included in installation activity, it is therefore inadvisable to distinguish between them in the case of production machinery and equipment." (para. 321).
Finally, with respect to commissioning (start-up) activities and the recovery of accessories of handling, packaging and transportation, the Commission concluded that these were related works connected with the installation of wind turbines during the construction phase of a wind farm. In consequence, they are governed by Law R-20.
For all these reasons, the Commission determined that, during the construction phase of the 14 wind farms contemplated by Enercon's proceeding, the work of installing the turbines, as well as works related to such construction, including commissioning (start-up), and the recovery of accessories of handling, packaging and transportation, if carried out on the work site or in its vicinity, are subject to Law R-20.
Repercussions of the Commission's decision
In theory, the Commission's decision has the authority of res judicata only with respect to the 14 wind farms contemplated by Enercon's reference. It can have no effect with regard to farms excluded from that legal proceeding, whether or not they are under construction at the present time.
Nevertheless, from a practical standpoint, it must be admitted that this decision puts a final end to the controversy: wind turbine installation works, as well as works connected therewith, are automatically subjected to Law R-20 during the construction phase of any wind farm, if those tasks are carried out on the work site or in its vicinity.
The major points of interest in the Commission's decision are the following:
- As regards whether the works are governed by Law R-20, a distinction must be drawn between civil engineering work and the equipment and machinery incorporated therein.
- In principle, building and production equipment and machinery will only be governed by Law R-20 in cases governed by the Regulation. Notwithstanding that, however, the provisions of the Regulation must be construed widely and liberally.
- Erection (set-up/‘‘montage’’) activities are included in installation activities. The Regulation does not violate its own enabling legislation by explicitly referring to erection.
- Lastly, the Commission lays down certain guidelines for determining whether a project constitutes an electric power plant within the meaning of the Regulation. It proposes a progressive reading of this concept, which, in its view, was not frozen in time when it was included in the Regulation.
All those involved in the wind power industry should take note of this decision, which could eventually be submitted to judicial review. If a judicial review application is made, the undersigned will see to it that you are informed via another newsletter.
If your organization operates in the wind power industry, you must absolutely take the following two points into consideration in managing your business activities:
- The installation of wind turbines, as well as related works, are automatically subject to Law R-20, without regard to the employer’s status, where they are carried out on the job sites themselves or in their vicinity, during the construction phase of a wind farm;
- When the construction phase of a wind farm is completed, the installation of additional wind turbines, their repair and their maintenance would not be so governed, unless those tasks are performed by construction workers in the employ of professional employers. In principle, you would not be obliged to retain the services of construction employees to carry out such works.
Unfortunately, the Commission's decision is silent as regards the concept of the "construction phase of an electric power plant". What is it exactly that constitutes the construction phase of a wind farm? When exactly does such a phase come to an end? Is it arguable that when the collector substation is completed and the wind turbines grouped together in the wind farm begin supplying electric power to the public transmission grid, we are then beyond the construction phase of the farm for the purposes of the Regulation?
Considering the foregoing, the stipulations dealing with the end of the construction phase of a wind farm that are to be found in various contractual documents have a certain importance. Such contractual stipulations cannot bind the Commission or any other tribunal. They do, however, provide an indication of the intention of the parties, which, in our opinion, is a relevant factor in weighting the evidence concerning the subjection of the works concerned to Law R-20. Those active in the wind power industry need to make sure that the descriptions of the construction phase of wind farms are harmonized in the different contractual documents involved.
One thing at least is certain: it is very much in the interest of those active in the wind power industry to consult their legal advisors, in order to determine whether construction industry employees must be hired to perform installation, repair and maintenance tasks after what they consider to be the end of the construction phase. A cost/benefit analysis of the risks of litigation and of penal offences should be undertaken, in order to decide whether more wind should be blown, yet again, into the sails of Law R-20!