Working in the Marine Industry: Does Federal or Provincial Employment Law Apply?

Here’s a common yet tricky question: You work for, or you own, a business that services the marine industry – does provincial or federal employment law apply?

That is a hugely important question because federal employment law (i.e. the Canada Labour Code) differs dramatically from its provincial counterparts (e.g. the Nova Scotia Labour Standards Code). For example, consider that under the Canada Labour Code an employer cannot terminate an employee unless that employee’s behavior was so egregious so as to constitute just cause - i.e. serious and repeated incompetence or theft etc. - all of which need to be proven by the employer. On the other hand, in most provinces, an employer can terminate any employee as long as reasonable notice or pay in lieu thereof is provided. This is one of many significant differences - there are others related to occupational health and safety, hours of rest, and overtime. Accordingly, it matters if you are provincially or federally regulated.

As a starting point, federal employment law applies when the employment in question relates to a work, undertaking, or business within the jurisdiction of the federal government (i.e. navigation and shipping, aviation and banking etc.). Federal employment law also applies when the work in question is integrally connected to a federal work, undertaking or business. Provincial law applies when the employment does not relate to a federal work or undertaking. Employment is preemptively regulated by provincial governments and most employees in Canada are provincially regulated.

However, the marine industry is an exception. Companies who own and operate ships are clearly engaged in "navigation and shipping" and therefore subject to federal employment law. The situation becomes more murky when the business in question provides services to the marine industry but also engages in other shore-side business – i.e. many surveyors, chandlers, agents, welders, contractors, and suppliers etc.

In these situations, the case of Tessier Ltée v. Quebec, 2012 SCC 23 is instructive. In that decision the business in question (Tessier) was a heavy equipment rental company that rented cranes for a variety of purposes including stevedoring. Stevedoring is a federally regulated activity as a result of an earlier Supreme Court decision. Stevedoring represented 14 percent of Tessier’s overall revenue and 20 percent of the salaries paid to employees.  

Ultimately the Supreme Court of Canada concluded that Tessier was not federally regulated because it "devoted the majority of its efforts to non-shipping activities" and its employees worked across different sectors of the organization - i.e. an employee who operated a crane at a port one day could operate it at a construction site, or drive a truck, the next. Extrapolating this analysis to other businesses, the question that employees/employers need to ask themselves is whether the services they provide to ships are the principal and/or core aspects of their business. If yes, there's a good chance federal employment law applies. 

In a similar case, the Nova Scotia Supreme Court held that Lloyd's Register surveyors are federally regulated (Lloyd's Register North America Inc. v. Dalziel, 2004 FC 822). 

Although this jurisprudence is helpful, each case will be fact specific which makes it impossible for employees, managers, business owners and lawyers to know with absolute certainty whether provincial or federal employment law applies. For this reason, it is possible to apply for a declaration that a given business is subject to either provincial or federal law, therefore minimizing uncertainty and risk going forward – probably a good idea if you’re a large organization. 

Here’s a link to the Tessier decision: 

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