In a significant decision for many Canadian businesses, particularly those in the transportation sector that operate from locations across the country, the Supreme Court of Canada has narrowed the scope of federal labour law.

In Consolidated Fastfrate, the country’s highest court clarified that multi-provincial operations will not automatically be subject to the Canada Labour Code.

Consolidated Fastfrate Inc. (“Fastfrate”) is a national freight forwarding company headquartered in Ontario. A series of labour board and court decisions ensued when rival unions fought over a declaration about Fastfrate employees working in Alberta, Saskatchewan and Manitoba, being together subject to federal jurisdiction.

Fastfrate’s operations were each confined to a particular province, with the company using its own terminal employees and mostly local drivers and trucks to collect originating shipments. Third-party shippers then transported these consolidated shipments to various locations, with shipments regularly being sent across provincial boundaries. After goods were sent to a Fastfrate location in another province, the shipment would then be deconsolidated by Fastfrate employees and delivered to the relevant customer location.

Prior to the Supreme Court of Canada’s decision, many would have considered the entire business of Fastfrate to be federally regulated, since it involved movement of goods between provinces. This would have made the operation an interprovincial undertaking (i.e., an operation between provinces), which would then be governed by the Canada Labour Code.

Breaking new ground, the Court ruled that Fastfrate was governed by applicable provincial labour relations statutes. The company’s employees and equipment did not cross provincial boundaries, so the Fastfrate operations were not part of the shipment of goods between provinces. The freight transportation network was thus subject to a divisible series of components, each of which needed to be reviewed individually.

The Court commented that federal jurisdiction over labour relations is exceptional and should be treated as such. While the Canadian constitutional division of powers reserves certain matters to the national government, this should be limited to those areas of national importance. There is no basis, held the Court, to find federal jurisdiction simply because an entity is connected to or conducts business with an interprovincial work or undertaking.

Fastfrate’s operations were deemed to be entirely intra-provincial. The absence of any involvement with actual transportation between the provinces or internationally was the key determining factor. The fact that the company was able to offer a national network was not relevant.

This decision has clear implications for a number of businesses, particularly multi-site transportation and freight-forwarding operators. There is also a potential impact for those that offer services in several provinces and merely contract with federally regulated employers such as telecommunications companies, banks or the postal service.

For the industries identified above, the different rules under applicable labour laws may be important in terms of employee relations strategy. The Canada Labour Code’s rules are unique, in a number of respects, including the requirements for certification and decertification, the bargaining cycle, and the ability to use replacement workers.

The Fastfrate decision is yet another example of the ongoing efforts by Canadian courts to streamline the approach to labour and employment topics that is indicative of a more pragmatic approach to regulating the workplace.