Federal or provincial – are you certain which laws to follow?

Both the employer and employee in this recent case got it wrong – are you sure you’re right? One industry lawyer explains.

Federal or provincial – are you certain which laws to follow?
Employers know there are labour and employment laws that they must apply when conducting business – understanding what set of laws should be followed for Canadian employers is not always easy. Every Canadian employer must correctly identify whether it is covered by federal or provincial legislation.    

The recent decision of Greaves v Actton Transport Ltd 2015 CanLII 10860 (ON LA) illustrates just how confusing identifying the proper legislation can be for both employers and employees alike.

In this case, two employees brought a complaint under the Canada Labour Code as they both believed that their company was covered by federal laws. Before the arbitrator even heard the merits of the case, however, the employer’s preliminary objection that the Canada Industrial Relations Board had no jurisdiction had to be answered.

Most employment relationships are covered by provincial legislation, however, federal law applies in certain industries and circumstances.

For example, interprovincial trucking companies apply federal law. This fact is likely why the employees mistakenly brought their claim to the CIRB. The two employees worked for a branch of SuperSave in the GTA. The employees’ duties involved picking up, delivering, installing and dismantling portable toilets in the GTA.

SuperSave, however, was highly integrated with Actton Transport which is a federally-regulated trucking company. Actton supplies materials by transport truck across provincial lines to the SuperSave companies. The employees believed that because Actton and SuperSave were interconnected that SuperSave should also be regulated by federal law.

The arbitrator disagreed.

(Continued...) #pb#

The complaint was dismissed as the arbitrator found he lacked jurisdiction over the complaint as SuperSave was bound to provincial laws. Even though SuperSave was owned and directed by Actton, a federal company, SuperSave was functionally distinct, located in Ontario and not a vital or essential part of the federal operation.

The arbitrator determined that in cases like this the proper test to apply is the functional integration test. This test was summarized as requiring some integrated activity or purpose of the otherwise local work or undertaking with the operations of the federal work or undertaking that is vital or essential.

The arbitrator found that a common commercial interest, sharing payroll, common human resources administration, or common direction and control were not enough for SuperSave to be bound to federal law.

Why is it important to apply the correct set of laws? Although in the Greaves case the Employer was able to use the jurisdictional confusion to its advantage to have the complaints dismissed, this same type of confusion can also create liability for employers.

The federal and provincial sets of laws that regulate the employment relationship have different standards. For example overtime and holiday provisions differ under the Employment Standards Act, 2000 and the Canada Labour Code. Therefore, employers should be certain that the correct laws are being applied to avoid liability and to ensure that any disputes can proceed in the correct forum. 

The lawyers at CCPartners can assist employers in undertaking a legal analysis of the jurisdictional issues between federal and provincial legislation and can advise employers on how to comply with the appropriate set of labour and employment laws.

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