In an important case for employers utilizing third party contractors and subcontractors, the Alberta Court of Appeal has ruled that the concept of an “employer” does not extend to the owner of an industrial site who receives the benefit of services provided by employees of an arm’s length contractor: Lockerbie & Hole Industrial Inc. v. Alberta (Human Rights and Citizenship Commission, Director), 2011 ABCA 3 (Lockerbie).

In Lockerbie, the complainant was an employee of Lockerbie & Hole Industrial Inc. (Lockerbie & Hole), which was a contractor retained to construct facilities on an oilsands upgrader construction project of Syncrude Canada Ltd. (Syncrude). Syncrude was not the complainant’s employer in any conventional sense, in that it did not hire him, pay him or direct his activities on Syncrude’s site. Nonetheless, in reviewing a complaint alleging discrimination under the Alberta Human Rights Act (the Act) as a result of Syncrude’s policies governing access to its site, a Human Rights Panel found that Syncrude was an employer of the complainant because it controlled the work site and was enjoying or utilizing his services indirectly through Lockerbie & Hole. On appeal, the Court of Queen’s Bench of Alberta overturned the decision of the Human Rights Panel.

In dismissing a further appeal, the Court of Appeal of Alberta found that Syncrude was not the complainant’s employer for purposes of the Act. The Court indicated that a contextual approach is required to decide whether a particular relationship qualifies as “employment” under the Act. This requires that a number of factors be examined, including whether there is another more obvious employer involved and who has the direct benefit of, or directly utilizes, the employee’s services. Further, where it is alleged that there is more than one co-employer, the Court held that it is also necessary to consider factors such as the nexus between any co-employer and the employee, the nature of the arrangement between the primary employer and the co-employer (e.g. independent subcontractor) and the extent to which the co-employer directs the performance of the work.

In the case at hand, the Court of Appeal held that the complainant’s relationship with Syncrude was too remote to justify a finding of employment, even under an expanded meaning of that term. The complainant provided his services to Lockerbie & Hole and was directed and paid by it. He had no contractual relationship with Syncrude, was not functionally a part of its organization and did not report to Syncrude, and Syncrude did not direct his work.

The Lockerbie decision has far-reaching implications for site owners, contractors, subcontractors and other employers. In particular, it should provide greater business and operational certainty for site owners who control, and adopt policies regulating access to, a work site. For purposes of the Act at least, in most circumstances, such site owners will not likely be considered to be “employers” of the potentially large number of contractors and subcontractors who work on-site, even though the site owners ultimately receive the benefits of the services of those contractors and subcontractors.