A-355-88
The Queen, represented by the Attorney General
of Canada (Applicant)
v.
Public Service Alliance of Canada (Respondent)
and
Econosult Inc. (Mis -en-cause)
INDEXED As: CANADA (ATTORNEY GENERAL) v. P.S.A.C.
Court of Appeal, Pratte, Marceau and Hugessen
JJ.A. Montréal, November 25, 1988; Ottawa,
January 17, 1989.
Public service Jurisdiction — Privatization of teaching at
federal penitentiary Contract between firm and government
detailing teachers' duties — Immediate supervisor employed
by firm, and Correctional Service representative monitoring
quality of instruction — Services billed on hourly basis —
Union applying under P.S.S.R.A., ss. 33 and 98 for determina
tion teachers included in bargaining unit's ED Group
Looking to substance, rather than form, Board agreeing with
Union — Whether Board having jurisdiction to determine who
is employee of Public Service — Whether Board erred in
looking to circumstances surrounding doing of work to deter
mine nature of relationship Whether legislation defining
and governing Public Service precluding application of sub
stance over form test to Public Service.
This was an application to set aside a decision of the Public
Service Staff Relations Board that teachers working at a
federal penitentiary were included in the Education Group
bargaining unit. The teachers had been part of the Solicitor
General's staff until 1984 when a new policy for the privatiza
tion of the education of inmates was implemented. At that
time, the government contracted with a private firm for the
supply of teaching services. The contract defined the teachers'
duties and indicated that they would be directly supervised by
an employee of the firm. A Correctional Service representative
monitored the instruction given. The services were billed on an
hourly basis. The firm recruited and hired the teachers. The
Union, P.S.A.C., applied to the Board under the Public Service
Staff Relations Act, sections 33 and 98 for a finding that the
teachers were employees of the Queen and members of the ED
Group included in the bargaining unit. The P.S.S.R.B. looked
at the substance, rather than the form, of the relationship and
made the findings requested. In so doing, it applied the well-
established criteria used by labour tribunals to determine
whether an employer-employee relationship actually exists. The
issues upon this section 28 application were whether the Board
had exceeded its jurisdiction or erred in law.
Held (Hugessen J.A. dissenting): the application should be
allowed.
Per Marceau J.A. (Pratte J.A. concurring): This case is of
importance because of its implications for the entire process of
implementing government policy of privatizating marginal ser
vices formerly performed by federal public servants.
The teachers were not public servants within the meaning of
the Public Service Staff Relations Act. Three preliminary
findings were emphasized: (1) There is a separate system
governing employment and labour relations of public servants.
The public sector system is defined in the Public Service
Employment Act, the Public Service Staff Relations Act and
the Financial Administration Act. These statutes must be
interpreted in relation to each other as they were adopted for a
common purpose. (2) There was no question of a problem of
employees disguised as independent contractors. The teachers
were employees but the question was: of whom? (3) The
method of creation of the employer-employee relationship dif
fers between the public and private sector labour relations
systems. In the latter, the status of employee is often inferred
from the circumstances surrounding the doing of the work. In
the public sector, the status of employee is subject to strict and
rigid rules and cannot be inferred from a situation of fact.
According to the Acts governing employment in the Public
Service, in order to be a public servant, there must be a position
created by Treasury Board and an appointment made by the
Public Service Commission.
This said, the Board lacked authority to determine who is an
employee of the Public Service. Its authority extends only to
public servants recognized as such by legislation other than its
enabling statute and by authority of a body other than itself.
Also, the teachers were never appointed by the Public Service
Commission to positions created by the Treasury Board. Final
ly, the employer was not merely seeking to avoid his status as
employer by acting through the artifice of a third party. The
Solicitor General clearly transferred the recruiting, control and
direction of the teachers to a private firm.
Per Hugessen J.A. (dissenting): The case law and the general
context of the Act established that the Board had authority to
determine who is an employee within the meaning of the Public
Service Staff Relations Act. The Board did not err in looking
at the reality of the situation. In so doing, it merely applied
general tests set by the Board and other labour tribunals.
The correlation between the Public Service Staff Relations
Act and the Public Service Employment Act may not be as
close as counsel maintained. The Public Service Staff Rela
tions Act relates to the government from the outside and
regulates collective relations between the government and per-
sons working for it. The Public Service Employment Act
relates to the internal workings of the government. A person
can be an employee for the purposes of his labour relations with
the government without necessarily having the status of a
member of the Public Service. Whatever the Public Service
Employment Act may say, Doré v. Canada has established that
creation of and appointment to a position depends on an
objective appraisal of the facts.
The perception of reality is a question of fact. The Board
weighed the evidence with care and drew its conclusions. The
Court cannot intervene unless the result is patently absurd,
which it was not.
Freedom of association, guaranteed by the supreme law of
Canada, is the basis of the Public Service Staff Relations Act.
If there is a conflict between the principles underlying the
P.S.S.R.A. and the P.S.E.A., the former should prevail.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Canada Labour Code, R.S.C., 1985, c. L-2, s. 6.
Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 28.
Financial Administration Act, R.S.C., 1985, c. F-11.
Public Service Employment Act, R.S.C., 1985, c. P-33.
Public Service Employment Act, R.S.C. 1970, c. P-32.
Public Service Staff Relations Act, R.S.C., 1985, c. P-35,
ss. 2, 34, 99.
Public Service Staff Relations Act, R.S.C. 1970, c. P-35,
ss. 2, 33, 98 (as am. by S.C. 1974-75-76, c. 67, s. 27).
Revised Statutes of Canada Act, 1985, S.C. 1987, c. 48,
s. 4.
CASES JUDICIALLY CONSIDERED
DISTINGUISHED:
Canada (Attorney General) v. Brault, [1987] 2 S.C.R.
489; Doré v. Canada, [1987] 2 S.C.R. 503.
CONSIDERED:
Syndicat Général du Cinéma et de la Télévision
(S.G.C.T.) v. The Queen, [ 1978] 1 F.C. 346 (C.A.);
Seafarer's International Union of Canada v. Kent Line
Limited, [1972] F.C. 573 (C.A.).
COUNSEL:
Raymond Piché and Linda Gobeil for
applicant.
Diane Nicholas for respondent.
SOLICITORS:
Deputy Attorney General of Canada for
applicant.
Soloway, Wright, Houston, Greenberg,
O'Grady, Morin, Ottawa, for respondent.
André Girouard, Econosult Inc., Montréal,
for mis -en-cause.
Legal Services, Public Service Staff Rela
tions Board for Public Service Staff Relations
Board.
The following is the English version of the
reasons for judgment rendered by
MARCEAU J.A.: It was rightly said that the
ramifications of this appeal go beyond solution of
the particular dispute arising between the parties
on this occasion. The decision impugned in this
action comes from the Public Service Staff Rela
tions Board. Its immediate effect was simply to
allow an application and a reference which the
respondent Public Service Alliance of Canada had
submitted to the Board, citing certain provisions of
the Public Service Staff Relations Act, R.S.C.,
1985, c. P-35; but in addition to this immediate
practical effect, the decision had implications for
and cast doubt on the entire process of implement
ing the government policy of privatizing certain
marginal services hitherto performed by employees
of the federal public service. The importance
placed by the government on this application to
review and set aside, submitted pursuant to section
28 of the Federal Court Act [R.S.C. 1970 (2nd
Supp.), c. 10], can readily be understood.
The facts present no difficulty. The impugned
decision, which covers some 58 pages, gives an
exhaustive and careful analysis of them to which
both parties did not hesitate to refer. If it were
necessary for me to review the facts as Mr. Bendel
did on behalf of the Board, I would have to deal
with them at the same length. However, I do not
feel that this is necessary. Once the basic context
has been described and the general background of
the situation indicated, the legal problems for solu
tion, as I see them, can be analyzed forthwith.
Certain points must be made, however, and they
are the following.
In 1971, the Solicitor General of Canada decid
ed to offer the inmates of federal penitentiaries
school and university education programs that
would be recognized through the co-operation of
accredited school boards, colleges or universities.
In Quebec, the Solicitor General at once concluded
an agreement with the Government of Quebec by
which organizations responsible to the Quebec
Department of Education would provide the neces
sary teaching services to support and direct the
teaching program in the two sectors, academic and
vocational. The Solicitor General wished to make
use of certain outside teachers to provide the edu
cation itself, but chiefly for vocational purposes, he
decided to hire instructors and attach them to his
own staff.
In 1984 the Solicitor General felt he should
alter his policy in part. He decided that in future
outside agencies in the private sector would be
used for teaching services and instruction, rather
than teachers on the regular staff. An internal
memorandum from the Commissioner, Correction
al Service Canada, is worth reproducing in extenso
because of the information it contains on the way
in which this new policy was implemented:
Re: Education by Contracts or Privatization of Education
Introduction
Since 1971, in the "academic" sector primarily, the C.S.C.
offers accredited academic programs to the inmates in its care
through contracted agreements with a School Board, a College,
a University or a private agency. In the "vocational" (trade)
sector the C.S.C. has occasionally or exceptionally had resource
[sic] to a similar contracted arrangement. It is my intention to
pursue and to accelerate the process of privatization of educa
tion, in both the academic and vocational (trade) sectors.
While ensuring at all times the high quality of our educational
programs and the security of staff and inmates, in our charge at
all times, there must no longer be any doubt as to the intentions
of the policy requiring that education of our inmates be through
teachers from Boards of Education, Colleges and Universities.
Replacement of C.S.C. teachers as vacancies occur shall be
carried out on a contractual agreement basis. The hiring of
services for the teaching of new and existing educational pro
grams must also be implemented in both academic and voca
tional (trade) sectors.
Each R.D.C. must develop a system to predict as exactly as
possible the date the vacancies should arise. The conversion of
person years (P.Y.'s) to O & M dollars to cover the costs of
contracts must be part of your budgetary process.
On May 16, 1985 Supply and Services Canada
(one of whose functions is, as we know, represent
ing the federal government in purchasing the
goods and services needed by the various depart
ments of the government) concluded a contract
with a private firm, Seradep Inc., to supply voca
tional and teaching services to inmates in the
Cowansville Penitentiary, one of the federal peni
tentiaries located in the province of Quebec. Under
this contract, which was to take effect on July 1,
1986 and continue in effect until June 30, 1987,
Seradep Inc. undertook to supply the institution
with six teachers at the elementary and secondary
levels and with a librarian. The contract precisely
defined the duties to be performed by the teachers
and indicated that they would be placed directly
under the control of a supervisor employed by the
firm. It was provided that a teaching co-ordinator
would oversee administration of the contract for
Seradep Inc., while the Correctional Service would
have a representative who would monitor the qual
ity of the instruction given. Seradep Inc. would bill
for the services of teachers and their supervisor on
an hourly basis.
The contract was carried out as agreed. Seradep
Inc. performed its obligations with staff hired by
the company itself, who, without contradiction in
the opinion of all concerned, remained in the
employ of the company, though of course they
worked in the penitentiary buildings under the
supervision of the Correctional Service representa
tive. A few days before the contract expired at the
end of the year, as no renewal had been men
tioned, Seradep Inc. told its employees that their
employment was at an end.
In July 1987 a second contract for the supply of
teaching services to Cowansville inmates was con
cluded between Supply and Services Canada and
the firm Econosult Inc., the mis -en-cause in this
action. This contract, which was to run from July
1987 to June 30, 1988, but with an option to renew
for two further periods, essentially contained the
same clauses as that concluded with and per-
formed by Seradep Inc. It presented no more
problems of performance than the first contract.
The new firm used the services of the former
employees of Seradep Inc., whom it hired first for
a probationary period but then permanently (with
one exception), and with a team consisting of not
six but eight teachers and a teaching supervisor, it
performed the agreed duties in a fully satisfactory
matter.
On February 12, 1987, while the first contract
(with Seradep Inc.) was still in effect, the respon
dent Public Service Alliance of Canada filed an
application with the Public Service Staff Relations
Board. Referring to its status as a bargaining
agent certified to represent all Treasury Board
employees who were members of the bargaining
unit of the Education Group, the Alliance based its
application on sections 33 and 98 of the Public
Service Staff Relations Act [R.S.C. 1970, c. P-35
(as am. by S.C. 1974-75-76, c. 67, s. 27)], which
read as follows:
33. Where, at any time following the determination by the
Board of a group of employees to constitute a unit appropriate
for collective bargaining, any question arises as to whether any
employee or class of employees is or is not included therein or is
included in any other unit, the Board shall, on application by
the employer or any employee organization affected, determine
the question.
98. (1) Where the employer and a bargaining agent have
executed a collective agreement or are bound by an arbitral
award and
(a) the employer or the bargaining agent seeks to enforce an
obligation that is alleged to arise out of the collective agree
ment or arbitral award, and
(b) the obligation, if any, is not an obligation the enforce
ment of which may be the subject of a grievance of an
employee in the bargaining unit to which the collective
agreement or arbitral award applies,
either the employer or the bargaining agent may, in the pre
scribed manner, refer the matter to the Board, which snail hear
and determine whether there is an obligation as alleged and
whether, if there is, there has been a failure to observe or to
carry out the obligation.
(2) The Board shall hear and determine any matter referred
to it pursuant to subsection (1) as though the matter were a
grievance, and subsection 95(2) and sections 96 and 97 apply to
the hearing and determination of that matter.'
' The situation here is complicated somewhat by the coming
into force of the 1985 Revised Statutes of Canada on December
(Continued on next page)
What the Alliance hoped to obtain from the
Board is set out clearly in the conclusions of its
application:
Further, the applicant by this application asks the Board to:
(a) find that all teaching employees at the Cowansville
Penitentiary are employees of the respondent employer
(Her Majesty the Queen in right of Canada, represented
by the Treasury Board), including those providing their
services through Seradep Inc.;
(b) find that all employees teaching at the Cowansville
Penitentiary are members of the Education Group (ED)
of the bargaining unit;
(c) find that the Public Service Alliance of Canada is the
certified bargaining agent for all employees teaching at
Cowansville Penitentiary;
(d) find that the respondent employer must comply with
clause 10 of the collective agreement, concerning the
withholding of union dues....
(Continued from previous page)
12, 1988. These sections 33 and 98 became sections 34 and 99
respectively and their wording was amended, especially in the
French version. The Revised Statutes of Canada, 1985 Act
[S.C. 1987, c. 48], does say in section 4 that "The Revised
Statutes shall not be held to operate as new law, but shall be
construed and have effect as a consolidation of the law as
contained in the Acts and portions of Acts repealed by section 3
and for which the Revised Statutes are substituted". To ensure
a more close correspondence I have referred only to the old
provisions in my reasons, but here in any case are the new ones,
in English and in French:
34. Where, at any time following the determination by the
Board of a group of employees to constitute a unit appropri
ate for collective bargaining, any question arises as to wheth
er any employee or class of employees is or is not included
therein or is included in any other unit, the Board shall, on
application by the employer or any employee organization
affected, determine the question.
99. (I) Where the employer and a bargaining agent have
executed a collective agreement or are bound by an arbitral
award and the employer or the bargaining agent seeks to
enforce an obligation that is alleged to arise out of the
agreement or award, and the obligation, if any, is not one the
enforcement of which may be the subject of a grievance of an
employee in the bargaining unit to which the agreement or
award applies, either the employer or the bargaining agent
may, in the prescribed manner, refer the matter to the Board.
(2) Where a matter is referred to the Board pursuant to
subsection (1), the Board shall hear and determine whether
there is an obligation as alleged and whether, if there is,
there has been a failure, to observe or to carry out the
obligation.
(3) The Board shall hear and determine any matter
referred to it pursuant to subsection (I) as though the matter
were a grievance, and subsection 96(2) and sections 97 and
98 apply to the hearing and determination of that matter.
At the conclusion of a lengthy hearing, which
was held after the Econosult Inc. contract came
into effect (hence the participation of the latter),
Mr. Bendel approved the respondent's arguments
on behalf of the Board. Analyzing in detail the
relations of the new outside teachers with the
Correctional Service representative and the other
teachers who were members of the Department's
staff, and applying the criteria used by labour
tribunals to identify where, despite the appearance
of a contract for services, an employer-employee
relationship actually exists (control over employ
ment, control over work, integration and risk), the
Deputy Chairman concluded that, in his words, he
had to "look at substance rather than form", and
he agreed to make the findings requested by the
Alliance. The conclusions of his decision read as
follows:
(a) I declare that the teachers working at the Correctional
Service Canada Cowansville Institution as "contract work
ers" for Econosult Inc., including Mrs. Lise Côté, the
supervisor of education, are included in the teaching group
bargaining unit [sic], for which the Applicant is the bar
gaining agent under the Public Service Staff Relations
Act;
(b) I declare that the same persons were included in that
bargaining unit in the month of February 1987;
(c) I declare that Treasury Board is obligated to comply with
section 10 of the basic agreement relating to union check
off with respect to these employees, commencing with the
month of February 1987;
(d) I order the Treasury Board to pay to the Applicant an
amount equal to the amount that the latter would have
collected if the Treasury Board had complied with section
10 of the agreement in question between February I and
September 30, 1987....
The application for review now before the Court
was filed shortly afterwards.
I feel that the Attorney General was right to ask
the Court to intervene as the impugned decision
seems to be clearly without foundation. Three
observations, which I would make as preliminary
remarks, will explain the basis of my objections in
this regard.
1. The system governing the employment and
labour relations of employees in the federal public
sector is not to be confused with that of employees
in the private or semi-public sectors. Parliament
intended that there should be a separate and
independent system governing Her Majesty's
public servants. Section 6 (formerly section 109)
of the Canada Labour Code, R.S.C., 1985, c. L-2,
expressly excludes "employment by Her Majesty
in right of Canada" from the scope of its Part I,
dealing with "Industrial Relations". Trying to
solve problems raised under one system with solu
tions developed in giving effect to the other may
lead to an irremediable distortion of the intent of
Parliament. The public sector system is defined, as
we know, in three statutes: the Public Service
Employment Act, R.S.C., 1985, c. P-33, the
Public Service Staff Relations Act, R.S.C., 1985,
c. P-35, and the Financial Administration Act,
R.S.C., 1985, c. F-11, which must necessarily be
interpreted in relation to each other since they
were adopted for a common purpose.
2. There was no question in the case at bar of a
problem of employees disguised as independent
contractors, a problem for the solution of which, as
we know, courts and tribunals both civil and
labour have developed a number of distinguishing
criteria. I do not think anyone could dispute that
the outside teachers were employees, not contrac
tors. The only question was as to whose employees.
3. One of the most striking points of difference
between the two labour relations systems, public
and private, is precisely the way in which the legal
relationship of employer and employee is created.
It is well known that in the private sector the
status of employee of a person acting for another,
though involving a contract resulting from deliber
ate acts, is often in practice inferred from the
circumstances which actually surround the doing
of the work. The reason is that the employer-
employee relationship is primarily a legal relation
ship which the law associates with a situation of
fact: the contract of employment may not take any
particular form and may result simply from the
behaviour of the parties concerned, hence the es
tablishment of criteria by which such a contract
can be identified behind appearances which may
conceal it.
In the public sector, on the contrary, as I under
stand the legislation, the status of an employee of
Her Majesty cannot be simply inferred from a
situation of fact. The intention was simply, so to
speak, to shield the Crown as employer from the
actions of all its representatives vested with execu
tive powers: otherwise, Parliament undoubtedly
concluded, the situation would quickly become
both uncontrollable and chaotic. Employment in
the Public Service has been subject to a body of
strict and rigid rules.
To begin with, "Public Service" is defined in the
Public Service Staff Relations Act as "the several
positions in or under any department or other
portion of the public service of Canada specified in
Schedule I" (section 2). By the Financial
Administration Act, Parliament has made the
Treasury Board responsible for organizing the
Public Service and accordingly given it exclusive
power to approve the creation of positions, to
classify them and to distribute them between the
various units of the government. Under the Public
Service Employment Act, finally, it is the Public
Service Commission, and only the Commission,
which has the power to fill positions by appoint
ments made on the merit principle. There is quite
simply no place in this legal structure for a public
servant (that is, an employee of Her Majesty, a
member of the Public Service) without a position
created by the Treasury Board and without an
appointment made by the Public Service
Commission. 2
I am not unmindful that, in Canada (Attorney
General) v. Brault, [1987] 2 S.C.R. 489 and Doré
v. Canada, [1987] 2 S.C.R. 503, the Supreme
Court drew legal consequences from two situations
of fact which had arisen in units of the Public
Service, without being unduly concerned by the
absence of official and formal documents issued by
the authorities. In Doré it deduced from the factu
al context proof of an intention to appoint to a
position that was not yet fully established although
its creation had long since been decided on (an
employee had been assigned to the position and
2 What is in question here is the employer-employee relation
ship, which does not necessarily correspond to the master-serv
ant relationship in tort law.
exercised the duties and responsibilities for nine
months); in Brault, it similarly concluded from the
evidence that a new position (a customs inspector
with a dog, or a dog handler) had been created and
that an appointment had been made to the posi
tion. However, on each occasion it did so in order
to protect the right of the candidates not selected
to challenge an appointment which they felt was
unjustified, and most importantly to prevent any
even indirect injury to the merit principle in the
distribution of work within the federal Public Ser
vice. In both cases, all concerned were without
question employees of the Public Service who
already held positions to which they had been duly
appointed. The rules with which we are concerned
in the case at bar, governing entry into the Public
Service and applicable to the creation of a public
servant, were not in any way at issue.
If we accept these three preliminary observa
tions, and I think it is difficult not to do so since
they are based directly on the fundamentals of the
legislation, we cannot fail to conclude that the
Board's decision is legally indefensible.
First, it is not the function of the Public Service
Staff Relations Board to determine who is an
employee of the Public Service. I cited above the
old section 33 (now 34), which Mr. Bendel
claimed to use as authority for the power to decide
that the teachers hired by Seradep Inc. and Econo-
sult Inc. were employees of the Public Service,
public servants. It will have been noted that the
provision does not define what is meant by
"employee", and the initial interpretation section,
section 2, does not appear concerned since it
simply states laconically that "employee" means
"a person employed in the Public Service". The
reason is that the Public Service Staff Relations
Board has no kind of authority to say who is
employed in the Public Service. Its authority
applies only to public servants recognized as such
by the provisions of legislation other than its en
abling statute and by authority of a body other
than itself. The Public Service Staff Relations
Board has complete jurisdiction over the determi
nation of occupational groups and categories for
certification purposes, and over whether a public
servant belongs to a given certified unit, and these
are the only purposes for which section 33 exists.'
Next, it is certain that the teachers of Seradep
Inc. and Econosult Inc. were never appointed by
the Public Service Commission to positions created
by the Treasury Board. They were certainly called
on to succeed teachers who had held such posi
tions, but it was established that those positions
had been abolished and no longer existed. To say
despite this that the Seradep Inc. and Econosult
Inc. teachers were Treasury Board employees and
members of the Public Service is directly contrary
to the provisions of the Public Service Employ
ment Act. In the circumstances it is a legal
misconstruction.
Finally, I do not think it is possible on the facts
of the case at bar to liken the situation here to that
of an employer seeking to avoid his status as
employer by acting through the artifice of a third
party. The aim of the Solicitor General and Cor
rectional Service Canada was known to everyone
and their employer's prerogatives or that of the
Treasury Board—recruiting, control and direc-
tion—were clearly and not merely artificially
transferred to a private firm, subject to the single
reservation of supervision required by the nature
and location of the services provided. In fact,
however, even if this were not the case, I do not
think that it matters in the public sector.
In my opinion, the conclusion is self-evident.
This section 28 application is valid. The Court
should quash the impugned decision and refer the
matter back to the Public Service Staff Relations
Board to be decided by it on the basis that the
teachers working for Econosult Inc. are not public
' It can be seen that the new French version of section 33,
which as noted is now section 34, is much less ambiguous in
this respect. Once again, it reads:
34.A la demande de l'employeur ou de l'organisation
syndicale concernée, la Commission se prononce sur l'ap-
partenance ou non d'un fonctionnaire ou d'une classe de
fonctionnaires à une unité de négociation qu'elle a préa-
lablement définie, ou sur leur appartenance à une autre
unité.
servants within the meaning of the Public Service
Staff Relations Act.
PRATTE J.A.: I concur.
* * *
The following is the English version of the
reasons for judgment rendered by
HUGESSEN J.A. (dissenting): Two groups of
teachers offered teaching services to inmates
within the same prison. The first group consisted
of public servants employed by Her Majesty pur
suant to the Public Service Employment Act. 4
They were represented by the respondent, their
bargaining agent, in accordance with the Public
Service Staff Relations Act. 5 The second group,
known as "contract workers", consisted of persons
whose nominal employer currently is the mis -en-
cause Econosult Inc.; although the composition of
this group remained more or less the same for a
number of years, the nominal employer changed
three times during that period.
Working conditions, including hiring, salary,
supervision and performance appraisal, are for all
practical purposes the same for both groups.
Relying on section 33 of the Public Service
Staff Relations Act, 6 the respondent filed an
application with the Board for a finding that the
members of the second group were part of the
bargaining unit of the first group. The Board
allowed the application: hence the application at
bar made pursuant to section 28 of the Federal
Court Act.'
Despite the respect I owe to those who hold the
contrary view, I do not see on what basis we would
be justified in intervening in the impugned
decision.
4 R.S.C. 1970, c. P-32.
5 R.S.C. 1970, c. P-35.
6 33. Where, at any time following the determination by the
Board of a group of employees to constitute a unit appropriate
for collective bargaining, any question arises as to whether any
employee or class of employees is or is not included therein or is
included in any other unit, the Board shall, on application by
the employer or any employee organization affected, determine
the question.
7 R.S.C. 1970 (2nd Supp.), c. 10.
In the first place, it seems clear that the Board
has jurisdiction to determine who are employees
within the meaning of the Public Service Staff
Relations Act. This jurisdiction results not only
from the general context of the Act itself but also
from the decided cases. In Syndicat Général du
Cinéma et de la Télévision (S.G.C.T.) v. The
Queen, 8 this Court had before it an application
made pursuant to section 28 from a decision of the
Board dismissing an application for certification
on the ground that the persons the union wanted to
represent, freelancers hired by the National Film
Board, were not "employees" within the meaning
of the Act. Le Dain J., speaking for the Court,
defined the problem as follows [at page 349]:
The issue as to whether the persons for whom certification is
sought are employees within the meaning of the Public Service
Staff Relations Act was determined by the Public Service Staff
Relations Board ....
And then [at page 352]:
The issue turns on the meaning and significance to be
attached to the word "position" in the definition of the Public
Service and in sections 13 and 14 of the National Filin Act.
Le Dain J. concluded [at page 353]:
A person who must be considered to be an employee of the
Board on the general tests for distinguishing between an
employee and an independent contractor must be deemed, in
my opinion, to occupy a position within the meaning of
section 14.
The result of this reasoning was [at page 354]:
... that the Public Service Staff Relations Board should have
determined whether the persons for whom certification is
sought are employees rather than independent contractors ....
The consequence of this judgment seems unvoid-
able to me. The Board is empowered, indeed it has
a duty, to itself determine according to the general
tests who are employees within the meaning of the
Act. To do this, it must examine the actual legal
relations as it sees them.
Secondly, I consider that the decision impugned
is not vitiated by any error of law that would
justify our intervention.
8 [ 1978] 1 F.C. 346 (C.A.).
To begin with, the Board in my view clearly
understood the nature of the task it had to
perform:
The basic question that the Board must decide is whether the
contract teachers who work at the Cowansville Institution
pursuant to the contract between the Government of Canada
and Econosult Inc. are employees of the Government of
Canada under the regime of the Public Service Staff Relations
Act. If we looked only at form, there would be no possible
doubt or dispute: they would be employees of Econosult Inc.
with which they have entered into an employment contract.
Labour relations boards and adjudicators are not, however,
limited to questions of form in these types of dispute because a
blind respect for form would allow businesses to ride roughshod
over the rights conferred by the legislator upon employees and
unions. Accordingly, the principle that has guided labour rela
tions boards and adjudicators in this area is that, if a business
receives employee services from a third party and its relation
ship with such employees is basically an employment relation
ship within the scope of the legislation, it cannot protect itself
from the consequences which result from that relationship
under the labour laws or under the collective agreements by
holding up the contracts that it has entered into with the
supplier or that the supplier has entered into with the
employees. (At pp. 458 (verso) and 459 of the record.)
The proposition that reality must take priority
over appearances, and substance over form, seems
to me to be beyond question, particularly in labour
relations matters. Indeed, in one of its first judg
ments this Court approved the rule, though in a
quite different context:
In the view I take of the matter whatever weight in the
circumstances was to be attributed to the appearances was a
matter for the Board, that the Board was not bound to have
regard only for the appearances and to reject the realities and
that the Board's finding was plainly one that was open to it on
the material before it. 9
Then, the Board thoroughly examined the situa
tion of the contract workers as a matter of fact: in
particular, it looked at the way in which employees
were hired, how their salaries were determined and
paid, the supervision and appraisal of their work
by their hierarchical superiors and who the latter
were, and finally the extent to which they were a
part of the institution's operations. This examina
tion was of course made in light of the general
tests set by the Board itself and by other tribunals
specializing in labour relations to determine when
and in what circumstances persons who are appar
ently third parties in relation to the contract of
9 Seafarers' International Union of Canada v. Kent Line
Limited, [ 1972] F.C. 573 (C.A.), per Thurlow J. (as he then
was), at p. 578.
service are nonetheless deemed to be employees for
collective labour relations purposes.
It is this examination and these tests which led
the Board to arrive at its general conclusion:
Regardless of what the contract between Econosult Inc. and the
Government of Canada says, Econosult Inc., in my opinion,
plays a rather marginal role in the working life of the contract
workers. It is a contract under which Econosult Inc. must
supply manpower in the form of six (or eight) teachers and a
supervisor of education. Once in place, that team is, for the
most part, directed and coordinated in the execution of its
duties by authorities at Correctional Services Canada. There
are no other contractual obligations on the part of Econosult
Inc. towards the Government of Canada. Even with respect to
its two main responsibilities, recruitment of contractual workers
and their compensation, I would characterize the role of Econo-
sult Inc. as marginal. (At p. 463 (verso) of the record.)
In this Court counsel for the applicant argued
strongly that the contract workers could not be
employees within the meaning of the Public Ser
vice Staff Relations Act because they had not
been hired in accordance with the formal proce
dure specified by the Public Service Employment
Act. Personally, I am far from sure that the corre
lation between those two statutes is as close as
counsel maintained. The two statutes do not have
exactly the same purpose. The first relates to the
government from the outside and, just as the
Canada Labour Code 10 does for employers in the
private sector, regulates collective relations be
tween the government and persons working for it.
The second, on the other hand, relates to the
internal workings of the government and some
what resembles the corporate by-laws of a private
sector employer. In my opinion, therefore, there is
no objection in principle to a person being regard
ed as an employee for the purposes of his labour
relations with the government without thereby
necessarily having the status of a member of the
Public Service." Further, I think it is now well
established that, whatever the Public Service
Employment Act may say, the creation of a posi
tion and appointment to that position depend not
on the subjective intent of the government but
rather on an objective appraisal of the facts in
each case:
10 R.S.C. 1970, c. L- I.
" See, for example, the case of the freelancers working for
the National Film Board, mentioned in Syndicat Général du
Cinéma et de la Télévision, supra.
... the application of the merit principle and the right of appeal
under s. 21 of the Public Service Employment Act cannot
depend on whether the Department chooses to regard what is
done as the creation of a position and an appointment to it
within the meaning of the Act. It is what the Department has
objectively done as a matter of fact and not what it may have
intended or understood it was doing as a matter of law that
must determine the application of the merit principle and the
right of appeal. ' 2
It may be argued that the Board erred in law by
disregarding the contracts existing between the
mis -en-cause Econosult Inc. and the employees
concerned on the one hand and the government on
the other, and concluding that despite these con
tracts there was an employer-employee relation
ship between the government and the contract
workers. To make such an argument is in my view
to misunderstand the nature of the impugned deci
sion. I have already said that the Board had a right
and a duty to look at the reality behind the
appearances. The perception of reality, even in
legal relationships, is above all a question of fact.
The Board weighed the evidence with care and
drew its conclusions. This Court cannot intervene
unless, of course, the result is patently absurd.
Whether one agrees with the impugned decision or
not, it is based on the earlier decisions and well-
established practice of tribunals specializing in the
area: there can be no question here of absurdity.
Ultimately what is at issue here is freedom of
association, guaranteed by the supreme law of
Canada. In my view, this freedom is at the very
basis of the Public Service Staff Relations Act. It
would be anomalous to suggest that the govern
ment could avoid its obligations to people who are
in fact its employees by invoking the body of strict
and technical rules governing hiring in the Public
Service. If there is truly a conflict between the
principles underlying the Public Service Staff
Relations Act and the rules enacted in the Public
Service Employment Act, it is the former which
should prevail.
I would dismiss the application.
12 Doré v. Canada, [1987] 2 S.C.R. 503, per Le Dain J., at
p. 510.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.