The Supreme Court of Canada recently released an important decision in Tessier Ltée v Québec (Commission de la santé et de la sécurité du travail). The case is important because it clarifies the test used to determine whether the labour relations of a business that would normally come within provincial jurisdiction fall within federal jurisdiction because of the business’s association with a federally regulated enterprise. This is known as derivative or secondary instance federal jurisdiction.

Determining federal jurisdiction

Derivative jurisdiction arises when the work being done by the employees in question is integral to a federal work, undertaking or business. Typically, derivative federal jurisdiction will be found in one of two situations: (1) when the services provided to the federal undertaking form the exclusive or principal part of the related work’s activities; and (2) when the services provided to the federal undertaking are performed by employees who form a functionally discrete unit that can be constitutionally characterized separately from the rest of the related operation.

In Tessier, the court clarified that it is only when the dominant character of a local work or undertaking is integral to a federal undertaking that the local operation will become federally regulated. A functional inquiry must be undertaken to determine whether the essential operational nature of the work renders it integral to a federal undertaking.

Background

Tessier Ltée was a heavy equipment rental company that rented out cranes and provided employees who worked on the cranes to various job sites. In 2005 – 2006, some of its cranes were used for stevedoring at the Port of Montreal, a federally regulated entity. The stevedoring part of the operations represented 14 percent of Tessier’s Ltée’s overall revenue and 20 percent of the salaries paid to employees. Tessier Ltée’s parent company sought a declaration from the Commission de la santé et sécurité de travail that Tessier Ltée’s activities fell within federal jurisdiction.

Decision

Writing for a unanimous court, Abella J. found that Tessier Ltée’s essential operational nature was local, and its stevedoring operations, which were integrated with its overall operations, formed a relatively minor part of its overall operation. As a result, Tessier Ltée’s operations were held to be governed by provincial occupational health and safety legislation.

The court noted that since Toronto Electric Commissioners v Snider, labour relations have been presumptively a provincial matter.1 The two exceptions to this rule are when the employment relates to a work, an undertaking, or a business within the legislative authority of Parliament, and when it is an integral part of a federally regulated undertaking. In the latter case of derivative or secondary instance federal jurisdiction, the focus is on the relationship between the activity, the particular employees under scrutiny, and the federal operation that is said to benefit from the work of these employees.

Reasoning

The court held that even if the work of the employees in question is vital or integral to the functioning of the federally regulated enterprise, 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 that regard, the court adopted the dissenting reasons of McLachlin J. (as she then was) in Westcoast Energy Inc. v Canada (National Energy Board) wherein she stated that for a local work or undertaking to be subject to federal regulation, it must lose its distinctly provincial character and essentially function as part of the federal undertaking.2

In Tessier Ltée’s case, the stevedoring activities were not performed by a discrete unit and represented only a small part of its overall operation. The employees were an indivisible workforce who worked interchangeably on various tasks throughout the company. The court held that not to retain provincial hegemony over Tessier Ltée’s employees would subject them to federal regulation based on intermittent stevedoring, notwithstanding that the major part of Tessier Ltée’s work consisted of provincially regulated activities. Therefore, the court held that Tessier Ltée’s employees were governed by provincial occupational health and safety legislation.

This decision adds to a long line of cases that establish a high threshold to be met before the labour relations of an operation will be governed by federal legislation.