A Refresher on First Principles: When Will the Province’s Presumptive Labour Jurisdiction be Displaced by “Derivative Jurisdiction”?
It is well known that Ontario has presumptive constitutional jurisdiction over labour relations within its boundaries. However, in rare instances, this constitutional jurisdiction may be displaced through the operation of “derivative jurisdiction” such that federal labour laws would apply. In the recent decision, Ramkey Communications Inc. v Labourers’ International Union of North America, 2019 ONCA 859, the Court of Appeal for Ontario assessed whether exceptional federal jurisdiction could be found. In doing so, the Court of Appeal for Ontario reconfirmed that the presumptive constitutional jurisdiction of the provincial government will not be displaced unless an otherwise provincial function (i) relates to a work, undertaking, or business within the legislative authority of the federal government; or (ii) is an integral part of a federally regulated undertaking.
The Labourers’ International Union of North America, Ontario Provincial District Council, applied to the Ontario Labour Relations Board for certification of all Ramkey Communication Inc.’s construction labourers – referred to as “construction technicians” – employed in six Ontario counties, subject to certain exceptions. Opposing certification, Ramkey argued that its construction technicians performed essential work for federally regulated telecommunications companies which meant that their labour relations should be federally regulated.
The construction technicians worked on Rogers’ telecommunications network closer to the headend, where the signals originate. At the time of certification, Rogers was Ramkey’s main client, with the construction work for Rogers accounting for 10-13% of Ramkey’s revenues. For the construction technicians, the work with Rogers represented the bulk of their work. However, despite being Ramkey’s main client, Rogers always had more than one contractor in the geographic areas where it operates. Moreover, during the hearing before the Board and for reasons unrelated to the proceeding, Rogers ceased all the construction work it had given to Ramkey. 
The Ontario Labour Relations Board and Divisional Court Decisions
The Board granted certification as a provincially regulated bargaining, because it was not satisfied that the presumption of provincial jurisdiction was displaced. Ramkey disagreed and sought judicial review. Prior, to the judicial review, Ramkey received a letter from the federal government’s Employment and Social Development Canada Labour Program. In the letter, a federal government inspector advised that an investigation regarding the jurisdiction of Ramkey with respect to labour standards legislation was conducted and concluded that Part III of the Canada Labour Code applied to Ramkey. Relying in part on the letter, Ramkey asked the Board to reconsider its decision, however, the Board declined to do so.
On judicial review, the Divisional Court quashed the Board’s decision. It found that Ramkey’s construction technicians should be federally regulated because they were engaged derivatively in work that was vital, essential, or integral to a federal undertaking. The Union appealed, arguing that the Divisional Court (i) misconstrued and misapplied the relevant case law, (ii) applied the wrong legal test for derivative jurisdiction and (iii) failed to defer to the Board’s extensive factual findings.
The Court of Appeal agreed with the Union and held that it would not impose exceptional federal jurisdiction over Ramkey’s construction technicians. It concluded that the Divisional Court erred by failing to give effect to the Board’s clear finding that Rogers was not dependent on the services of Ramkey’s construction technicians.
Further, the Court of Appeal held that the Divisional Court failed to consider whether the performance of the telecommunications network operated by Rogers was dependent on the construction technicians, especially since Rogers had ceased using Ramkey’s construction technicians.  In addition, the Court of Appeal agreed with the Union that the Divisional Court did not correctly apply the test for displacing the province’s presumptive labour jurisdiction over Ramkey’s construction technicians. Turning to first principles, the Court of Appeal stated,
labour relations is presumptively a provincial matter since it engages the provinces’ authority over property and civil rights under s. 92(13) of the Constitution Act, 1867. Parliament has jurisdiction to regulation employment in two circumstances: when the employment relates to a work, undertaking, or business within the legislative authority of Parliament; or when it is an integral part of a federally regulated undertaking, sometimes referred to as derivative jurisdiction.
Recognizing that the first circumstance did not apply, the Court of Appeal noted that the issue was whether the employment of Ramkey’s construction technicians was an integral part of a telecommunications network such that Parliament has jurisdiction over it. Ultimately, the Court of Appeal decided that Parliament did not have jurisdiction because it could not be said in the absence of dependency and where the construction technicians no longer conducted any work for Rogers, that Ramkey’s construction technicians were vital or integral to the operations of Rogers as a federal telecommunications undertaking.
Takeaway for Employers
For employers, this decision serves as an example of how courts and administrative bodies will assess when the provincial presumption regarding jurisdiction may be displaced. More specifically for service employers, the decision reinforces that they should be undergoing an assessment with respect to whether federal or provincial laws apply to their business at the start of a contract.
The decision also serves as a reminder that there is no “construction presumption”, but rather, a provincial presumption over labour relations generally. The result being, that the same principles apply to construction employees as to other employees in determining whether they are subject to derivative federal jurisdiction.
If you have any questions regarding your workplace, please do not hesitate to contact one of the members of our Labour & Employment group.
Ramkey Communications Inc. v Labourers’ International Union of North America, 2019 ONCA 859, at para 14 (“Ramkey”).
Ibid. at para 58.
Ibid. at para 4.
Ibid. at para 5.
Ibid. at para 30.
Ibid. at para 32, citing to Tessier Ltée v. Quebec (Commission de la santé et de la sécurité du travail), 2012 SCC 23, at paras 11, 17 (“Tessier”).
Ramkey, at para 32.
Ibid. at para 65.