Broad Human Resources


How do I know if my company is governed by the Canada Labour Code or the Employment Standards Act?


It depends on the nature of your business. Provincial or territorial labour laws apply to 90% of the Canadian workforce while the federal Canada Labour Code applies to only 10%. Here is my lesson on Constitutional law 101 as it relates to labour laws.

The Canadian Constitution allows both the federal government and the provincial governments the right to enact labour standards legislation.

Federal government

The federal jurisdiction over labour matters is narrow and comes from its right to regulate certain subjects (national, international or interprovincial nature) expressly assigned to Parliament by Section 91 of the Constitution Act of 1867, and expressly exempted from provincial jurisdiction by Section 92. In addition, Parliament has jurisdiction to regulate works and undertakings wholly within a province which have been declared by Parliament to be works or undertakings for the general advantage of Canada or for the advantage of two or more provinces.

By virtue of this exclusive right to regulate certain works and undertakings, Parliament has the power to enact labour laws.

As a result, the Canada Labour Code, which establishes minimum standards for employment to define and guarantee employee rights and responsibilities in federally regulated workplaces, applies to employers in the following area:

  • Operations that perform a function or duty on behalf of the Government of Canada, this includes: most federal Crown corporations and federal special operating agencies; private businesses which are necessary for the operation of a federal Act (sufferance warehouses are a good example of this kind of business). The Public Service Staff Relations Act defines labour standards for the federal Public Service. This Act is administered by the Treasury Board of Canada.
  • Air transport, aircraft and airports
  • Chartered banks
  • Post offices
  • Extra-provincial shipping and related services (e.g., the operation of ships anywhere in Canada, a line of ships or a ferry service extending beyond the borders of a province, or of Canada, ports)
  • Operations that connect one province with another province or country (e.g., bridges, bus operations, canals, ferries, pipelines, railways, telephone, telegraphs, cable systems, trucking, and tunnels)
  • Radio and television broadcastings (including cablevision)
  • Specific types of work that the federal Parliament determines to be for the entire country's advantage or the advantage of two or more provinces (e.g., flour mills, grain elevators, and uranium mining and processing). Although the Parliament of Canada has exclusive jurisdiction to pass laws dealing with the territories, the federal government has passed laws giving the Yukon, Northwest Territories and Nunavut the power to make their own laws in the areas of property and civil rights and for matters that are local or private. This allows territories to enact their own employment/labour standards laws.

Provincial government

Provinces have the power to enact labour laws from the property and civil rights subsection of the Constitution Act of 1867. "The right to enter into contracts is a civil right, and since labour laws impose certain restrictions on contracts between employers and employees, they fall within provincial authority as property and civil rights legislation." Provinces also have the right to legislate on "local works and undertakings".

The above allows provinces to enact their own employment/labour standards laws.

As a result, if you are not a company covered by the Canada Labour Code as indicated above, your company is covered by employment/labour standards law in the province were your company is located and employees report to work.

Indians on land reserved for the Indians

The Constitution Act, 1867, section 91 (24) gives jurisdiction over "Indians, and lands reserved for the Indians" to the federal government. As a result, the federal government has been assigned jurisdiction to most affairs related to First Nations people and First Nations communities. In labour matters, therefore, the federal government has jurisdiction if the particular enterprise is specifically "Indian" in nature or integrally related to "Indian" lands. If not, the provinces would normally have jurisdiction. According to the HRSDC, in determining jurisdiction, there are two primary considerations which appear in the case law: the nature of the enterprise, and the degree of control exercised over it by the Band Council.

The nature of the enterprise is established by examining its operations and normal activities as a going concern. If the activity is infused with what has been called "Indianness" or closely tied with Indian status or identity, it will fall under federal jurisdiction. "Indianness" is determined according to factors such as whether the enterprise is located off or on reserve, the percentage of First Nations staff and clientele or beneficiaries, the right of employees to participate in the election of Chiefs and Band Councils, reserve privileges, and the degree to which the enterprise is dedicated to preserving traditional and cultural aspects, and survival of First Nations peoples. Aside from the sphere of industrial relations, if a provincial law of general application was seen to touch "Indianness", it could still apply to First Nations workplaces, providing it did not conflict with an Act of Parliament or with a treaty, by virtue of section 88 of the Indian Act.

Where Treaty rights and special legislation are not in issue, section 88 of the Indian Act provides that Indians are subject to provincial laws of general application. Such laws include, for example, compulsory auto insurance, highway traffic or motor vehicle legislation, occupational health and safety laws, employment and labour laws.

Labour relations boards also consider the level of involvement of a Band Council in a workplace. For example, in Whitebear Band Council v. Carpenters Provincial Council of Saskatchewan, the Saskatchewan Court of Appeal held that Band Councils' powers exist only through delegation from Parliament or by acting as an agent of the Minister of Indian Affairs. Activities of a Band Council, therefore, fall under "federal work, undertaking or business", and are covered by federal labour relations. If workplace decisions are made by private entities rather than Band Councils, provincial jurisdiction is the rule.

Recently, the British Columbia Labour Relations Board ruled regulating labour relations between First Nations employers and employees on reservations does not infringe on the rights and treaties of the aboriginal peoples of Canada. The ruling stated that "…the First Nations persons involved with the Society as ordinary employees and employers in a way that does not intrude on their First Nations' character, identity or relationships. When provincial legislation only affects Indian organizations and the Indian persons associated with the organization in this way, the labour relations of the organization remains within provincial jurisdiction."

Other requirements

Whether your company is governed by the Canada Labour Code or provincial or territorial employment/labour standards laws, they are established minimum requirements to be followed by employers and employees during the employment relationship. However, union contracts (collective bargaining), employment contracts and workplace policies can establish greater and more favourable terms and provisions and will prevail over the legislated requirements.

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Please Note: Any information provided in response to an HR or payroll question is not legal advice or a legal opinion. To obtain legal advice or a legal opinion, consult a lawyer.