Preliminary Matters for Employment Law (9:IV)

A. Determine Jurisdiction

The jurisdiction in which the employee is covered determines whether provincial or federal legislation applies to the employment relationship. This section will help you determine which jurisdiction the employee falls under, and which statutes apply.

1. Federal or Provincial Jurisdiction

The large majority of employees fall under provincial jurisdiction.

Employees will fall under federal jurisdiction if they are employed in connection with any federal work, undertaking, or business that is within the legislative authority of Parliament, or if they work for certain federal crown corporations. This can be a complicated constitutional question, but generally, areas of business that are federally regulated include:

• Shipping and navigation, including the operation of ships and transportation by ship anywhere in Canada
• Interprovincial or international transportation (for example, truck, rail, ferry, or shipping routes that cross a provincial or international border)
• Telecommunications companies, such as cell phone, cable, or internet providers
• Airports and air transportation, including any airline companies
• Radio broadcasting stations
• Banks (but not credit unions)
• Businesses located on First Nations reserves
• Other areas listed in section 91 of the Constitution Act, 1867 (UK), 30 & 31 Vict, c 3, reprinted in RSC 1985, App II, No 5.

Students must look to the type of work done, as well as the employer’s area of business, in order to determine jurisdiction. It is important to note that a single employer could have both federally and provincially regulated employees. Although an employer may be subject to federal jurisdiction, it does not follow that all of that employer’s employees will be governed by federal law. In some cases, additional research must be done to determine the employee’s jurisdiction. For additional details to assist in determining jurisdiction if a difficult case arises, see Actton Transport Ltd v British Columbia (Director of Employment Standards), 2008 BCSC 1495.

One action students can take to help determine jurisdiction is to perform a BC Online company search. While not always determinative, a company search will provide information regarding whether the company is provincially registered, which may help determine jurisdiction. In addition, a company search will usually provide the company’s director and registered office information.

B. Determine Applicable Legislation

1. Applicable Legislation

Once you have determined the jurisdiction, make note of which statutes apply to the employee, and then continue on to the next step in the checklist: Section II.A: Unionized vs. Non-Unionized Employees.

Note that this chapter focuses on provincial legislation. In cases where the employee is federally-regulated, this chapter can still be of assistance as the provincial and federal statutes have many similarities, but it will be necessary to read the federal statutes to determine whether a particular provision is similar.

a) Employment Standards

Provincially regulated employees are generally covered by the Employment Standards Act [ESA]. Be aware that certain professions and employees are exempt from the ESA, or parts of the ESA. Review the Employment Standards Regulations to determine if the employee is covered by the ESA.

See IV.B.10: Exceptions to the General Rule (Specialty Professions) to determine whether the ESA applies to the employee in question. See IV.B.6: Hours of Work and Overtime Pay to determine if the employee is exempt from overtime.

b) Labour Relations Code and Canada Labour Code

Provincially regulated employees who belong to a union are additionally covered by the Labour Relations Code. It should be noted that parts of the ESA may not apply to unionized employees.

Federally regulated employees are covered by the Canada Labour Code [CLC]. A significant difference between the CLC and the ESA is that the CLC confers a special right: If the employee is non-managerial, worked for at least one year, and was unjustly dismissed, his or her job can be reinstated. A complaint must be filed within 90 days (CLC, s 240(2)).

Students should be aware that in 2015 the Supreme Court of Canada granted leave to appeal the Federal Court of Appeal decision in Wilson v. Atomic Energy of Canada Limited, 2015 FCA 17, which may have an impact on a CLC employer’s ability to dismiss an employee without cause, and without the employee having access to reinstatement.

c) Human Rights

Provincially regulated employees are covered by the British Columbia Human Rights Code. Federally regulated employees are covered by the Canada Human Rights Act.

d) Common Law and Contract Law

Provincially and federally regulated employees have common law employment entitlements. Causes of action, such as breach of contract due to wrongful dismissal, remain the same whether the employee is provincially or federally regulated.

Employees will also often have written contractual entitlements. Students should have employees provide them with any written employment contract or applicable workplace policy, and carefully review these documents to both clarify terms of employment and determine whether the contract is enforceable.

Unionized employees may have common law or contractual entitlements, but generally these entitlements have to be acted upon by the union that is party to the collective agreement. See Section II.A: Unionized vs. Non-Unionized Employees.

C. Determine if the Employee is Unionized or Non-Unionized

The student should determine whether the employee belongs to a union. If the employee does not belong to a union, continue on to the next step in the checklist: Section II.A: Employees vs. Independent Contractors.

Issues regarding unionized employees can be complex, and unionized employees should therefore generally be referred to their union representative or a lawyer. However, the following paragraph provides basic information for unionized employees.

If an employee is a union member and has a complaint regarding the employer, he or she must first advise the union’s representative. The employee can contact either the shop steward at the workplace, or an external union representative, to see what the union can and will do. The ESA provides minimum standards that generally must be met, but collective agreements will contain other critical guidelines that the employer must follow. Usually, union contracts contain different or more onerous terms than the ESA provisions, and union members in their collective agreements can contract out of ESA limitations (ESA, s 3) regarding such matters as hours of work, overtime, statutory holidays, vacations, vacation pay, seniority retention, recall, and termination of employment or layoff. Whole sections of the ESA might not apply under a collective bargaining agreement as long as they have been addressed by the agreement. The collective agreement does not necessarily have to meet minimum guidelines for certain sections of the ESA. For more information consult the Employment Standards Branch fact sheet on collective bargaining agreements.

Unions have a duty to represent their workers fairly. An employee who feels his union has not fairly represented his interests or advanced a grievance can bring a complaint under section 12 of the Labour Code. These complaints are seldom successful, and so it is very important to have the employee document all requests for help to the union and document the union’s response.

D. Determine if the Worker is an Employee or Independent Contractor

Most workers are considered “employees”, but some are considered “independent contractors”, and some fall under an intermediate category sometimes referred to as “dependent contractors”. The distinction is important because independent contractors are generally not protected by the Employment Standards Act or the Human Rights Code for provincially regulated employees, or the Canada Labour Code or the Canada Human Rights Act for federally regulated employees.

Additionally, independent contractors may not be entitled to reasonable notice if they are dismissed, as many employees are, although the law on this can be complex (see below). Note that different statutes have different objectives and definitions, and as a result, “employee” and “independent contractor” may be interpreted differently under each statute. These interpretations are generally similar and sometimes follow the same tests; however, the ESA and particularly the HRC may define “employee” more broadly than the common law tests would – see Sections III.D.2 and III.D.3, below. As a result, those who would be categorized as dependent or independent contractors under the common law may sometimes be categorized as employees under the HRC.

In McCormick v Fasken Martineau DuMoulin LLP (2014 SCC 39), the Supreme Court of Canada affirmed that the key to a determination of employment relationship is the degree of control and dependency.

1. Employees v. Contractors - Common Law

The common law distinction between employees, dependent contractors, and independent contractors should be used if pursuing a claim regarding the employment contract, such as a wrongful dismissal claim.

An employee is typically highly controlled by the employer: the employer might set the employee’s hours, provide training, decide how work should be performed, require adherence to policies such as dress codes, and discipline the employee for misconduct. The employer would also typically make Canada Pension Plan (CPP) and Employment Insurance (EI) deductions, provide Worker’s Compensation coverage, and pay for any business expenses and equipment. Employees tend to be highly dependent on the employer to earn their living.

An independent contractor is generally not significantly controlled by the employer: the independent contractor might set their own hours, determine how to perform the work, make their own payments for CPP, EI, and Worker’s Compensation coverage, pay for their own business expenses and equipment, and determine whether to hire their own employees or subcontractors to assist in performing the work. Independent contractors often contract with more than one business, and as a result are less dependent on a single business to earn their living.

A dependent contractor is an intermediate category, falling somewhere in the middle of the scale. A dependent contractor might set their own hours and hire their own employees, but derive most of their income from a contract with one business, and thus be fairly dependent on that business to earn their living. None of the factors listed above can alone determine the categorization of the worker. One of the leading tests to apply to determine how to categorize the worker is set out in 671122 Ontario Ltd v Sagaz Industries Canada Inc, 2001 SCC 59, [2001] 2 SCR 983:

[...]The central question is whether the person who has been engaged to perform the services is performing them as a person in business on his own account. In making this determination, the level of control the employer has over the worker's activities will always be a factor. However, other factors to consider include whether the worker provides his or her own equipment, whether the worker hires his or her own helpers, the degree of financial risk taken by the worker, the degree of responsibility for investment and management held by the worker, and the worker's opportunity for profit in the performance of his or her tasks.

It bears repeating that the above factors constitute a non-exhaustive list, and there is no set formula as to their application. The relative weight of each will depend on the particular facts and circumstances of the case.