Supreme Court Upholds Provincial Powers over Labour Relations05-Jan-10
In a recent decision, the Supreme Court of Canada reinforced the principle that labour relations are presumptively a matter of provincial legislative authority, not federal authority.
The case involved a transportation company engaged in “freight forwarding,” a business that serves its customers by collecting less-than-truckload shipments, consolidating them into truckloads, arranging with third parties for the interprovincial transportation of those shipments, and then deconsolidating the shipments and delivering them locally at the other end of the process. Fastfrate had unionized operations across the country, some of which were governed by provincial certification orders and others which were governed by federal certification orders.
The Teamsters sought a federal certification order for Alberta, Saskatchewan, and Manitoba which would have the effect of ousting provincial certification orders, individual location collective agreements, and removing an employees' association at the Calgary operation. Both the Alberta Labour Relations Board and the Canada Industrial Relations Board held that Fastfrate's business was regulated by the Canada Labour Code because the purpose of the operation was viewed as being interprovincial transportation and Fastfrate was a national organization with many corporate matters handled in a centralized fashion.
After winning and losing at different levels of appeal, Fastfrate was ultimately successful before the Supreme Court of Canada in confirming that its operations constitute local transportation, not interprovincial transportation. The Supreme Court clarified conflicting decisions in respect to the division of powers under Canada's Constitution and reached the following conclusions:
- 1. Matters of labour relations are presumptively subject to provincial authority under the Constitution, and the default position should be provincial jurisdiction unless the circumstances demonstrate an activity clearly subject to federal authority, such as interprovincial transportation.
2. Transportation undertakings must be physically involved in the interprovincial aspects of the transportation in order to be subject to federal authority under the Constitution. Obtaining the physical transportation across borders through contracts with third parties is not sufficient to create an interprovincial undertaking. Among other things, the Supreme Court found this test would foster certainty and consistency in applying the Constitution to a given undertaking.
3. The Supreme Court distinguished the treatment of transportation undertakings from communications undertakings under the Constitution and thus distinguished communications cases from transportation cases in dealing with jurisdiction under the Constitution.
4. The Supreme Court dismissed the Labour Board's reliance upon Fastfrate's national corporate structure in determining its constitutional jurisdiction.
This case is a victory for provincial rights and the sensible regulation of labour relations at the local level where regulatory regimes are closely aligned with the local working conditions of employees being regulated. This case is also a victory for more certain application of the Constitution to transportation undertakings and provides clear guidance on the need for physical involvement in interprovincial transportation, thereby allowing organizations to structure their affairs appropriately for their circumstances.
McLennan Ross represented Fastfrate in this matter.