YMHA Jewish Community Centre of Winnipeg Inc. v. Brown, 1989 CanLII 53 (SCC), [1989] 1 SCR 1532
Thomas Brown, Bobby Koerner, Marc Sequin, Eugene Cherniak, Darren Olynyk, Eino Vesa, Keith Gibson, Gary Robinson, Wade Gibson and Martin Roy Appellants
v.
YMHA Jewish Community Centre of Winnipeg Inc. Respondent
and
Manitoba Labour Board Respondent
and
The Attorney General of Canada and the Attorney General for New Brunswick Interveners
indexed as: ymha jewish community centre of winnipeg inc. v. brown
File No.: 20614.
1989: March 14; 1989: June 8.
Present: Dickson C.J. and Lamer, Wilson, La Forest, L'Heureux‑Dubé, Sopinka and Gonthier JJ.
on appeal from the court of appeal for manitoba
Constitutional law ‑‑ Labour relations ‑‑ Federal job creation programmes ‑‑ Whether federally funded job creation programmes infringe upon provincial jurisdiction over labour relations ‑‑ Whether provincial wage laws applicable to workers participating in a federal job creation programme ‑‑ Constitution Act, 1867, ss. 91(2A), (29), 92(10) ‑‑ Unemployment Insurance Act, 1971, S.C. 1970‑71‑72, c. 48, s. 38 ‑‑ The Payment of Wages Act, S.M. 1975, c. 21 ‑‑ The Construction Industry Wages Act, R.S.M. 1970, c. C190.
Master and servant ‑‑ Federal job creation programmes ‑‑ YMHA entering into an agreement with federal government to engage workers participating in a federal job creation programme ‑‑ Whether workers were employees of YMHA within the meaning of The Payment of Wages Act and The Construction Industry Wages Act of Manitoba ‑‑ Whether YMHA was the "employer" under the same legislation.
The YMHA undertook to renovate its premises and participated in a federal job creation programme aimed at unemployed workers and established pursuant to s. 38 of the Unemployment Insurance Act, 1971. To take advantage of the programme, the YMHA entered into an agreement with the federal government. The Agreement designated the YMHA as "employer" and provided that the Canada Employment and Immigration Commission would continue to pay the unemployment insurance benefits of the "employees" while the "employer" would be responsible for topping up this amount in accordance with the rates set up in the Agreement. The appellants were classified as "cleaners" under the Agreement and were paid an amount equivalent to the minimum wage for that classification. They subsequently contested their classification before the Manitoba Labour Board arguing that they performed general construction work which entitled them to a higher wage. The Board, by virtue of its jurisdiction under the Manitoba Payment of Wages Act, allowed the complaint, fixed the appropriate wage according to the regulations passed pursuant to the Manitoba Construction Industry Wages Act, and ordered the "employer", the YMHA, to pay to the appellants the difference between the amount already received by them and the new wage rate. The Court of Appeal quashed the Board's order. This appeal is to determine: (1) whether the appellants were employees within the meaning of the relevant provincial legislation; and (2), whether the provincial wage laws were applicable to workers participating in a job creation programme established pursuant to s. 38 of the Unemployment Insurance Act, 1971.
Held: The appeal should be allowed.
The appellants were "employees" and the YMHA was an "employer" within the definitions of these words contained in Manitoba's Payment of Wages Act and Construction Industry Wages Act. First, the YMHA was directly or indirectly responsible for the engagement of the appellants. While the pool of applicants was limited by the Agreement to workers receiving unemployment insurance benefits, the YMHA freely selected workers from that group and thus retained the power of selection of the workers who participated on the project. Second, the top‑up pay received by the appellants from the YMHA constituted wages. Section 38(3) of the Unemployment Insurance Act, 1971, which provided that money received by the project participants was not "remuneration from employment", did not affect the classification of the money received by the appellants for the purposes of any legislation not specifically referred to in that provision. Third, the YMHA had the control and direction over the appellants. The Agreement between the YMHA and the Commission did not affect the employer/employee relationship.
The provincial wage laws were applicable to the workers participating in the job creation programme at issue. Parliament had no jurisdiction over labour relations in this case. The power to establish the programme is not founded in its exclusive jurisdiction over unemployment insurance (s. 91(2A) of the Constitution Act, 1867). Section 38 merely provides for approval of such programmes. The section addresses only the limited issue of the continued application of various provisions of the Unemployment Insurance Act, 1971 during the course of the unemployed person's participation in a job creation programme. It makes no attempt to regulate the work to be performed nor does it address the subject of labour standards or rates of remuneration. The power to establish these programmes is derived from the federal spending power, but the mere spending of federal money does not bring a matter which is otherwise provincial into federal competence. While Parliament may be free to offer grants, the decision to make a grant of money in any particular area cannot be construed as an intention to regulate all related aspects of that area. Thus, a decision to provide a job creation grant to an organization such as the YMHA should not be construed, without other evidence, as an intention to remove provincial labour law jurisdiction over the project. Finally, the job creation programme cannot be categorized as a federal undertaking covered by ss. 91(29) or 92(10) of the Constitution Act, 1867.
Cases Cited
Referred to: Four B Manufacturing Ltd. v. United Garment Workers of America, 1979 CanLII 11 (SCC), [1980] 1 S.C.R. 1031; Bell Canada v. Quebec (Commission de la santé et de la sécurité du travail), 1988 CanLII 81 (SCC), [1988] 1 S.C.R. 749.
Statutes and Regulations Cited
Constitution Act, 1867, ss. 91(2A), (29), 92(10).
Construction Industry Wages Act, R.S.M. 1970, c. C190, ss. 2(1)(c), (e), 14(4) [am. 1980‑81, c. 38, s. 3].
Payment of Wages Act, S.M. 1975, c. 21, ss. 1(c) [rep. & subs. 1985‑86, c. 52, s. 1], (d), 16(1) [am. 1978, c. 18, s. 8; rep. & subs. 1985‑86, c. 52, s. 10].
Unemployment Insurance Act, 1971, S.C. 1970‑71‑72, c. 48, ss. 38(1) to (6) [rep. & subs. 1976‑77, c. 54, s. 41].
Authors Cited
Christie, Innis. Employment Law* in Canada. Toronto: Butterworths, 1980.
Hogg, Peter W. Constitutional Law of Canada, 2nd ed. Toronto: Carswells, 1985.
La Forest, Gérard Vincent. The Allocation of Taxing Power Under the Canadian Constitution, 2nd ed. Toronto: Canadian Tax Foundation, 1981.
Oxford English Dictionary, vol. III. Oxford: Clarendon Press, 1969, "engage".
APPEAL from a judgment of the Manitoba Court of Appeal (1987), 1987 CanLII 5305 (MB CA), 48 Man. R. (2d) 236, 42 D.L.R. (4th) 360, quashing an order of the Manitoba Labour Board. Appeal allowed.
W. G. McFetridge and M. A. Webb, for the appellants.
Harold Buchwald, Q.C., and Campbell Wright, for the respondent YMHA Jewish Community Centre of Winnipeg Inc.
David Gisser, for the respondent the Manitoba Labour Board.
James M. Mabbutt, Q.C., for the intervener the Attorney General of Canada.
Gabriel Bourgeois, for the intervener the Attorney General for New Brunswick.
//L'Heureux-Dubé J.//
The judgment of the Court was delivered by
L'HEUREUX-DUBÉ J. -- This case raises the issue of whether a federally funded job creation programme can infringe upon provincial jurisdiction over labour relations.
The respondent YMHA Jewish Community Centre of Winnipeg Inc. (the "YMHA") is a non-profit organization which provides social, educational and recreational facilities in the Winnipeg community. From the fall of 1984 to the spring of 1985, the YMHA undertook to renovate its premises. Funding for the renovation project was received by the YMHA from a number of sources. Contributing bodies were both private and public, provincial and federal. In addition to these sources, the YMHA also participated in a federal job creation programme which provided wage subsidies for workers on the renovation project.
The appellants were among those who participated in the renovation project. At the time of the commencement of renovations, they were unemployed persons receiving benefits under the Unemployment Insurance Act, 1971, S.C. 1970-71-72, c. 48, as amended. Because the appellants were unemployed at the time of their participation in the job creation programme, the terms of their participation were governed by s. 38 of the Act. Section 38 provides:
Job Creation
- (1) For the purposes of this section, a job creation project means a project that is approved by the Commission for the purposes of this section under a program designed primarily to create employment and conducted by the Government of Canada pursuant to any Act of Parliament.
(2) Benefit otherwise payable under this Part to a claimant who takes employment on a job creation project may, at the discretion of the Commission and subject to subsection (10), be paid in the manner prescribed.
(3) For the purposes of this Part, a week during which the claimant is employed on a job creation project and is paid benefit under subsection (2) shall be deemed to be a week of unemployment and for the purposes of this Part, Part IV, the Income Tax Act and the Canada Pension Plan, any benefit paid to a claimant under subsection (2) shall be deemed not to be remuneration from employment.
(4) Notwithstanding section 24, the rate of weekly benefit payable to a claimant employed on a job creation project shall be an amount not exceeding the greater of the rate payable under section 24 and the wage rate applicable to employment on that project, as determined by the Commission.
(5) Notwithstanding anything in this Part, no claimant is disentitled or disqualified from receiving benefit under this Part by reason only of his voluntarily leaving or refusing to accept employment on a job creation project.
(6) The Commission may require that a claimant who is employed on a job creation project be capable of and available for work in other employment and provide such proof thereof as the Commission may direct.
Section 38 of the Act allowed the appellants to continue to be deemed unemployed for the duration of their participation in the project so that their status under the Act, as unemployment insurance beneficiaries, would not be affected by their participation.
The YMHA engaged a number of workers under the job creation project to carry out its renovations. To do so, it entered into an agreement with the federal government. The Agreement designated the YMHA as "employer", and provided that Canada would continue to pay the unemployment insurance benefits of the "employees" while the "employer" would be responsible for topping up this amount in accordance with the rates set out in Schedule A of the Agreement. The "employer" would maintain at all times the direct supervision, management and control of the project workers.
Schedule A of the Agreement set out the different classifications of the types of workers required by the project. A wage rate was established for each classification. It is significant that the wages set for each category were in line with the applicable provincial minimum wage for that type of employment.
The appellants were classified as "cleaners" under the Agreement, and were paid an amount equivalent to the minimum wage for that classification. However, they subsequently contested the classification and argued that the work they performed was general construction work which would entitle them to a higher wage.
The Manitoba Labour Board (the "Board"), by virtue of its jurisdiction under The Payment of Wages Act, S.M. 1975, c. 21, heard the appellants' complaint. The Board determined that the work performed by the appellants:
. . . entailed extensive structural and mechanical alterations, including such functions as the removal of existing walls, erection of new walls, roof repairs, suspended ceiling installation, as well as other functions which were required to complete the renovations. . .
According to the Board, such work fell within the definition of "industrial, commercial and institutional Construction" as defined in Regulation 189/84 under The Construction Industry Wages Act, R.S.M. 1970, c. C190. The Board held that the appellants were thus entitled to be paid $13.45 per hour, being the appropriate wage for general construction labour. The Board made the further determination that the YMHA was the employer of the appellants. It reached this conclusion based on the fact that the YMHA "maintained control over hiring and termination, hours of work, duties to be performed, and supervision, of those so engaged". As a result, the Board ordered the YMHA to pay to the appellants the difference between the amount already received by them and the higher wage to which it held they were entitled. It calculated the total amount owing at $13,025.13.
Since the order of the Board was made under The Payment of Wages Act, an appeal to the Court of Appeal of Manitoba was possible by virtue of s. 16(1) of that Act:
16(1) An appeal lies to the Court of Appeal from any final order or decision of the board upon any question involving the jurisdiction of the board or upon any point of law; and section 58 of The Public Utilities Board Act except clause 58(1)(c) thereof applies, mutatis mutandis, to any appeal taken.
Leave to appeal to the Manitoba Court of Appeal was granted by O'Sullivan J.A. who delivered reasons for granting leave. O'Sullivan J.A. accepted the Board's findings that the appellants were performing the work of construction labourers rather than cleaners, and did not grant leave to appeal on this point. However, O'Sullivan J.A. was concerned with the problem of how the appellants could be both unemployed for the purposes of the Unemployment Insurance Act, 1971 and employed for the purposes of The Payment of Wages Act. As a result, he granted leave to appeal on the following three grounds:
(1) That the (board) erred in law and acted in excess of its jurisdiction in making the said order, as the matters in issue fall outside the scope of Manitoba wage and employment legislation.
(2) That the (board) erred in law and acted in excess of its jurisdiction in finding that work and services performed by those individuals described as employees in the said Order on the premises of the applicant fall within the scope of Manitoba wage and employment legislation.
(3) That the (board) erred in law in finding that these individuals described as employees in the said Order were either employees of, or employed by, the applicant.
The appeal was heard by Hall, O'Sullivan and Lyon JJ.A. of the Manitoba Court of Appeal: (1987), 1987 CanLII 5305 (MB CA), 42 D.L.R. (4th) 360, 48 Man. R. (2d) 236. Hall J.A. delivered the brief reasons of the Court allowing the appeal of the YMHA. The ratio of the Court of Appeal can be reproduced here in full. Hall J.A. wrote:
In my opinion, the board has no jurisdiction to intervene and enhance the benefits payable to workers participating in the programme by invoking provincial wage laws. It is true that the agreement between YMHA and the commission refers to YMHA as an employer but that does not automatically make the workers employees, much less employees governed by provincial wage laws.
In sum, it is my view that having regard to the governing statute and the agreement between YMHA and the commission, the provincial wage laws are not applicable to workers participating in a s. 38 job- creation project.
The appellants appealed to this Court on the following grounds:
A. The Court of Appeal erred in finding that provincial wage laws are not applicable to workers participating in job creation projects established pursuant to section 38 of the Unemployment Insurance Act, [1971, as amended by] S.C. 1976-77 c. 54.
B. The Court of Appeal erred in finding that workers performing work and services pursuant to section 38 projects were not employees.
In their arguments as to whether the appellants should be considered employed or unemployed for the purposes of the application of provincial wage legislation, counsel for both the appellants and the respondent YMHA engaged in a debate which pitted federal against provincial jurisdiction in the matter. It was argued that the appellants were either employees under provincial jurisdiction, or that they were unemployed persons under federal jurisdiction.
Following the fundamental principle that legislative competence over labour relations is provincial, unless that jurisdiction is an integral part of Parliament's primary and exclusive jurisdiction over another class of subjects, I will begin from the assumption that there is provincial competence over labour relations in the present case. Thus, I will first address the question of whether the appellants were employees within the meaning of The Payment of Wages Act and The Construction Industries Wages Act. If the answer to this question is in the affirmative, I will next address the issue of whether there is anything in the matter which would remove provincial competence and bring the question within federal jurisdiction.
1. Employee Status Under Provincial Legislation
Because the order of the Board was made against the YMHA as employer, it is necessary to determine not only that the appellants were employees, but also that they were employed by the YMHA.
The relevant provincial legislation is as follows:
- . . .
(c) "employee" means a person engaged by another person to perform skilled or unskilled manual, clerical, domestic, professional or technical work or services, but does not include an independent contractor or a person who is an employer as defined in (d);
(d) "employer" means a person, firm, corporation, principal, agent, manager, representative, contractor, or subcontractor, having control and direction of, or responsible directly or indirectly for the engagement or employment of, or payment of wages to, a person employed;
The Construction Industry Wages Act
2(1) . . .
(c) "employee" includes a person who personally does labour notwithstanding that he, either alone or jointly with others, employs other persons;
(e) "employer" means a person who, either solely or jointly, is responsible directly or indirectly for the wages of an employee, and includes the agent, manager, and representative, of any such person;
The Board set the appropriate wage to be paid to the appellants according to the regulations passed pursuant to The Construction Industry Wages Act. By virtue of s. 14(4) of that Act, The Payment of Wages Act applied to the recovery of those wages.
a. "Person Engaged By Another Person"
The appellants argue that three elements support the finding that they were employed by the YMHA for the purposes of the provincial Acts. They cite the actual control and supervision by the YMHA of their work, as found by the Board. They also cite the terms of the Agreement between the YMHA and the Canada Employment and Immigration Commission ("CEIC"), and the wording of s. 38 of the Unemployment Insurance Act, 1971.
The YMHA counters that no contract of employment ever existed between the appellants and the YMHA. They argue that without a contract of employment, no employer-employee relationship is possible. The respondent YMHA prefers to categorize the appellants as having an agreement with the CEIC that the workers would perform the services on the premises of the YMHA. The respondent further argues that the appellants were not paid "wages" within the meaning of the definitions of "employer" in either The Construction Industry Wages Act and The Payment of Wages Act.
It seems to me that these arguments essentially turn on the question of the characterization of the relationship between the appellants and the YMHA. The Payment of Wages Act defines an employee as one who is "engaged" by an employer. The respondent argues that "engagement" in this context requires a contract. They argue that in the present case, there was no contract between themselves and the appellants, and that their sole contract or "engagement" was with the CEIC.
The dictionary definition of "engage" is not particularly helpful in the present case. The Oxford English Dictionary (1969), vol. III, refers both to a contract, and, in the employment context, to hiring:
Engage . . .
- To bind by a contract or formal promise.
5... a. To hire, secure the services of (a servant, workman, agent, etc.).
The substitution of the word "hire" for "engage" does not answer the respondent's contention that they did not enter into any direct agreement with the appellants to perform the work, although "secure the services of" appears to give a somewhat broader scope to the definition. However, the position of the respondent would require a strict, literal approach to the meaning of the word "engage", and a narrow approach to the definition of a relationship of employment. In my view, the terms of the provincial legislation in the present case do not support such an interpretation. The definitions of "employer" and "employee" are broad and inclusive.
Even if one were to accept the respondent's argument that a contract is required to satisfy the definition of "employee" in The Payment of Wages Act, it cannot automatically be assumed that no such "contract" existed in the present case.
Dean Innis Christie, in his work Employment Law in Canada (1980), draws the conclusion that a contract is required to create an employment relationship. However, he notes at p. 13 that:
Subject in certain cases to the requirements of the Statute of Frauds or similar provincial legislation contracts of employment need not be in writing and may be quite informal. Indeed the arrangement may be unspoken, arising from the acts of the parties. Its substance may be drawn from terms normally implied by the common law or imposed by statute, from general and particular customs and practices or from rules of the work-place which the employee knows about and which the employer has made reasonable attempts to bring to his attention. [Emphasis added.]
Thus, an inquiry into the existence of a "contract" between the parties need not necessarily be limited to a search for a written text.
The respondent contends that the existence of the Agreement entered into by the YMHA and the CEIC would indicate that there is no contract between the YMHA and the project workers. In my view, the existence of this Agreement, per se, does not remove the possibility of an employer-employee relationship arising between the parties. Because it is not an agreement between the YMHA and the appellants, it cannot alone be determinative of the existence of a relationship between those parties. However, it can help to establish that the funding arrangements entered into by the YMHA and the CEIC were not intended to disturb the relationship which would otherwise have existed between the appellants and the respondent.
The YMHA is designated as "employer" throughout the Agreement. While the Manitoba Court of Appeal was correct in pointing out that this could not be decisive of the question of the existence of an employer-employee relationship, it is still a relevant factor. In my view, the use of the term "employer" may be indicative that the CEIC had no intention to affect the relationship between the YMHA and the project workers.
b. Engagement of the Employees
The definitions in The Payment of Wages Act refer to the "employer" as being responsible "directly or indirectly for the engagement or employment of" the employees. The Agreement does not directly address the question of the actual selection of project workers. Clause 12 of the Agreement provides that the facilities and services of the Canada Employment Centre must be used for enlisting project participants. Naturally, because of the nature of the funding arrangement, the employer would be limited to a pool of applicants who were, at the time, receiving unemployment insurance benefits.
While it seems clear that the pool of applicants available to the employer will be limited in these respects, there is nothing to indicate that the employer could not freely select workers from within that group. Thus, within certain parameters, the employer would retain the power of selection of the workers who will participate on the project. The Board found that:
The Board is satisfied that although a condition of the Canada Works Program Grant, was that the Y.M.H.A. Jewish Community Centre of Winnipeg Inc., employ persons deemed eligible under this program, the Y.M.H.A. Jewish Community Centre of Winnipeg, Inc., maintained control over hiring and termination, hours of work, duties to be performed, and supervision, of those so engaged. Accordingly, the Board is satisfied that the Y.M.H.A. Jewish Community Centre of Winnipeg, Inc., was the Employer of the affected Employees. [Emphasis added.]
Under The Payment of Wages Act, the employer can be responsible directly or indirectly for the engagement of employees. Thus even if the employees are selected "indirectly" through an agreement with the CEIC, there is still the exercise of a choice on the part of the employer to participate in the programme and to select from the pool of applicants presented by the CEIC.
c. Payment of Wages
The payment of wages features prominently in the definitions of "employer" contained in both The Payment of Wages Act and The Construction Industry Wages Act. In fact, The Construction Industry Wages Act defines "employer" exclusively by reference to the sole or joint payment of wages.
The Unemployment Insurance Act, 1971 deems the money received by the project participants not to be wages:
- . . .
(3) For the purposes of this Part, a week during which the claimant is employed on a job creation project and is paid benefit under subsection (2) shall be deemed to be a week of unemployment and for the purposes of this Part, Part IV, the Income Tax Act and the Canada Pension Plan, any benefit paid to a claimant under subsection (2) shall be deemed not to be remuneration from employment.
The respondent YMHA argues that this provision means that no wages were paid to the appellants, and that therefore no employer-employee relationship existed.
However, it should be noted that s. 38(3) deems the money received not to be wages for the purposes of that Part of the Unemployment Insurance Act, 1971. Thus that provision must be construed to have a fairly limited effect. In addition, the "deeming" of the money received as not being wages is made only with respect to certain federal statutes. There is no attempt to affirmatively designate the money received as anything other than wages. Furthermore, there is no attempt to affect any legislation outside of federal legislative competence. In my view, s. 38(3) of the Unemployment Insurance Act, 1971 in no way affects the classification of the money received by the appellants for the purposes of any legislation not specifically referred to in that provision.
The appellants performed work on the premises of the YMHA. They received more money for the performance of that work than they would have received had they not participated in the job creation project. The appellants were not simply doing chores to pass the time while on unemployment. By working, they could increase their income above and beyond the amounts to which they would be entitled under the Unemployment Insurance Act, 1971. In my view it is not necessary to decide whether the portion of the payment representing the unemployment insurance benefits constituted "wages". I do not see how the top-up paid directly by the YMHA to the appellants could constitute anything other than wages, in view of the definition of wages in the provincial Act which speaks of wages as meaning "any compensation". The Construction Industry Wages Act makes it clear that an employer can be someone who is only jointly and indirectly responsible for the wages of the employee.
d. Control and Direction of the Employees
The Payment of Wages Act also defines "employer" as someone who has "control and direction of" the employees. This element is clearly present on the facts of this case. The Agreement specifically provides that the project employer will retain full control over the employees:
- The project and all persons employed thereon shall be at all times under the direct supervision, management and control of the EMPLOYER or of an agent of the EMPLOYER who has been approved by CANADA.
Furthermore, the Board made a finding of fact that the element of control was clearly present. As noted above, the Board found that the YMHA maintained control over "hours of work, duties to be performed, and supervision, of those so engaged." I am satisfied that this element of "control" is present in this case.
In my view, there can be no question that the appellants fall within the definitions of "employee" contained in the relevant provincial legislation, and that the YMHA was the "employer" under the same legislation. While it is not necessary to decide this point, it is my view that the appellants were so clearly the employees of the respondent that the same result would also be reached under the common law. The only remaining question is whether there is anything on the present set of facts which would remove the matter from provincial jurisdiction.
2. Job Creation and the Federal Power
The respondent YMHA raises several arguments to the effect that the Manitoba wage legislation does not apply since the matter properly falls within the legislative authority of Parliament.
a. Jurisdiction Over Unemployment Insurance
The respondent argues that the job creation programme falls within the exclusive federal jurisdiction over unemployment insurance, as set out in s. 91(2A) of the Constitution Act, 1867.
This argument is premised upon the notion that s. 38 of the Unemployment Insurance Act, 1971 is the source of authority for the establishment of job creation schemes. In my view, this premise is not supported by the terms of the legislation.
It is clear from a reading of s. 38 that it neither establishes job creation programmes, nor contains the power to do so. Section 38 merely provides for approval of such programmes:
- (1) For the purposes of this section, a job creation project means a project that is approved by the Commission for the purposes of this section under a program designed primarily to create employment and conducted by the Government of Canada pursuant to any Act of Parliament.
Section 38 addresses the limited issue of the continued application of various provisions of the Unemployment Insurance Act, 1971 during the course of the unemployed person's participation in a job creation programme. Section 38 does not establish, regulate or define such programmes. The provisions make no attempt to regulate the work to be performed, nor do they in any manner address the subject of labour standards or rates of remuneration. As such, the federal head of power regarding unemployment insurance cannot be said to be the source of the power to establish federal job creation programmes, nor can it be the source of constitutional authority to override provincial competence in the area of wages and labour relations.
The federal financial assistance for job creation projects is authorized by annual appropriation acts voted by Parliament. Job creation programmes consist essentially of a federal agreement to fund projects which will employ persons currently unemployed. They consist of a provision of funds under a certain set of conditions which constitute an Agreement between Canada and the "employer". The programmes are approved under discretionary spending programmes, and not pursuant to the Unemployment Insurance Act, 1971.
In my view, the power to establish a job creation scheme is derived from the federal spending power. The scope and extent of this power has been the subject of some speculation. Professor Peter Hogg describes the constitutional basis for this power in Constitutional Law of Canada (2nd ed. 1985), at p. 124:
What is the constitutional basis for federal grants to the provinces, and for federal involvement in shared-cost programmes which are outside federal legislative competence? The only possible basis is the "spending power" of the federal Parliament, a power which is nowhere explicit in the Constitution Act, 1867, but which must be inferred from the powers to levy taxes (s. 91(3)), to legislate in relation to "public property" (s. 91(1A)), and to appropriate federal funds (s. 106). Plainly the Parliament must have the power to spend the money which its taxes yield, and to dispose of its own property. But of course the issue is whether this spending power authorizes payments for objects which are outside federal legislative competence.
There has been some debate over the extent to which the exercise of the federal spending power can justify federal incursions into what would otherwise be areas of provincial legislative jurisdiction. In The Allocation of Taxing Power Under the Canadian Constitution (2nd ed. 1981), at p. 45, Dr. G. V. La Forest, now a Justice of this Court, expressed the view that the federal spending power can be exercised so long as it is not in substance legislation on a provincial matter. Thus, the federal government could spend money to create jobs in the private sector, or in areas not directly under its competence. However, while Parliament may be free to offer grants subject to whatever restrictions it sees fit, the decision to make a grant of money in any particular area should not be construed as an intention to regulate all related aspects of that area. Thus, a decision to provide a job creation grant to an organization such as the YMHA should not be construed, without other evidence, as an intention to remove provincial labour law jurisdiction over the project.
On several occasions this Court has determined that the mere spending of federal money cannot bring a matter which is otherwise provincial into federal competence. The role of federal funding in determining questions of legislative competence has also been considered by this Court in Four B Manufacturing Ltd. v. United Garment Workers of America, 1979 CanLII 11 (SCC), [1980] 1 S.C.R. 1031. In that case, a company named Four B was incorporated pursuant to the laws of Ontario to carry on business as a shoe manufacturer on an Indian reserve. While the company was located on the reserve, it was privately owned and operated. The company received certain sums of money as federal grants advanced pursuant to programmes of the Department of Indian Affairs and Northern Development. The issue which arose in Four B was whether the provincial Labour Relations Act applied, and whether the Labour Board had jurisdiction to make the particular decisions under review.
Beetz J. for the majority of this Court indicated that the actual business carried out by Four B was clearly provincial. He wrote, at p. 1046:
There is nothing about the business or operation of Four B which might allow it to be considered as a federal business: the sewing of uppers on sport shoes is an ordinary industrial activity which clearly comes under provincial legislative authority for the purposes of labour relations. Neither the ownership of the business by Indian shareholders, nor the employment by that business of a majority of Indian employees, nor the carrying on of that business on an Indian reserve under a federal permit, nor the federal loan and subsidies, taken separately or together, can have any effect on the operational nature of that business. By the traditional and functional test, therefore, The Labour Relations Act applies to the facts of this case, and the Board has jurisdiction.
Beetz J. tersely rejected the proposition that the federal subsidy given to Four B could bring the company within the jurisdiction of Parliament, at p. 1050:
I do not see much substance either in the argument the Four B was federally subsidized. The Government of Canada subsidizes a great many industries without Parliament thereby acquiring the power to regulate their labour relations.
Similarly, in the present case, I find it difficult to believe that simply by providing federal money to promote employment in a region or sector, the federal government can obtain jurisdiction over the workers employed by virtue of the grant. It is worth noting that the Attorney General of Canada, who intervened in this matter, did not support this position, and argued against federal competence in the matter:
It is submitted that s. 38 of the Act is legislation limited in scope to the scheme of unemployment insurance which the Act itself establishes. The system of payments and the statutory presumptions it creates as to the nature of those payments have nothing to do with the employment relationship which may arise where a claimant works on a job creation project. This relationship is something entirely separate from the unemployment insurance scheme. Parliament has not, under this legislation, purported to regulate conditions of employment.
In the present case, the federal spending at issue consisted of money received by the employees in the form of benefits. Other amounts were received by the YMHA from a variety of sources: provincial, municipal, federal and private. While the funds received from all sources made the renovation project possible, it cannot be said that any of this money "bought" jurisdiction over the project.
Regulation of the status of a worker engaged in a job creation project clearly has a double aspect. For the purpose of provincial legislation, a person can be employed while, from the federal perspective, that same person can be considered unemployed. Application of the provincial employment laws in question to the workers on the job creation project does not, in the words of Beetz J. in Bell Canada v. Quebec (Commission de la santé et de la sécurité du travail), 1988 CanLII 81 (SCC), [1988] 1 S.C.R. 749, at p. 762, "bear upon those subjects in what makes them specifically of federal jurisdiction".
b. The Job Creation Programme as a Federal Undertaking
The respondent YMHA also argues that the job creation programme itself is a federal undertaking.
Section 91(29) of the Constitution Act, 1867 allows for federal jurisdiction with respect to:
. . .
Such Classes of Subjects as are expressly excepted in the Enumeration of the Classes of Subjects by this Act assigned exclusively to the Legislatures of the Provinces.
This express exception occurs in s. 92(10), which gives the provinces jurisdiction over local works and undertakings, with the exception of those enumerated in paragraphs 92(10)(a),(b), and (c):
. . .
Local Works and Undertakings other than such as are of the following Classes: --
(a) Lines of Steam or other Ships, Railways, Canals, Telegraphs, and other Works and Undertakings connecting the Province with any other or others of the Provinces, or extending beyond the Limits of the Province;
(b) Lines of Steam Ships between the Province and any British or Foreign Country;
(c) Such Works as, although wholly situate within the Province, are before or after their Execution declared by the Parliament of Canada to be for the general Advantage of Canada or for the Advantage of Two or more of the Provinces.
The rule with respect to jurisdiction over labour relations in federal undertakings is made clear in Bell Canada, supra, at pp. 761-62, where Beetz J. for the unanimous Court stated that:
. . . Parliament is vested with exclusive legislative jurisdiction over labour relations and working conditions when that jurisdiction is an integral part of its primary and exclusive jurisdiction over another class of subjects, as is the case with labour relations and working conditions in the federal undertakings covered by ss. 91(29) and 92(10)a., b. and c. of the Constitution Act, 1867, that is undertakings such as Alltrans Express Ltd., Canadian National and Bell Canada.
However, I do not see how the job creation scheme in the present case can be categorized as a federal undertaking covered by ss. 91(29) or 92(10). Subsections 92(10)(a) and (b) deal with works or undertakings related to transportation or communication. Subsection 92(10)(c) requires that such works be declared, either before or after their execution, to be for the general advantage of Canada. Not only has this not been done in the present case, but the Attorney General of Canada has, in his intervention in this matter, clearly expressed the position that the federal government has no desire to assume competence over labour relations in the job creation programme at issue.
Conclusion
Although I find against the respondent YMHA in this matter, I cannot help but have sympathy for its position. The YMHA is a non-profit organization which no doubt makes a valuable contribution to the Winnipeg community. I note the observation of the Board that the rate of pay set for the appellants was established through consultation with the Employment and Immigration Project Officer assigned to this project:
. . . Employment and Immigration Canada should take note of the fact that the initial rate paid by the Y.M.H.A. Jewish Community Centre of Winnipeg, Inc., for this classification had been established, and authorized by the Project Officer assigned to the Project.
It is unfortunate indeed that an organization like the YMHA should be called to bear the burden of this costly error. I nonetheless cannot escape the conclusion that the appellants are employees within the meaning of the relevant provincial legislation, and that such legislation applies to workers in the job creation scheme at issue. As a result, the appellants are entitled to the difference between the amount they received for the work performed and the amount to which they were entitled under The Construction Industry Wages Act. The Board, which had jurisdiction to decide the matter, set this sum at $13,025.13.
Accordingly, I would allow the appeal and restore the decision of the Board, with costs throughout.
Appeal allowed with costs.
Solicitor for the appellants: John P. Guy, Winnipeg.
Solicitors for the respondent YMHA Jewish Community Centre of Winnipeg Inc.: Buchwald Asper Henteleff, Winnipeg.
Solicitor for the respondent the Manitoba Labour Board: Gordon Pilkey, Winnipeg.
Solicitor for the intervener the Attorney General of Canada: James M. Mabbutt, Ottawa.
Solicitor for the intervener the Attorney General for New Brunswick: Gabriel Bourgeois, Fredericton.
- See Erratum, [1989] 1 S.C.R. iv