In Tessier v. Québec (Commission de la santé et sécurité du travail), 2012 SCC 23 the Supreme Court of Canada tackled an important issue relating to the division of powers as they relate to labour relations. In this decision, handed down on May 17, 2012, the Supreme Court was tasked with deciding whether work done by employees qualified as a federal transportation undertaking for the purpose of s.92(10) of the Constitution, which deals with lines of steam and other ships. This appeal was the first time the Supreme Court has had the opportunity to assess the constitutional consequences when the employees performing the work do not form a discrete or distinct unit but are instead fully integrated into the related operation.
Tessier (or the Employer), a heavy equipment rental company, engaged in intra-provincial road transportation and maintenance. In 2005-2006, the Employer's equipment was regularly used in the loading and unloading of ships, an activity also known as stevedoring. This activity represented 14 percent of its overall revenue and 20 percent of the salaries paid to its employees. Furthermore, Tessier's stevedoring services were not performed by a discrete unit of employees. Instead, the employees were fully integrated into the Employer's.
In 2006, Tessier's parent company sought a declaration from Quebec's Commission de la santé et de la sécurité du travail ("CSST") that its stevedoring activities fell under federal jurisdiction and that it was not, as a result, subject to provincial occupational health and safety legislation. Tessier preferred to have its workers declared to be under federal jurisdiction because federal undertakings are excluded from paying fees directed to financing Quebec's Operational Health and Safety Act.
Writing for the Court, Justice Abella noted that, although labour relations is a presumptively provincial matter, the federal government has jurisdiction to regulate labour relations in two specific circumstances. First, when the employment relates to a work, undertaking, or business within the legislative authority of Parliament; or second, when it is an integral part of a federally regulated undertaking, sometimes referred to as derivative jurisdiction.
Citing the Stevedores Reference, [1955] S.C.R 529, Justice Abella asserted that, while s.91(10) confers exclusive legislative jurisdiction to Parliament over "Navigation and Shipping", s.91(10) does not confer absolute authority on the federal government to regulate shipping. Instead, s.91(10) must be read in light of s.92(10)(a) and (b). Justice Abella concluded by stating that stevedoring is not an activity that brings an undertaking within a federal head of power, at least for the purposes of labour relations regulation. Rather, Parliament will only be justified in regulating these labour relations if the stevedoring activities are an integral part of the activities contemplated under s.92(10)(a) and (b).
The Supreme Court took a similar approach as in Stevedores Reference, interpreted as a case of derivative jurisdiction. To qualify as a derivative jurisdiction, the services provided to the federal undertaking must form the exclusive or principal part of the related work's activities. Alternatively, it may be justified when the services provided to the federal undertaking are performed by employees who form a functionally discrete unit. However, if the employees do not form a discrete unit and are fully integrated into the related operation, then even if their work is vital to the federal undertaking it will not qualify if the work is a minor aspect of the essential nature of the overall (provincial) operations.
In this case, the Supreme Court held that Tessier's employees could not qualify as being under federal jurisdiction. Tessier devoted only 14% of its business to stevedoring services to federal undertakings. Further, the employees did not represent a distinct unit within Tessier.
This decision will aid many employers in determining, based on the elements discussed above, whether they fall under federal jurisdiction.
In collaboration with Laurence Farmer, student at Norton Rose Canada LLP
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