Thursday, November 4, 2010

Labour relations presumptively a provincial matter

NIL/TU,O Child and Family Services Society v. B.C. Government and Service Employees’ Union, 2010 SCC 45, released today, is yet another Supreme Court of Canada federal/provincial jurisdiction case.

Canadian courts have long recognized that labour relations are presumptively a provincial matter. To displace that presumption, a court must conduct an inquiry having two distinct steps, the first being the “functional test”, which examines the nature, operations and habitual activities of the entity to determine whether it constitutes a federal undertaking. Only when this first test is inconclusive, should a court proceed to the second step, which is to ask whether the provincial regulation of that entity’s labour relations would impair the “core” of the federal head of power at issue. There is no reason why the jurisdiction of an entity’s labour relations should be approached differently when dealing with s. 91(24) of the Constitution Act, 1867. The fundamental nature of the inquiry is — and should be — the same. The Court holds:

[11] Jurisdiction over labour relations is not delegated to either the provincial or federal governments under s. 91 or s. 92 of the Constitution Act, 1867. But since Toronto Electric Commissioners v. Snider [1925] A.C. 396 (P.C.), Canadian courts have recognized that labour relations are presumptively a provincial matter , and that the federal government has jurisdiction over labour relations only by way of exception. This exception has always been narrowly interpreted (Snider; Reference re Industrial Relations and Disputes Investigation Act, [1955] S.C.R. 529 (the “Stevedoring case”); Reference re Minimum Wage Act of Saskatchewan, [1948] S.C.R. 248; Commission du salaire minimum v. Bell Telephone Co. of Canada, [1966] S.C.R. 767; Agence Maritime Inc. v. Conseil canadien des relations ouvrières, [1969] S.C.R. 851; Letter Carriers’ Union of Canada v. Canadian Union of Postal Workers, [1975] 1 S.C.R. 178; Canada Labour Relations Board v. City of Yellowknife, [1977] 2 S.C.R. 729; Construction Montcalm Inc. v. Minimum Wage Commission, [1979] 1 S.C.R. 754; Northern Telecom; Four B; Bell Canada v. Quebec (Commission de la santé et de la sécurité du travail), [1988] 1 S.C.R. 749; Ontario Hydro v. Ontario (Labour Relations Board), [1993] 3 S.C.R. 327; Consolidated Fastfrate, at paras. 27-28).

[12] The approach to determining whether an entity’s labour relations are federally or provincially regulated is a distinct one and, notably, entails a completely different analysis from that used to determine whether a particular statute is intra or ultra vires the constitutional authority of the enabling government. Because the regulation of labour relations falls presumptively within the jurisdiction of the provinces, the narrow question when dealing with cases raising the jurisdiction of labour relations is whether a particular entity is a “federal work, undertaking or business” for purposes of triggering the jurisdiction of the Canada Labour Code.

[13] The principles underpinning this Court’s well-established approach to labour relations jurisdiction are set out by Dickson J., writing for a unanimous Court, in Northern Telecom. The case dealt with the jurisdiction of the labour relations of a subsidiary of a telecommunications company which was itself unquestionably a federal “work, undertaking or business” under s. 92(10)(a) of the Constitution Act, 1867. Adopting Beetz J.’s majority judgment in Construction Montcalm, Dickson J. described the relationship between the division of powers and labour relations as follows:

(1) Parliament has no authority over labour relations as such nor over the terms of a contract of employment; exclusive provincial competence is the rule.

(2) By way of exception, however, Parliament may assert exclusive jurisdiction over these matters if it is shown that such jurisdiction is an integral part of its primary competence over some other single federal subject.

(3) Primary federal competence over a given subject can prevent the application of provincial law relating to labour relations and the conditions of employment but only if it is demonstrated that federal authority over these matters is an integral element of such federal competence.

(4) Thus, the regulation of wages to be paid by an undertaking, service or business, and the regulation of its labour relations, being related to an integral part of the operation of the undertaking, service or business, are removed from provincial jurisdiction and immune from the effect of provincial law if the undertaking, service or business is a federal one. [p.132]

[14] He then set out a “functional test” for determining whether an entity is “federal” for purposes of triggering federal labour relations jurisdiction. Significantly, the “core” of the telecommunications head of power was not used to determine, as part of the functional analysis, the nature of the subsidiary’s operations:

(5) The question whether an undertaking, service or business is a federal one depends on the nature of its operation.

(6) In order to determine the nature of the operation, one must look at the normal or habitual activities of the business as those of “a going concern”, without regard for exceptional or casual factors; otherwise, the Constitution could not be applied with any degree of continuity and regularity. [Emphasis added; p. 132.]

[15] Four B, decided the same year as Northern Telecom, also adopted the principles from Construction Montcalm, and again found the functional test, which examined the “normal or habitual activities” of the entity, to be determinative. The issue in Four B was whether provincial labour legislation applied to a provincially incorporated manufacturing operation that was owned by four Aboriginal band members, employed mostly band members, and operated on reserve land pursuant to a federal permit. Beetz J., for the majority, set out the governing principles and concluded that the “operational nature” of the business was provincial:

In my view the established principles relevant to this issue can be summarized very briefly. With respect to labour relations, exclusive provincial legislative competence is the rule, exclusive federal competence is the exception. The exception comprises, in the main, labour relations in undertakings, services and businesses which, having regard to the functional test of the nature of their operations and their normal activities, can be characterized as federal undertakings, services or businesses.

There is nothing about the business or operation of Four B which might allow it to be considered as a federal business: the sewing of uppers on sport shoes is an ordinary industrial activity which clearly comes under provincial legislative authority for the purposes of labour relations. Neither the ownership of the business by Indian shareholders, nor the employment by that business of a majority of Indian employees, nor the carrying on of that business on an Indian reserve under a federal permit, nor the federal loan and subsidies, taken separately or together, can have any effect on the operational nature of that business. By the traditional and functional test, therefore, The Labour Relations Act applies to the facts of this case, and the Board has jurisdiction. [Emphasis added; pp. 1045- 46.]

Beetz J. was satisfied that the functional test was conclusive and that Four B was a provincial undertaking.

[16] At no point, in discussing the functional test, does Beetz J. mention the “core” of s. 91(24) or its content. In fact, he makes it clear that only if the functional test is inconclusive as to whether a particular undertaking is “federal”, should a court consider whether provincial regulation of labour relations would impair the “core” of whatever federal regulation governed the entity.

[17] He went on to discuss, in obiter, whether this conclusion would have been different if the functional test had been inconclusive:

The functional test is a particular method of applying a more general rule namely, that exclusive federal jurisdiction over labour relations arises only if it can be shown that such jurisdiction forms an integral part of primary federal jurisdiction over some other federal object: the Stevedoring case.

Given this general rule, and assuming for the sake of argument that the functional test is not conclusive for the purposes of this case, the first question which must be answered . . . is whether the power to regulate the labour relations in issue forms an integral part of primary federal jurisdiction over Indians and Lands reserved for the Indians. The second question is whether Parliament has occupied the field by the provisions of the Canada Labour Code. [Emphasis added; p. 1047.]

[18] In other words, in determining whether an entity’s labour relations will be federally regulated, thereby displacing the operative presumption of provincial jurisdiction, Four B requires that a court first apply the functional test, that is, examine the nature, operations and habitual activities of the entity to see if it is a federal undertaking. If so, its labour relations will be federally regulated. Only if this inquiry is inconclusive should a court proceed to an examination of whether provincial regulation of the entity’s labour relations would impair the core of the federal head of power at issue.

3 comments:

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Anonymous said...

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Anonymous said...

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