Ontario Labour Relations Board Clarifies Federal Jurisdiction Over Construction Work At Nuclear Facilities

When does construction work performed by a provincially regulated contractor fall under federal labour jurisdiction? According to the Ontario Labour Relations Board (the "Board"), as soon as the work crosses the fence of a federally licensed nuclear facility.

In SNC Lavalin Inc., 2026 CanLII 63980 (ON LRB), the Board declined jurisdiction over construction work performed at a federally regulated nuclear facility by provincially regulated contractors, holding that the work was integral to, and inseverable from, the site operator's federal undertaking.

Background: Candu’s Nuclear Laboratory in Mississauga

Candu Energy Inc. and Candu Energy International Inc. (together, "Candu") are subsidiaries of SNC Lavalin Group Inc., now AtkinsRéalis, incorporated under the Canada Business Corporations Act. Candu's business involves the design, construction, and ongoing servicing of nuclear reactors, and its existence is “intrinsically connected” to Atomic Energy of Canada Ltd. (“AECL”), a federally regulated crown corporation with mandates related to nuclear energy.

In 2011, the Government of Canada divested AECL's CANDU Reactor Division to SNC Lavalin, through Candu. AECL's employees moved with the business, and the Canada Industrial Relations Board declared Candu the successor employer to AECL in respect of four bargaining units represented by the Society of Professional Engineers and Associates. Those bargaining units remain federally regulated, and each is governed by a collective agreement under the Canada Labour Code.

Candu operates under a nuclear waste substance license (the “License”) issued under the Nuclear Safety and Control Act (“NSCA”) and administered by the Canadian Nuclear Safety Commission (“CNSC”). The License authorizes Candu to possess nuclear substances and receive nuclear tooling for decontamination and refurbishment. It also imposes detailed conditions on Candu relating to safety, site access, security, radiation protection, and regulatory reporting. Importantly, those conditions extend to any contractor performing work within the areas covered by the License.

Those conditions come alive at Candu's Sheridan Park Campus, and in particular in a building known as “SP3.” Of the three buildings on the campus, only SP3 hosts licensed nuclear activities. Approximately 90% of SP3's 160,000 square feet falls within the Licensed Control Area; only the front offices sit outside the boundaries of the License.

Where construction occurs within the Licensed Control Area, Candu carves out what it calls a "construction island," a jobsite temporarily "de-zoned" so contractors and their workers can operate with fewer radiation and security constraints. Even then, the contractors are not on their own: their workers must be escorted in and out by Candu, must complete radiation training, and remain subject to oversight by Candu's Radiation Protection Team.

The Work in Dispute

In 2023, Candu subcontracted demolition work in SP3's north offices to Jeemca Developments Ltd. ("Jeemca"). In 2024 and 2025, it subcontracted the construction of a radiation lab in SP3 to Compass Construction Resources Ltd., ("Compass"). Both companies are provincially regulated construction contractors, and Candu did not self-perform any of the construction work at SP3.

SNC Lavalin is bound to the Labourers’ Provincial ICI Agreement^[1] applicable to the work of construction labourers in the industrial, commercial, and institutional sector of the construction industry (the “ICI Agreement”). Compass is also bound to the ICI Agreement and applied its terms to the construction work it performed at SP3. Jeemca, which is non-unionized, did not.

On February 20, 2024, LIUNA Local 506 filed two grievances alleging that SNC Lavalin had engaged non-union personnel to perform work at SP3 that fell within the scope of the ICI Agreement.

Shortly after, on April 18, 2024, the Labourers' International Union of North America, Ontario Provincial District Council filed a related-employer and sale-of-business application against SNC Lavalin, AtkinsRéalis, and Candu under sections 1(4) and 69 of the Labour Relations Act, 1995 (the "Act"), alleging that the companies were associated or related businesses under common control or direction, and that a sale of business had occurred affecting Local 506's bargaining rights.

Candu raised a preliminary objection that it is federally regulated, and that the Board has no jurisdiction to hear the Labourers’ application as it applies to Candu.

Why the Board Found Federal Jurisdiction Applied

Labour relations in Canada are presumptively a matter of provincial jurisdiction. Federal regulation is exceptional, and applies in only two circumstances:

• where the essential operational nature of the work brings it within the legislative authority of Parliament (direct jurisdiction); or
• where the work forms an integral part of a federally regulated undertaking (derivative jurisdiction).

The party seeking to displace the provincial presumption bears the onus of doing so.

Even where a federal undertaking is clearly present, that is not the end of the analysis. The work in dispute must itself be integral to the federal operation. For example, in TD Bank, a prior decision of the Board involving the construction of a bank branch, the Board found that the construction was not an integral part of the federally regulated banking function, and retained jurisdiction over the construction work notwithstanding the bank's federal character.

Turning to Candu, the parties agreed, and the Supreme Court of Canada has confirmed, that Parliament has authority over nuclear energy production. That authority arises from Parliament's declaratory power under section 91(29) of the Constitution Act, 1867, exercised through the NSCA.

Section 71 of the NSCA declares any work or undertaking constructed for the development, production, or use of nuclear energy, or for the possession or use of a nuclear substance, to be a work or undertaking for the general advantage of Canada. Candu's nuclear operations at SP3 therefore fall squarely within federal jurisdiction as a core federal undertaking.

The harder question was severability. Could Candu's construction operations be functionally carved out of that federal undertaking and fall within the Board’s provincial jurisdiction?

Factors Supporting Federal Jurisdiction

The Board held that construction work could not be severed from Candu's federally regulated operations. Several facts drove that conclusion:

1. The site itself is federally regulated. SP3 is primarily a working nuclear laboratory, and roughly 90% of it falls within the Licensed Control Area under Candu's CNSC-issued License. All of the disputed construction work took place within that area.
2. Candu retains ultimate oversight under the License. As the licensee, Candu was legally required to ensure that every contractor performing work at SP3 complied with the terms of the License, including its obligations relating to health and safety, security, radiation protection, and reporting.
3. The contractors could not operate independently of Candu. Even within a "construction island," contractor employees required escorts in and out, mandatory radiation training, and, where the island was dissolved, direct supervision by Candu's Radiation Protection Team. Their work could not be performed without daily interaction with, and oversight by, Candu's federally regulated employees.
4. The construction served, and could not be extricated from, the federal undertaking. The demolition work and construction of the radiation lab were performed to maintain and upgrade Candu's licensed facilities so that Candu could continue carrying out its federally regulated nuclear work: “the Board does not agree that Candu’s construction activities are a minor and tangential aspect of its overall operations… the fact of the matter is that Candu does require construction for maintenance and upgrades… in order to allow it to continue its operations.” (para 62)

Disposition

The Board concluded that the work subcontracted to Compass and Jeemca was integrally related to Candu's federal undertaking and could not be severed from it. Candu's labour relations in respect of the work at SP3 therefore fell within federal jurisdiction, and the Board dismissed the Labourers' application against Candu.

Key Takeaways

Employers operating federally regulated facilities should note several lessons from this decision:

• Federal jurisdiction may extend to subcontracted work. Where a federal licence, permit, or regulatory regime imposes ongoing obligations on the business, including responsibility for the conduct of contractors on site, the subcontracted work supporting that undertaking may also fall within federal jurisdiction, even where the contractors themselves are provincially regulated.
• Using provincial contractors does not automatically make work provincially regulated. Engaging provincial subcontractors does not, by itself, alter the constitutional character of an undertaking. What matters is the nature of the licensee's operations, the degree of integration between the subcontracted work and the federal undertaking, and the extent to which the licensee retains oversight and regulatory responsibility for the work.
• Constitutional jurisdiction prevails over collective agreement provisions. A union's contractual rights against subcontracting cannot expand a labour tribunal's jurisdiction where the underlying undertaking is federal. Subcontracting language in a collective agreement does not override the constitutional division of powers.
• Jurisdictional objections should be considered early. When facing a related-employer, sale-of-business, or grievance application that touches on work performed at a federally regulated site, employers should consider a jurisdictional objection at the outset.

Footnote

1  between the Labourers’ International Union of North America (and affiliated entities); Construction Labour Relations Association of Ontario; Ontario Masonry Contractors Association; Industrial Contractors Association of Canada; Waterproofing Contractors Association of Ontario; and Cement Finishing Labour Relations Association.