Pointe‐Claire (City) v. Quebec (Labour Court), [1997] 1 S.C.R. 1015
City of Pointe‐Claire Appellant
v.
Syndicat des employées et employés
professionnels‐les et de bureau, section locale 57
(S.E.P.B.‐O.P.E.I.U.‐C.L.C.‐F.T.Q.) Respondent
and
The Labour Court, the Labour Commissioner
General and Réal Bibeault Mis en cause
Indexed as: Pointe‐Claire (City) v. Quebec (Labour Court)
File No.: 24845.
1996: November 6; 1997: April 24.
Present: Lamer C.J. and La Forest, L’Heureux‐Dubé, Gonthier and Cory JJ.
on appeal from the court of appeal for quebec
Labour law ‐‐ Identification of real employer in tripartite relationship ‐‐ Relevant criteria ‐‐ Temporary employee hired by city through employment agency ‐‐ Inclusion of employee in union’s bargaining unit ‐‐ Labour Court finding that employee’s real employer was city and not agency ‐‐ Whether Labour Court’s decision patently unreasonable.
The appellant city hired a temporary employee through a personnel agency to work for 6 weeks as a receptionist and then for 18 weeks as a clerk. During the two work assignments, the employee’s wages were determined and paid by the agency, which submitted an invoice to the city. The employee performed her work under the direction and supervision of a manager working for the city. The general working conditions, such as hours of work, breaks and statutory holidays, were dictated by the city. If the employee had not been qualified or had experienced problems in adapting, the city would have informed the agency, which would have taken the appropriate action. The respondent union, which holds the certification certificate for most of the city’s employees, submitted a request to the office of the labour commissioner general under s. 39 of the Labour Code seeking, inter alia, to have the temporary employee included in the union’s bargaining unit. The labour commissioner found that the city was the employee’s real employer during the two assignments and granted the union’s request. On appeal, the Labour Court affirmed the decision. It acknowledged that the agency recruited, assigned positions to, evaluated, disciplined and paid the temporary employees, but concluded that the city was the real employer by focusing on the question of which party had control over the temporary employee’s working conditions and the performance of her work. The Labour Court also noted that there was a relationship of legal subordination between the city and the employee because the city’s managers directed and supervised how she did her day‐to‐day work. The Superior Court dismissed the motion in evocation brought by the city, finding that the Labour Court’s decision was not patently unreasonable. The Court of Appeal affirmed that judgment in a majority decision.
Held (L’Heureux‐Dubé J. dissenting): The appeal should be dismissed.
Per Lamer C.J. and La Forest, Gonthier and Cory JJ.: To determine whether the Labour Court’s decision is patently unreasonable, it must be asked whether the decision was based on the evidence adduced and whether the Labour Court’s interpretation of the legislative provisions was patently unreasonable. The Labour Code provides few indications of how to determine the real employer in a tripartite relationship, and the definitions of the terms “employer” and “employee” found in the Code have had to be interpreted by specialized administrative tribunals. To identify the real employer in a tripartite relationship, a comprehensive approach must be taken. The criterion of legal subordination, which basically encompasses the notion of actual control by a party over the employee’s day‐to‐day work, and the criterion of integration into the business must not be used as exclusive criteria for identifying the real employer. In a context of collective relations governed by the Labour Code, it is essential that temporary employees be able to bargain with the party that exercises the greatest control over all aspects of their work—and not only over the supervision of their day‐to‐day work. Moreover, when there is a certain splitting of the employer’s identity in the context of a tripartite relationship, a comprehensive approach has the advantage of allowing for a consideration of which party has the most control over all aspects of the work on the specific facts of each case. This approach requires a consideration of the factors relevant to the employer-employee relationship, including: the selection process, hiring, training, discipline, evaluation, supervision, assignment of duties, remuneration and integration into the business.
Here, the Labour Court used a comprehensive approach by not basing its decision solely on the criterion of legal subordination. It certainly gave greater probative value to working conditions and the criterion of legal subordination, but it also considered other factors that define the employer-employee relationship, such as the role of the agency and the city with respect to remuneration and discipline, and the specific facts of the employee’s case. Nor did the Labour Court ignore the agency’s role in recruiting, training and evaluating the employee. However, it justified giving predominant weight to working conditions and the legal subordination test by relying on the ultimate objective of the Labour Code. The purpose of certification is to promote bargaining between the employer and the union in order to determine the employees’ working conditions. According to the Labour Court, those conditions are “essential aspects of an employee’s experience”. The reasoning of the Labour Court, a highly specialized agency that has expertise in labour law and is protected by a privative clause, was not patently unreasonable.
The Labour Court’s conclusion that the city was the employee’s employer for the purposes of the Labour Code does not lead to a patently unreasonable result. The applicability of the city’s collective agreement to the employee during her assignments does not raise any major difficulties. Moreover, although the agency was the employee’s employer for the purposes of the Act respecting labour standards, no inconsistency can be found in the application of the Code and that Act. Each of the labour statutes has a distinct object and its provisions must be interpreted on the basis of their specific purpose. Moreover, this case relates to provisions of the Labour Code, specifically whether the Labour Court’s decision was patently unreasonable, and not to the Act respecting labour standards. The arrangement is not perfect. However, the relationship in question here is not a traditional bipartite relationship, but a tripartite one in which one party is the employee and the other two share the usual attributes of an employer. In such a situation, it is thus natural that labour legislation designed to govern bipartite situations must be adjusted in some ways.
After an analysis of the facts, the legislation and the cases, there is a basis for the Labour Court’s decision in the Labour Code and the evidence, and it is therefore not patently unreasonable.
Per L’Heureux‐Dubé J. (dissenting): Given the Labour Court’s exclusive and specialized jurisdiction to determine whether an employee should be included in a bargaining unit, as well as the privative clause in the Labour Code, a reviewing court may only intervene if the Labour Court’s decision is patently unreasonable. While a high degree of deference is warranted in reviewing the Labour Court’s decision, if such a decision fundamentally contradicts the underlying principles and intended outcomes of the enabling legislation and interferes with the effective implementation of other statutes which support and protect employees, intervention by the reviewing court is in order. Here, the Labour Court was asked to interpret the “employer‐employee relationship” within the scope of the Code’s regime governing certification and the collective bargaining process in the context of a tripartite arrangement. The modern rule of statutory interpretation holds, inter alia, that a court must adopt an interpretation that is appropriate in terms of its acceptability ‐‐ namely, the reasonableness of its outcome. Where an administrative tribunal contrives an absurd interpretation, it commits an error of law that warrants judicial intervention pursuant to any standard of review.
The wording, history, context and purpose of the Code reveal that it never contemplated a tripartite employment relationship. The Code’s core objective is to facilitate relations between an employer and the representative of its employees, with the aim of setting adequate terms of employment and fostering industrial peace. The Code further seeks to achieve these ends for the benefit of the parties to the collective agreement, and the present and future employees it contemplates. In the type of tripartite relationship at issue in this case, all of the traditional elements of an employment relationship exist between the agency and its employee. Such an agency typically interviews, tests, hires, trains, negotiates a work assignment with, sets the wages for, and establishes its disciplinary measures as regards these employees. An agency and an employee will conclude a contract whereby that employee agrees to fulfill intermittent temporary replacements of personnel of the agency’s clients, under the particular client’s supervision, in exchange for an hourly wage and other employment benefits. There is no legal link of a contractual nature between the employee of the agency and the client. As the Code only envisages and regulates the negotiation of a bipartite employment relationship, and does not contemplate the existence of two simultaneous employers for one employee, for the same work, done at the same time, logic would dictate that an agency in such circumstances is the employer of such an employee for the purposes of this regime. As a consequence, the conclusion which the Labour Court should have reached prima facie is that the Code’s regime governing collective bargaining was not intended to cover tripartite arrangements. Furthermore, the Labour Court should have avoided adding wording to the Code and the collective agreement, in the absence of any clear indication having regard to the text of the agreement or the legislation, the intent of the legislature in adopting the Code, the intent of the parties in entering into the collective agreement, and the underlying policy objectives of this labour relations regime. The Labour Court’s decision subjects a client and the employee of an agency to the binding legal relationship established by a collective agreement, a relationship that was established with a union which was not certified to represent such an employee and that was never intended to be covered by the Code. This decision involves altering an agreement which was collectively negotiated between the City and the representative of its employees in a manner which flies in the face of the objectives of the Code in establishing this regime.
To identify the “employer‐employee relationship” within a tripartite arrangement, a court must adopt a global approach aimed at determining, first and above all, the legal status of the parties, by examining all the rights and obligations agreed to by the various parties, and thereby finding who the real employer is. The focus on identifying the employer to whom the employee is legally subordinate and the examination of all the relevant factors of an employment relationship are essential to a global determination of the true employer in a tripartite arrangement. The test of de facto control over the work performed by the employee is too rigid and must be rejected. That test was developed in the bipartite context and has a very different objective from that at issue in a tripartite arrangement. This type of control is only one of a series of factors which define the employment relationship in a tripartite context. Here, the Labour Court failed to apply the proper test. Rather than undertaking a global review of the various elements of the tripartite arrangement to determine who maintained legal control over the employee, the Labour Court enumerated the various factors which govern the quantity and quality of work done by the employee of an agency in the performance of her work, and then, on this basis, determined which employer had de facto control over the greatest number of these factors. In so doing, the Labour Court rejected the proper approach, which focuses on the legal status of the parties, in favour of a test where de facto subordination is the controlling element. The purpose of the Code, the intent of the legislation, and the negotiated collective agreement between the City and its employees’ certified union were not analysed in great detail but were given only cursory mention by the Labour Court. As well, discipline, remuneration, recruitment, hiring, training, evaluation and assignment of tasks, all functions undertaken by the agency vis‐à‐vis the employee, were virtually ignored.
The Labour Court used the wrong definitional test in its interpretation of the “employer‐employee relationship” and this error qualifies as patently unreasonable for it leads to an absurd result. The Labour Court’s decision creates two legal relationships, binding one employee to two separate employers simultaneously, for the same work done at the same time, during her temporary assignments with the City ‐‐ one employer for the purposes of collective bargaining and another for all other purposes. This situation produces a number of impracticable, anomalous, and irrational consequences for the parties involved: confusion will arise as to who the employer is ‐‐ particularly as regards the employee’s employment‐related human rights; incoherence is created within labour and employment legislation; important employee’s rights under the collective agreement binding the City are unenforceable against the agency if they conflict with the obligational content of the contract of employment concluded between the agency and the employee and, therefore, are virtually meaningless for the employee within this arrangement; many conditions of employment which are of great concern to a temporary services employee will be absent from the collective agreement since these employees were not contemplated as being included in the bargaining unit covering the City’s employees; the employee is prevented from exercising her rights, pursuant to the Code, to collective negotiation with the agency of important terms and conditions of employment; and, finally, the Labour Court’s approach denies the employee many rights and benefits established by legislation aimed at ensuring minimum standards of employment. It is inconceivable that a tribunal empowered to give effect to the collective bargaining regime established by the Code would deny a vulnerable group of employees the right to avail themselves of not only this regime, but others intended to protect employees. The Labour Court’s decision cannot be sustained. While the Labour Court has a broad jurisdiction to interpret its legislation and decide the question before it, even when this requires filling gaps and resolving ambiguities in statutes, this jurisdiction cannot extend to an interpretation which essentially ignores the fundamental requirement that an employer and an employee have actually agreed to enter a legal relationship of employment and brings results diametrically opposed to those intended by the Code and other pieces of labour legislation.
Cases Cited
By Lamer C.J.
Considered: Hôpital Royal Victoria v. Vassart, [1990] R.J.Q. 1961; Centre d’accueil Mgr Coderre v. Union des employés de service, local 298 (F.T.Q.), [1985] T.T. 291; Syndicat des employés des hôpitaux de Val d’Or (C.S.N.) v. Syndicat des employés de l’hôpital Malartic (C.S.N.), [1974] T.T. 425; Société d’énergie de la Baie James v. Léa Benoît & Associés Ltée, [1975] T.T. 323; Syndicat des professeurs du Québec v. Procureur général du Québec, [1970] T.T. 314; Syndicat des fonctionnaires provinciaux du Québec Inc. v. Procureur général du Québec, [1984] T.T. 353; Messageries dynamiques, division de groupe Québecor inc. v. Syndicat québécois de l’imprimerie et communications, local 145, [1986] T.T. 431; Caisse d’économie Hydro v. Syndicat des employées et employés professionnels‐les et de bureau, section locale 57, [1988] T.T. 429; referred to: Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., [1979] 2 S.C.R. 227; Syndicat des employés de production du Québec et de l’Acadie v. Canada Labour Relations Board, [1984] 2 S.C.R. 412; Blanchard v. Control Data Canada Ltd., [1984] 2 S.C.R. 476; U.E.S., Local 298 v. Bibeault, [1988] 2 S.C.R. 1048; Bell Canada v. Canada (Canadian Radio‐television and Telecommunications Commission), [1989] 1 S.C.R. 1722; National Corn Growers Assn. v. Canada (Import Tribunal), [1990] 2 S.C.R 1324; Lester (W.W.) (1978) Ltd. v. United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry, Local 740, [1990] 3 S.C.R. 644; Canada (Attorney General) v. Public Service Alliance of Canada, [1991] 1 S.C.R. 614; Canada (Attorney General) v. Public Service Alliance of Canada, [1993] 1 S.C.R. 941; Domtar Inc. v. Quebec (Commission d’appel en matière de lésions professionnelles), [1993] 2 S.C.R. 756; Centre communautaire juridique de l’Estrie v. Sherbrooke (City), [1996] 3 S.C.R. 84; Hôtel du Jardin v. Syndicat des salariés de l’Hôtel du Jardin (F.E.M.S.Q.), D.T.E. 91T‐1122; A. & F. Baillargeon Express (Québec) inc. v. Teamsters du Québec, chauffeurs et ouvriers de diverses industries, local 69, Labour Ct., No. 200‐28‐000182‐805, February 10, 1981; Garderie Blanche‐Neige inc. v. Giguère, Labour Ct., No. 500‐28‐000286‐799, July 11, 1980; Syndicat des salariés du Foyer Mgr Gendron Grandes Bergeronnes (C.S.N.) v. Union des employés de service, local 298 (F.T.Q.), Labour Ct., No. 200‐28‐000067‐790, November 1, 1979; Labourers’ International Union of North America, Local 183 v. York Condominium Corp., [1977] O.L.R.B. Rep. 645; Hotel and Club Employees’ Union, Local 299 v. Sutton Place Hotel, [1980] O.L.R.B. Rep. 1538; United Electrical, Radio and Machine Workers of Canada v. Sylvania Lighting Services, [1985] O.L.R.B. Rep. 1173; National Automobile, Aerospace and Agricultural Implement Workers Union of Canada v. Nichirin Inc., [1991] O.L.R.B. Rep. 78; Labourers International Union of North America, Local 607 v. Grant Development Corp., [1993] O.L.R.B. Rep. 21; International Brotherhood of Electrical Workers, Local 586 v. Dare Personnel Inc., [1995] O.L.R.B. Rep. 935; Nationair (Nolisair International Inc.) (1987), 70 di 44; United Brotherhood of Carpenters & Joiners of America, Local Union 93 v. Templet Services, [1974] O.L.R.B. Rep. 606; United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local 819 v. Tower Company (1961) Ltd., [1979] O.L.R.B. Rep. 583; Nolisair International Inc. (Nationair Canada) (1992), 89 di 94.
By L’Heureux‐Dubé J. (dissenting)
Toronto (City) Board of Education v. O.S.S.T.F., District 15, [1997] 1 S.C.R. 487; National Corn Growers Assn. v. Canada (Import Tribunal), [1990] 2 S.C.R. 1324; Canada (Director of Investigation and Research) v. Southam Inc., [1997] 1 S.C.R. 748; CAIMAW v. Paccar of Canada Ltd., [1989] 2 S.C.R. 983; Centre d’accueil Mgr Coderre v. Union des employés de service, local 298 (F.T.Q.), [1985] T.T. 291; Hôpital Royal Victoria v. Vassart, [1990] R.J.Q. 1961; Labourers’ International Union of North America, Local 183 v. York Condominium Corp., [1977] O.L.R.B. Rep. 645; Hotel and Club Employees’ Union, Local 299 v. Sutton Place Hotel, [1980] O.L.R.B. Rep. 1538; United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local 819 v. Tower Company (1961) Ltd., [1979] O.L.R.B. Rep. 583; United Brotherhood of Carpenters & Joiners of America, Local Union 93 v. Templet Services, [1974] O.L.R.B. Rep. 606; Zeller’s Inc. v. Agences de personnel Cavalier Inc., [1994] C.A.L.P. 719; Niagara Employment Agency Inc., [1989] O.L.R.D. No. 921 (QL); I.M. Personnel Agency Inc., [1989] O.L.R.D. No. 970 (QL); First Team Personnel Inc., [1994] O.L.R.D. No. 2630 (QL); All‐Work, Inc., 193 N.L.R.B. 918 (1971).
Statutes and Regulations Cited
Act respecting industrial accidents and occupational diseases, R.S.Q., c. A‐3.001, s. 2 “employer”.
Act respecting labour standards, R.S.Q., c. N‐1.1, ss. 1(7), (12) [am. 1990, c. 73, s. 1], 66 et seq., 124 [idem, s. 59].
Act respecting occupational health and safety, R.S.Q., c. S‐2.1, s. 1 “employer”.
Act respecting the Québec Pension Plan, R.S.Q., c. R‐9, s. 1(i).
Charter of Human Rights and Freedoms, R.S.Q., c. C‐12, s. 16.
Labour Code, R.S.Q., c. C‐27, ss. 1(k), (l) [am. 1982, c. 54, s. 52; am. 1983, c. 22, s. 1; idem, c. 55, s. 138; am. 1984, c. 47, s. 26; am. 1985, c. 12, s. 1; am. 1991, c. 69, s. 1], 39 [am. 1983, c. 22, s. 21], 67, 100 [idem, s. 61], 118 [repl. 1990, c. 4, s. 229], 119, 122 [am. 1992, c. 61, s. 177], 139 [repl. 1982, c. 16, s. 5; am. 1983, c. 22, s. 93; am. 1985, c. 12, s. 93; am. 1990, c. 4, s. 232].
National Labor Relations Act, 29 U.S.C. §151 (1994).
Taxation Act, R.S.Q., c. I‐3, s. 1 “employer”.
Unemployment Insurance Act, R.S.C., 1985, c. U‐1, s. 13 [now Employment Insurance Act, S.C. 1996, c. 23, s. 14].
Authors Cited
Arthurs, Harry William, et al. Labour Law and Industrial Relations in Canada, 4th ed. Markham, Ont.: Butterworths, 1993.
Bennion, Francis Alan Roscoe. Statutory Interpretation: A Code, 2nd ed. London: Butterworths, 1992.
Christie, Innis, Geoffrey England and Brent Cotter. Employment Law in Canada, 2nd ed. Toronto: Butterworths, 1993.
Côté, Pierre‐André. The Interpretation of Legislation in Canada, 2nd ed. Cowansville, Que.: Yvon Blais, 1991.
Dennard, H. Lane, and Herbert R. Northrup. “Leased Employment: Character, Numbers, and Labor Law Problems” (1994), 28 Ga. L. Rev. 683.
Driedger on the Construction of Statutes, 3rd ed. By Ruth Sullivan. Toronto: Butterworths, 1994.
Dubé, J.‐ L., et Nicola Di Iorio. Les normes du travail, 2e éd. Sherbrooke: Revue de droit Université de Sherbrooke, 1992.
Gagnon, Robert P. Le droit du travail du Québec: pratiques et théories, 3e éd. Cowansville, Qué.: Yvon Blais, 1996.
Gagnon, Robert P., Louis LeBel et Pierre Verge. Droit du travail, 2e éd. Sainte‐Foy: Presses de l’Université Laval, 1991.
Grant, Michel, et Pierre Laporte. “Salarié d’accord, . . . mais de qui (à la recherche du véritable employeur) -- Analyse de la jurisprudence du Tribunal du travail concernant les entreprises de ‘placement de main‐d’{oe}uvre’” (1987), 47 R. du B. 1205.
Masse, Claude. “Le nouveau Code civil du Québec et l’entrepreneur précaire”. Dans Lucie Lamarche, dir., Emploi précaire et non‐emploi: droits recherchés. Cowansville, Qué.: Yvon Blais, 1994, 37.
Moberly, Robert B. “Temporary, Part‐Time, and Other Atypical Employment Relationships in the United States” (1987), 38 Lab. L.J. 689.
APPEAL from a judgment of the Quebec Court of Appeal, [1995] R.J.Q. 1671, affirming a judgment rendered by the Superior Court on November 5, 1993, dismissing a motion in evocation against a decision of the Labour Court, D.T.E. 93T‐806. Appeal dismissed, L’Heureux‐Dubé J. dissenting.
Pierre‐André Côté and Michel Dupuy, for the appellant.
Pierre Gingras and Serge Cadieux, for the respondent.
English version of the judgment of Lamer C.J. and La Forest, Gonthier and Cory JJ. was delivered by
1. The Chief Justice ‐‐ This appeal raises the question of determining the real employer in a tripartite relationship in the collective labour relations context. What must be determined in the present case is whether the Labour Court made a patently unreasonable decision when it ruled that a temporary employee of the City of Pointe‐Claire (the “City”) who had been hired through a personnel agency was included in the bargaining unit of the union that represented the City’s permanent employees.
I. Facts
2. Personnel Hélène Tobin inc. (hereinafter the “agency”) is an agency whose business involves, inter alia, supplying temporary staff to businesses that are part of its clientele. The agency’s staff consists of three permanent employees and at least thirty employees (“temporary employees”) whose services are supplied to its clients on a temporary basis. The temporary employees are recruited and selected by the agency, which administers evaluation tests to them. The agency sees to the employees’ career development by entrusting them with increasingly demanding assignments and sometimes recommending that they take courses. It agrees with the client on the rate for the temporary employees’ services without regard to what the client pays its own employees in the same category. The agency pays its temporary employees an hourly wage that varies depending on the specific assignment. The wage paid by the agency is calculated on the basis of the number of hours recorded on a form filled out by the employee and countersigned by the client. The agency does not pay its temporary employees when they are not assigned to a client. The client can officially hire the employee, but the agency charges additional fees if this is done before the end of an assignment of 18 consecutive weeks. If the client is not satisfied with the quality of the temporary employee’s work, it must inform the agency, which will then take the appropriate action. The agency can change an employee’s assignment if the employee is underqualified or overqualified. As well, the agency has an employer number assigned by the Commission de la santé et de la sécurité du travail (“CSST”) and it withholds the necessary amounts from the employee’s wages for taxes and employment‐related costs (vacation pay and contributions to unemployment insurance, the CSST and the Quebec Pension Plan).
3. The City asked the agency to send it someone to serve as receptionist at city hall from November 5 to December 14, 1990. The agency assigned Ginette Lebeau to the position. At the end of this initial six‐week assignment, Ms. Lebeau informed the agency that she did not want another assignment before the beginning of January 1991. She also informed the City that she would like to apply for permanent employment. The City had her complete a form and, on December 17, 1990, had her take the necessary tests. Ms. Lebeau qualified for a position as a clerk with the City with an average of 94 percent.
4. After New Year’s Day, the agency offered Ms. Lebeau another work assignment with the City, this time as a clerk in the purchasing department. That second assignment lasted 18 weeks, from January 14 to May 17, 1991. On May 20, 1991, after the time allotted for the second work assignment had expired, Ms. Lebeau was hired directly by the City as a temporary employee. On June 17, 1991, she became a permanent employee at the City’s Municipal Court.
5. During the two work assignments in question, which lasted 6 and 18 weeks respectively, Ms. Lebeau’s wages were determined and paid by the agency. She filled out a time sheet given to her by the agency, had it signed by the City and then returned a copy to the agency. When the agency was informed of the number of hours she had worked, it paid her and submitted an invoice to the City, without informing the City what wages it had paid. Ms. Lebeau performed her work under the direction and supervision of a manager working for the City. The City also took part in her training, since it showed her how to do her work. Ms. Lebeau’s general working conditions, such as hours of work, breaks and statutory holidays, were dictated by the City. If she had not been qualified or had experienced problems in adapting, the City was supposed to inform the agency, which would have found the solution necessary to remedy the situation. In practice, when Ms. Lebeau was late or absent, she notified her immediate supervisor at the City.
6. The respondent Syndicat des employées et employés professionnel‐les et de bureau, section locale 57 (S.E.P.B.‐O.P.E.I.U.‐C.L.C.‐F.T.Q.), holds the certification certificate for most of the City’s employees. On January 25, 1991, the respondent union submitted a request to the office of the labour commissioner general under s. 39 of the Labour Code, R.S.Q., c. C‐27, seeking, inter alia, a declaration that Ms. Lebeau was included in the union’s bargaining unit because she was employed by the City during her two work assignments of 6 and 18 weeks respectively.
II. Relevant Statutory Provisions
7. The Labour Code defines “employer” and “employee” as follows:
1. In this code, unless the context requires otherwise, the following expressions mean:
. . .
(k) “employer -- anyone, including Her Majesty, who has work done by an employee;
(l) “employee -- a person who works for an employer and for remuneration, but the word does not include: [the exceptions are not applicable in this case];
8. The Quebec legislature has given labour commissioners exclusive jurisdiction to determine the matters relating to s. 39 of the Labour Code:
39. Of its own motion during its investigation and at any time upon request by an interested party, the labour commissioner may decide if a person is an employee or a member of an association, if he is included in the bargaining unit, and any other matters relating to certification.
9. That jurisdiction is transferred to the Labour Court when it sits on appeal from a labour commissioner’s decision. When the decision of a labour commissioner is appealed, it is the Labour Court that has jurisdiction to hear the appeal, under s. 118 of the Labour Code:
118. In addition to the other matters which are declared by law to be within its competence, such Court [the Labour Court] shall have jurisdiction, to the exclusion of any other Court, to hear and decide, in appeal, as to any decision of a labour commissioner who closes a case, and as to any decision of the labour commissioner general made under section 8 or section 9.
10. The scope of the Labour Court’s jurisdiction when it sits on appeal from a labour commissioner’s decision is set out in s. 119 of the Labour Code:
119. The Court sitting in appeal may confirm, amend or quash any decision referred to it and render the decision which, in its opinion, should have been rendered in the first place.
11. In s. 122 of the Labour Code, the Quebec legislature has provided that when the Labour Court sits in matters of certification, it has the same powers as a labour commissioner:
122. When it sits otherwise than in penal matters, the Court and each of its members shall have the powers and immunities of commissioners appointed under the Act respecting public inquiry commissions (chapter C‐37), except the power to order imprisonment; whenever they sit in matters of certification, they shall also have all the powers of a labour commissioner, and sections 21 to 47 shall apply mutatis mutandis. [Emphasis added.]
12. The decisions of the Labour Court sitting on appeal from a labour commissioner’s decision are protected by the privative clause found in s. 139 of the Labour Code:
139. Except on a question of jurisdiction and except when the Court is sitting in penal matters, no extraordinary recourse contemplated in articles 834 to 850 of the Code of Civil Procedure (chapter C‐25) shall be exercised and no injunction granted against an arbitrator, the Conseil des services essentiels, a certification agent, a labour commissioner or the Court acting in their official capacities.
III. Decisions Below
Office of the Labour Commissioner General, D.T.E. 92T-517
13. The labour commissioner granted the respondent union’s request under s. 39 of the Labour Code that Ms. Lebeau be included in the bargaining unit. According to commissioner Bibeault, the City was Ginette Lebeau’s real employer during her two work assignments. The commissioner said that since the evidence showed that the City had actual control over the work done by Ms. Lebeau, it acquired the status of her employer (at p. 7 of the full text):
[translation] I agree with the position taken by the [union’s] representative. It is the most logical and realistic one. In short, whoever directs the employees and makes the decisions that affect them is their real employer. This is also the position that has been adopted by the majority of Labour Court judges.
Labour Court, D.T.E. 93T-806
14. Judge Prud’homme noted that, prima facie, the agency seemed to be Ginette Lebeau’s employer since it had a number of the traditional attributes of an employer. The agency recruited, evaluated, paid and disciplined the temporary employees. However, Judge Prud’homme said that this approach failed to consider the essential aspects of an employer-employee relationship, namely, on the one hand the establishment of working conditions, and on the other hand the supervision of the performance of work. The judge stressed the importance, in the context of an employee’s day‐to‐day work, of control over the working conditions established by collective agreement, such as rules governing working hours, breaks, meal periods and statutory holidays. Ms. Lebeau had the same working conditions as the City’s other employees; she therefore did her work within a system established by the City and not the agency. In addition, Ms. Lebeau performed her work under the direction and supervision of City representatives. Judge Prud’homme stated the following about working conditions and the performance of work, at p. 11 of the full text:
[translation] Thus, when it came to working conditions -- aside from the exceptions that I will discuss next -- and the performance of work as such, the City was omnipresent while the agency had no authority.
15. Judge Prud’homme acknowledged that the agency had some control over two of Ms. Lebeau’s working conditions: discipline and wages. He was of the view, however, that the City’s involvement with respect to discipline and wages diluted the impact of the agency’s role in these areas. As regards discipline, the judge noted that the City would have been at the source of any action taken by the agency concerning Ms. Lebeau. With respect to the setting of wages, the judge pointed out that the rate of pay was directly affected by the type of service requested by the City and the number of hours the temporary employee worked there. For all these reasons, the judge held that the City was Ms. Lebeau’s employer for the purposes of the Labour Code, at p. 13:
[translation] This analysis necessarily leads to the conclusion that the City was Ginette Lebeau’s employer within the meaning and for the purposes of the Labour Code. The Code is concerned with the realities of the “employer‐employee” relationship rather than the form in which that relationship has been established; those realities essentially relate to the working conditions that the Code seeks to ensure are set up in a certain way. In this case, the conditions surrounding Ginette Lebeau’s work were predominantly determined by the City, not the agency; in addition, Ginette Lebeau was legally subordinate to the City, as shown by the fact that it was the City that issued instructions with respect to, and controlled the actual performance of, her work.
Judge Prud’homme added that this conclusion was consistent with the majority of the Labour Court’s decisions on the subject.
Superior Court (District of Montreal, No. 500-05-005556-939, November 5, 1993)
16. Côté J. rejected the City’s argument in support of its motion in evocation that the evidence adduced before the labour commissioner clearly showed that Ms. Lebeau was an employee of the agency and not of the City. According to the judge, the Labour Court’s reasoning was not patently unreasonable (at p. 5):
[translation] A careful review of the judgment in question and of the evidence before the labour commissioner, which was entered into the record in lieu of an affidavit, shows that the appellate judge analysed that evidence in detail and made a reasoned assessment of a number of criteria and factors that are very similar to those set out in Hôpital Royal Victoria v. Vassart. It cannot be said that this approach was patently unreasonable or that there was anything irrational about it; on the contrary, although I do not have to agree with the appellate judge, it is sufficient to say that his method of reasoning was rational and that his decision finds support in the evidence. In this regard, there are no grounds for evocation.
Court of Appeal, [1995] R.J.Q. 1671
Rousseau‐Houle J.A. (Tyndale J.A. concurring)
17. Rousseau‐Houle J.A. noted that s. 39 of the Labour Code clearly establishes that the labour commissioner is responsible for deciding whether a person is an employee and if that person is included in the bargaining unit. A misinterpretation on such an issue will not mean that the labour commissioner loses jurisdiction unless his or her assessment is patently unreasonable.
18. The judge stated that identifying the real employer in a tripartite relationship can be difficult because both the personnel agency and its client each clearly have some of the traditional attributes of an employer vis‐à‐vis the employee. The judge referred to the relevant criteria that must be considered in order to determine the real employer (at p. 1674):
[translation] Day‐to‐day control over the work done is therefore only one factor in determining the employer. The selection process, hiring, discipline, training, evaluation, assignment of duties and the length of time the services are provided are all elements to be considered when it must be determined who the real employer is in a tripartite relationship. Remuneration is not really a probative factor, since it is ultimately the client that bears the financial burden.
In the context of this case, in which the issue of employer identification arises in relation to an employee’s membership in the bargaining unit, the nature and concrete reality of the work done and the employee’s connection with the business are important criteria.
19. After reviewing the Labour Court’s conclusions with respect to legal subordination, disciplinary authority, the wages paid by the agency and the purpose of the Labour Code, Rousseau‐Houle J.A. found that the Labour Court’s decision was not patently unreasonable.
Deschamps J.A. (dissenting)
20. Deschamps J.A. conceded that the Labour Court had exclusive jurisdiction to decide the issue under s. 39 of the Labour Code. However, she stated that the Labour Court’s decision was patently unreasonable since it could not be reconciled with either the law or the facts.
21. Deschamps J.A. acknowledged that with one exception, namely Centre d’accueil Mgr Coderre v. Union des employés de service, local 298 (F.T.Q.), [1985] T.T. 291, the Labour Court has consistently found that the real employer in a tripartite relationship is the client and not the personnel agency. However, while in its other decisions the Labour Court had considered a number of criteria to determine the real employer, in the present case it had based its decision solely on the criterion of legal subordination. The judge stated the following in this regard (at p. 1676):
[translation] The Labour Court, under the guise of the so-called “legal subordination” criterion, which in fact merely identified who had day‐to‐day control over the performance of work, took a narrow view that made the employment agency’s client the employer without taking account of the reality or of the facts adduced in evidence.
The judge felt that this case showed [translation] “the end result of a gradual evolution of the legal subordination criterion, which was originally considered along with a number of other criteria but which has progressively moved away from the facts to become a rule that simplifies reality” (p. 1676).
22. According to Deschamps J.A., the Labour Court’s decision was subject to judicial review because its conclusion and the reasoning underlying it [translation] “offend common sense and the legal mind” (p. 1676). She criticized the Labour Court for considering only the day‐to‐day aspect of the working relationship whereby the work had to be performed on the client’s premises and during the hours of work determined by it. The judge stated the following on this point (at pp. 1678-79):
[translation] All of this seems rather absurd. It is hard to imagine that the temporary work of a receptionist or a clerk, as in this case, could be done elsewhere than in the workplace or at a time other than during the hours of work determined by the client.
It seems improbable to me that a client using the services of a temporary personnel agency would end up being the employer of the agency’s employees simply because it controls the work that is to be done every day. This reduces the concept of “employer” to insignificance and ignores reality, which calls for a much more comprehensive view. The factors that must be considered include not only recruitment, selection, training, remuneration and discipline, but also integration into the business, continuity of employment and the employees’ sense of belonging. I cannot conceive of an employer‐employee relationship that involves none of these aspects.
The concept of “legal subordination”, a term that was used by the Labour Court, actually involves, in its view, merely the day‐to‐day supervision of the performance of work. The concept of legal subordination thus simplified is therefore totally inadequate to characterize the tripartite relationship that exists among the agency, its client and the employee. The Labour Court had to consider all aspects of the relations among the three parties, which it failed to do. There is nothing in this case that justifies a finding that the client was the employer.
23. The judge also stated that the Labour Court’s interpretation was contrary to common sense and the coherence of labour legislation. She noted that the agency was already considered the temporary employees’ employer for the purposes of a number of provincial and federal statutes (at p. 1679):
[translation] In a context of legitimate replacement, as in this case, the agency is the employer for all purposes, including occupational safety (CSST), continuity of employment (labour standards), taxation and health insurance. In spite of all the subtleties inherent in labour law and all the latitude left to the Labour Court, I believe that there is a limit beyond which the interpretation becomes unreasonable.
24. Deschamps J.A. felt that the Labour Court’s narrow and exclusive application of the “legal subordination” criterion in interpreting s. 39 of the Labour Code was patently unreasonable in the instant case.
IV. Issue
25. The issue before the Court of Appeal was whether the Labour Court’s decision was patently unreasonable. The majority of the Court of Appeal found that it was not. The City is appealing to this Court from the Court of Appeal’s decision. To determine whether the Court of Appeal erred in law, this Court must ultimately inquire whether, in light of the evidence in the record, the Labour Court made a patently unreasonable error in declaring that the City was Ginette Lebeau’s real employer in the context of a request under s. 39 of the Labour Code.
V. Analysis
26. Personnel agencies are occupying an increasing share of the labour market. These agencies might be described as intermediaries in that they supply businesses with the services of employees they recruit. That supplying of services gives rise to a triangular relationship among the parties -- the agency, the client and the employee -- whose legal relationship is not clearly defined by labour legislation. While it is easy to identify the employee in such a tripartite relationship, the identification of the real employer is another matter. Generally speaking, both the agency and the client have some of the traditional attributes of an employer within the meaning of the Labour Code. There is accordingly a certain splitting of the employer in a tripartite relationship. The agency may recruit, train, pay and discipline the employee, while the business supervises the work, imposes the employee’s working conditions and bears the financial burden of the wages paid. An interesting labour law issue therefore arises, namely whether temporary employees engaged by a business through a personnel agency can in some cases be included in the bargaining unit of the union that represents the business’s permanent employees, or whether they are employees of the agency. Despite the importance of this issue, in this appeal I do not have to determine how to identify the real employer in all tripartite relationships involving a personnel agency. In the present case, the only issue is whether the Labour Court made a patently unreasonable error by holding, in the context of a request under s. 39 of the Labour Code, that the City was Ginette Lebeau’s employer during her two work assignments.
27. The exclusive jurisdiction of labour commissioners to determine whether an employee is included in a bargaining unit is not being challenged in this case. The wording of s. 39 of the Labour Code makes it clear that labour commissioners are responsible for deciding this issue and thus interpreting the concept of “employee” as defined in s. 1(l) of the Labour Code, which refers to the concept of “employer” defined in s. 1(k) of that statute. Under ss. 118, 119 and 122 of the Labour Code, the Labour Court has the same jurisdiction when sitting on appeal from a labour commissioner’s decision relating to certification. The decisions of the Labour Court sitting on appeal, as in the case at bar, are protected by a privative clause set out in s. 139 of the Labour Code. Because of that clause and because it is agreed that the Labour Court acted within its jurisdiction stricto sensu, only a patently unreasonable error can form a basis for judicial review.
A. Patently Unreasonable Error Test
28. This Court has considered the patently unreasonable error test on many occasions. I will mention only a few decisions: Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., [1979] 2 S.C.R. 227; Syndicat des employés de production du Québec et de l’Acadie v. Canada Labour Relations Board, [1984] 2 S.C.R. 412; Blanchard v. Control Data Canada Ltd., [1984] 2 S.C.R. 476; U.E.S., Local 298 v. Bibeault, [1988] 2 S.C.R. 1048; Bell Canada v. Canada (Canadian Radio‐television and Telecommunications Commission), [1989] 1 S.C.R. 1722; National Corn Growers Assn. v. Canada (Import Tribunal), [1990] 2 S.C.R. 1324; Lester (W.W.) (1978) Ltd. v. United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry, Local 740, [1990] 3 S.C.R. 644; Canada (Attorney General) v. Public Service Alliance of Canada, [1991] 1 S.C.R. 614; Canada (Attorney General) v. Public Service Alliance of Canada, [1993] 1 S.C.R. 941 (“PSAC No. 2”); Domtar Inc. v. Quebec (Commission d’appel en matière de lésions professionnelles), [1993] 2 S.C.R. 756; Centre communautaire juridique de l’Estrie v. Sherbrooke (City), [1996] 3 S.C.R. 84. The test was developed in response to the courts’ concern to show greater deference toward the decisions of specialized administrative tribunals on issues falling within their jurisdiction.
29. Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., supra, is the leading decision on the standard of review based on a patently unreasonable error. In that case, Dickson J. stated that when the interpretation of a legislative provision lies at the heart of an administrative tribunal’s jurisdiction, the standard that applies to justify judicial review is not mere error but unreasonable error, at p. 237:
Did the Board here so misinterpret the provisions of the Act as to embark on an inquiry or answer a question not remitted to it? Put another way, was the Board’s interpretation so patently unreasonable that its construction cannot be rationally supported by the relevant legislation and demands intervention by the court upon review?
This test has been consistently applied in subsequent cases.
30. In Lester (W.W.) (1978) Ltd. v. United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry, Local 740, supra, McLachlin J., writing for the majority, set out the guidelines for identifying a patently unreasonable error, at p. 669:
Courts should exercise caution and deference in reviewing the decisions of specialized administrative tribunals, such as the Labour Board in this case. This deference extends both to the determination of the facts and the interpretation of the law. Only where the evidence, viewed reasonably, is incapable of supporting a tribunal’s findings of fact, or where the interpretation placed on the legislation is patently unreasonable, can the court interfere. [Emphasis added.]
The Court must therefore ask whether the administrative tribunal’s decision was based on the evidence adduced and whether its interpretation of the legislative provisions was patently unreasonable.
31. Finally, in a subsequent decision, PSAC No. 2, supra, at p. 963, Cory J. stated that the patently unreasonable error test sets a high standard of review:
It is said that it is difficult to know what “patently unreasonable” means. What is patently unreasonable to one judge may be eminently reasonable to another. Yet any test can only be defined by words, the building blocks of all reasons. Obviously, the patently unreasonable test sets a high standard of review.
32. Thus, this Court has developed a very strict test for determining whether an administrative tribunal’s decision is patently unreasonable. In the case at bar, it must therefore be asked whether the Labour Court’s decision is patently unreasonable in its interpretation of the legislative provisions and its use of the evidence.
B. Application of the Test to the Facts
1. Is the Labour Court’s Reasoning Patently Unreasonable?
33. The Quebec Labour Code and Canadian labour legislation provide few indications of how to determine the real employer in a tripartite relationship. For the purposes of such an analysis, the Labour Code merely defines the terms “employer” and “employee”. According to s. 1(k) and (l) of the Labour Code, an employer is “anyone, including Her Majesty, who has work done by an employee”, while an employee is “a person who works for an employer and for remuneration”. On the basis of these two definitions, it has been established that the employer-employee relationship is defined by three essential elements: the performance of work, remuneration and the legal subordination of the employee to the employer. See Syndicat des employés des hôpitaux de Val d’Or (C.S.N.) v. Syndicat des employés de l’hôpital Malartic (C.S.N.), [1974] T.T. 425; Société d’énergie de la Baie James v. Léa Benoît & Associés Ltée, [1975] T.T. 323; R. P. Gagnon, Le droit du travail du Québec: pratiques et théories (3rd ed. 1996), at p. 180.
34. These definitions, which are terse to say the least, have had to be interpreted by specialized administrative tribunals in cases requiring them to identify the employer in a tripartite relationship. Those tribunals have made up for the gaps in the legislation by examining the various components of the employer-employee relationship and proposing certain criteria to define that relationship more clearly. I shall consider the Quebec and Canadian decisions on the subject before analysing the approach taken by the Labour Court in the present case.
(i) Quebec Cases
35. Over the last 25 years, the Labour Court has considered the question of determining the real employer in a tripartite relationship on a number of occasions. A consensus has emerged within that court about the importance that should be given to one specific criterion in identifying the employer in such a triangular relationship, specifically in the certification context. That criterion is legal subordination, which basically encompasses the notion of actual control by a party over the employee’s day‐to‐day work. In applying this test, the Labour Court has consistently and unanimously held, with only one exception, namely Centre d’accueil Mgr Coderre, supra, that the client (to which the staff is supplied) is the real employer within the meaning of the Labour Code because it is the party that controls the quantity and quality of the employee’s day‐to‐day work.
36. The Labour Court’s general position was clearly expressed by Judge Melançon in Syndicat des employés des hôpitaux de Val d’Or, supra, at p. 429:
[translation] While it is true that remuneration and its source are important factors in determining the relationship between an employee and an employer, it has consistently been found that they are not the only, or the most important, factors. The cases have long established that the primary test is rather that of legal subordination, in addition to a number of other criteria such as work performance, place of work and hiring.
37. In Société d’énergie de la Baie James, supra, at p. 326, Judge Aubé also focused on this relationship of legal subordination:
[translation] It has consistently been held that there must be legal subordination for a worker to be considered an employee.
Judge Aubé referred to Associate Chief Judge Quimper’s definition of “employee” in Syndicat des professeurs du Québec v. Procureur général du Québec, [1970] T.T. 314. In that case, the judge set out the three main elements included in the definition of “employee” in the Labour Code, at p. 318:
[translation]
1. performance of work;
2. remuneration;
3. relationship of legal subordination. This is the essential and specific element without which the other two would not be sufficient. The employer is identified by determining to whom the [employees] in question are subordinate.
The fundamental, decisive criterion for a relationship of subordination is direction and actual control of the work. [Emphasis added.]
In taking account of these characteristic elements of the definition of “employee”, a concept referred to in the definition of “employer”, Judge Aubé gave precedence to the element of control over the performance of work for the purposes of identifying the employer, at p. 333:
[translation] It must therefore be concluded under s. 1(l) of the Labour Code that Énergie is the employer of the employees in question because it is the one that has work done by them. It clearly results from the foregoing that the employees in question are legally subordinate to the appellant, the Société d’énergie. It is the appellant that directs and actually controls the work done on the work sites. It is the appellant that gives orders about the way to do the work and that exercises control over how it is performed.
. . .
In short, although the employees who come from Léa Benoît maintain a relationship with that original employer, they become employees of the Société d’énergie once they arrive at the James Bay work sites and they remain its employees as long as they are assigned there.
38. In another case, Syndicat des fonctionnaires provinciaux du Québec Inc. v. Procureur général du Québec, [1984] T.T. 353, in which the issue was whether temporary employees supplied to the Commission de la santé et de la sécurité du travail by the Quantum agency were employees of the former, Judge Auclair focused on the relationship of subordination when setting out the general criteria used by the Labour Court to identify which party is the employer of the employees in question. He stated the following at p. 355:
[translation] The criteria used by the Labour Court to determine the status of an employee in relation to an employer are well known. First, there is the work test. In this case, the work is performed solely for the Commission as one of its normal, and even necessary, activities. Quantum [the personnel agency] is in no way involved in the work of the employees in question. Pursuant to this criterion, the seventeen persons in question therefore perform work solely for the Commission. This aspect of the issue raises no problems.
Another criterion used by the Labour Court to determine an employee’s status is that of subordination; it is the most important factor. It must be established who decides what work is to be done, who supervises its performance and who controls it. . . . [Emphasis in original.]
39. In Messageries dynamiques, division de groupe Québecor inc. v. Syndicat québécois de l’imprimerie et communications, local 145, [1986] T.T. 431, at p. 434, Messageries dynamiques had retained the services of temporary employees through a personnel agency, Service de personnel A.T., to replace regular employees who were absent or to assist regular employees when there was extra work. The labour commissioner had found that the temporary employees were employees of the business and therefore subject to the union’s certification. Sitting on appeal from that decision, Judge Ménard of the Labour Court, after analysing the operation of the tripartite relationship and the roles of the agency and the business with respect to the temporary employees -- roles very similar to those in the present case -- examined the three characteristic elements of the concept of “employer” in s. 1(k) of the Labour Code: performance of work, remuneration (a test deriving from the reference to the concept of “employee”) and a relationship of legal subordination. She stressed the importance of examining the final element, legal subordination, to identify the real employer in such a tripartite relationship, at p. 434:
[translation] Thus, the remuneration element is certainly another clear characteristic of the employer‐employee relationship.
However, another criterion has been held to be essential to a finding that someone is an employer within the meaning of the Code, as is evident from the large number of cases on this topic dealing either with the issue of how to identify the real employer or with the issue of whether there is a contract for services. That test is the requirement that there be a relationship of legal subordination between the employer and the employee.
With respect to remuneration, Judge Ménard noted that although the temporary employees’ wages were paid by the agency, it was the client business that ultimately bore the financial burden of remuneration.
40. Finally, in Caisse d’économie Hydro v. Syndicat des employées et employés professionnels‐les et de bureau, section locale 57, [1988] T.T. 429, the Labour Court affirmed the labour commissioner’s decision that the Caisse was the employer of the temporary employees it had engaged through a personnel agency. Judge Beaudry stressed the importance of determining which party exercised fundamental control in the workplace. He stated the following, at pp. 431‐32:
[translation] Realistically speaking, the Caisse is actually the one giving out the work within the meaning that must be given to the definition of “employer” in the Code (s. 1(k)): “anyone, including Her Majesty, who has work done by an employee”. The Caisse determines what work is to be done and whether a candidate is qualified, directs and supervises the performance of the work and even decides whether the employment is maintained (and hence whether the employee should be dismissed).
. . .
. . . legal subordination in the broad sense, that is, control over work and its quality, is one of the main elements of the employer’s role. [Emphasis in original.]
41. The judge also noted that it is important to adopt a flexible approach in analysing the legal subordination test in order to take account of the many different types of tripartite relationships, each of which may have its own specific characteristics. He stated the following, at p. 432:
[translation] In light of the many different types of relationships with a business that may be envisaged, flexibility in applying the legal subordination criteria thus seems to be the best approach to take in determining the legal employer‐employee relationship.
42. Other Labour Court decisions involving similar issues have focused both on the criterion of legal subordination and on the factual situations specific to each case in order to identify the real employer in a tripartite relationship: Hôtel du Jardin v. Syndicat des salariés de l’Hôtel du Jardin (F.E.M.S.Q.), Labour Ct., No. 200‐28‐000033‐91, July 25, 1991, D.T.E. 91T‐1122; A. & F. Baillargeon Express (Québec) inc. v. Teamsters du Québec, chauffeurs et ouvriers de diverses industries, local 69, Labour Ct., No. 200‐28‐000182‐805, February 10, 1981; Garderie Blanche‐Neige inc. v. Giguère, Labour Ct., No. 500‐28‐000286‐799, July 11, 1980; Syndicat des salariés du Foyer Mgr Gendron Grandes Bergeronnes (C.S.N.) v. Union des employés de service, local 298 (F.T.Q.), Labour Ct., No. 200‐28‐000067‐790, November 1, 1979.
43. In summary, the majority of Labour Court decisions have held that legal subordination is an important criterion for identifying the employer in a tripartite relationship. More specifically, the Labour Court has said that it is important to determine which party exercises the most direct control over the temporary employee’s day‐to‐day work. It is essential to point out, however, that in none of the cases cited did the Labour Court consider only the criterion of legal subordination. Each decision was based on a complete assessment of the evidence and a consideration of other factors relating to the employer-employee relationship, such as remuneration. A number of Labour Court judges have certainly given predominant weight to the legal subordination test but, as I shall suggest below, a more comprehensive approach is more appropriate in the context of a tripartite relationship.
44. The only decision in which the Labour Court ruled differently was Centre d’accueil Mgr Coderre, supra. It is the one decision in which the Labour Court found that the personnel agency should be considered the employer within the meaning of the Labour Code. Judge Girouard took a different position from that taken by the other members of the Labour Court by attaching greater importance to the tests of continuity and integration into the business than to the criterion of legal subordination. He explained these concepts as follows, at p. 295:
[translation] [H]owever, I must in fact conclude that the real employer of the employees in question here is not the appellant [the Centre d’accueil] but the mis en cause [the personnel agency]. It is true that once the latter’s employees have arrived at the location of their work assignment, that is, at the premises of the mis en cause’s client, as the appellant was, they must be directed and guided by the client if they are to know what is expected of them in concrete terms and must work in accordance with the request submitted not to them but to the mis en cause: that assignment as put into practice does not mean that the workers cease to be integrated into the mis en cause’s business and at the same time become integrated into the appellant’s business. The real employer that must be sought is not the appellant, which, occasionally and solely for the purposes of the sporadic presence of workers sent to it by the mis en cause, can give those workers orders and concrete instructions. There is no question here of successive employers as the workers are sent from one client to the next by the mis en cause; the “employment” originated with the mis en cause and continues with it, and it is with the mis en cause that the workers have a stable, ongoing relationship.
Judge Girouard seemed to suggest that the criterion of legal subordination is not the appropriate criterion for determining the real employer and that the criterion of integration into the business should be preferred. However, although the criterion used by Judge Girouard, namely integration into the business, is relevant in identifying the real employer in a tripartite relationship, his approach as such cannot be accepted since it relies solely on an analysis of that concept.
45. In Hôpital Royal Victoria v. Vassart, [1990] R.J.Q. 1961, the Superior Court also took a different position from that of the majority of the Labour Court jurisprudence on this issue. The Superior Court had to determine whether the Labour Court had made a patently unreasonable error in finding that temporary nurses hired by the hospital through a personnel agency were the hospital’s employees for the purposes of the Labour Code. The Superior Court stated that it was patently unreasonable to identify the real employer by relying solely or predominantly on the legal subordination test. Grenier J. said the following, at p. 1970:
[translation] In a tripartite situation, the test of actual control over work performance is much too rigid and does not take account of other fundamental aspects that are obviously important. Any interpretation of the concept of “employee” must remain consistent with the tripartite context described above. Whether the nurses are employees of the supplier or the user of their services depends on a series of factors, of which actual control over the work is but one. Otherwise, the balance struck in the labour legislation enacted by the legislature would be upset. . . .
When applied in an unqualified manner, the test adopted by the Commissioner and the Labour Court is inconsistent with labour legislation and becomes patently unreasonable. [Emphasis added.]
46. In Vassart, unlike in Centre d’accueil Mgr Coderre, the judge did not reject the notion of actual control or legal subordination. Rather, the Superior Court took a more balanced approach. While acknowledging that the criterion of actual control was relevant, Grenier J. added that any analysis that relied solely on that test to identify the real employer would be an overly narrow approach.
47. I agree with the more comprehensive approach proposed by Grenier J. in Vassart for identifying the real employer in tripartite relationships. This was also the approach taken by the majority and dissenting judges of the Court of Appeal in the present case. Rousseau‐Houle J.A. stated the following for the majority of the Court of Appeal (at p. 1674):
[translation] Day‐to‐day control over the work done is therefore only one factor in determining the employer. The selection process, hiring, discipline, training, evaluation, assignment of duties and the length of time the services are provided are all elements to be considered when it must be determined who the real employer is in a tripartite relationship.
Deschamps J.A., dissenting in the result, proposed the same type of more liberal approach involving the consideration of a number of factors to determine the real employer in a tripartite relationship (at pp. 1678-79):
[translation] It seems improbable to me that a client using the services of a temporary personnel agency would end up being the employer of the agency’s employees simply because it controls the work that is to be done every day. This reduces the concept of “employer” to insignificance and ignores reality, which calls for a much more comprehensive view. The factors that must be considered include not only recruitment, selection, training, remuneration and discipline, but also integration into the business, continuity of employment and the employees’ sense of belonging. I cannot conceive of an employer‐employee relationship that involves none of these aspects.
The concept of “legal subordination”, a term that was used by the Labour Court, actually involves, in its view, merely the day‐to‐day supervision of the performance of work. The concept of legal subordination thus simplified is therefore totally inadequate to characterize the tripartite relationship that exists among the agency, its client and the employee.
48. According to this more comprehensive approach, the legal subordination and integration into the business criteria should not be used as exclusive criteria for identifying the real employer. In my view, in a context of collective relations governed by the Labour Code, it is essential that temporary employees be able to bargain with the party that exercises the greatest control over all aspects of their work—and not only over the supervision of their day‐to‐day work. Moreover, when there is a certain splitting of the employer’s identity in the context of a tripartite relationship, the more comprehensive and more flexible approach has the advantage of allowing for a consideration of which party has the most control over all aspects of the work on the specific facts of each case. Without drawing up an exhaustive list of factors pertaining to the employer-employee relationship, I shall mention the following examples: the selection process, hiring, training, discipline, evaluation, supervision, assignment of duties, remuneration and integration into the business.
(ii) Canadian Cases
49. In applying collective labour relations legislation that is similar to that in Quebec, Canadian administrative agencies have also dealt with how to identify the real employer in a tripartite relationship. Most of the decisions of those agencies, and specifically the Ontario Labour Relations Board (“OLRB”) and the Canada Labour Relations Board (“CLRB”), have noted that the essential test for identifying an employer-employee relationship in a tripartite context is that of fundamental control over working conditions. The application of the fundamental control test leads to an analysis of which party has control over, inter alia, the selection, hiring, remuneration, discipline and working conditions of temporary employees and to a consideration of the factor of integration into the business. In the final analysis, the application of the fundamental control test involves an examination of a series of factors that are similar to those suggested by the comprehensive approach set out in Vassart and in the Court of Appeal’s decision in the instant case.
50. In applying the fundamental control test, the OLRB and the CLRB have generally concluded that the client is the temporary employee’s real employer. See, for example: Labourers’ International Union of North America, Local 183 v. York Condominium Corp., [1977] O.L.R.B. Rep. 645; Hotel and Club Employees’ Union, Local 299 v. Sutton Place Hotel, [1980] O.L.R.B. Rep. 1538; United Electrical, Radio and Machine Workers of Canada v. Sylvania Lighting Services, [1985] O.L.R.B. Rep. 1173; National Automobile, Aerospace and Agricultural Implement Workers Union of Canada v. Nichirin Inc., [1991] O.L.R.B. Rep. 78; Labourers International Union of North America, Local 607 v. Grant Development Corp., [1993] O.L.R.B. Rep. 21; International Brotherhood of Electrical Workers, Local 586 v. Dare Personnel Inc., [1995] O.L.R.B. Rep. 935; Nationair (Nolisair International Inc.) (1987), 70 di 44. However, Canadian administrative agencies have not reached this conclusion systematically. In some decisions, the factual situation led the OLRB and the CLRB to find that it was the personnel agency or supplier that actually had the attributes of an employer. See, for example: United Brotherhood of Carpenters & Joiners of America, Local Union 93 v. Templet Services, [1974] O.L.R.B. Rep. 606; United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local 819 v. Tower Company (1961) Ltd., [1979] O.L.R.B. Rep. 583; Nolisair International Inc. (Nationair Canada) (1992), 89 di 94.
(iii) Labour Court Decision in the Instant Case
51. The issue before Judge Prud’homme was how to identify the employer, within the meaning of the Labour Code, in a tripartite relationship. More specifically, he had to determine whether the agency or the City should be considered Ginette Lebeau’s real employer for the purposes of s. 39 of the Labour Code.
52. Judge Prud’homme acknowledged that the agency recruited, assigned positions to, evaluated, disciplined and paid the temporary employees. However, by focusing on the question of which party had control over the temporary employee’s working conditions and the performance of her work, he concluded that the City was Ms. Lebeau’s real employer. According to the evidence, Ms. Lebeau had the same working conditions as the City’s permanent employees in terms of working hours, meal periods, breaks and statutory holidays. Judge Prud’homme gave predominant weight to working conditions because of the purpose of the Labour Code: [translation] “[t]he Code is concerned with the realities of the ‘employer‐employee’ relationship rather than the form in which that relationship has been established; those realities essentially relate to the working conditions that the Code seeks to ensure are set up in a certain way” (p. 13). The judge also found that there was a relationship of legal subordination between the City and Ms. Lebeau because the City’s managers directed and supervised how she did her day‐to‐day work. According to the judge, that complete legal subordination of Ms. Lebeau to the City went to [translation] “the heart of the traditional ‘employer‐employee’ relationship” (p. 11).
53. In addition to considering the criterion of control over Ms. Lebeau’s day‐to‐day work and her general working conditions, the Labour Court looked at other aspects that define the employer-employee relationship, namely wages, discipline and the feeling of integration into the business.
54. With respect to wages, the judge noted that although Ms. Lebeau’s wages were paid by the agency, they were entirely dependent on the number of hours she actually worked for the City. Moreover, Ms. Lebeau’s wage rate varied depending on her position with the City. According to the judge, the City therefore had a role to play in determining her wages, which correspondingly lessened the impact of the agency’s authority over that traditional element of the employer-employee relationship.
55. I shall add two important elements that show that the criterion of remuneration was not determinative in this case. First, according to the evidence, a temporary employee was not paid unless he or she was assigned to work for one of the agency’s clients. Thus, between her two work assignments with the City, that is, during the 1990 holiday season, Ms. Lebeau was not paid at all by the agency. Second, the definition of “employee” in the Labour Code does not specify who must pay the employee. The source of remuneration is therefore not conclusive in identifying the employer, because the statute does not mention it. To be covered by the Labour Code, the employee need only receive financial compensation in the form of wages. This was the position taken by the Labour Court in Messageries dynamiques, supra, at p. 435; Syndicat des fonctionnaires provinciaux du Québec Inc., supra, at p. 355; and Syndicat des professeurs du Québec, supra, at p. 318. In actual fact, the City bore the financial burden of Ms. Lebeau’s wages even though the agency actually paid those wages to the temporary employee. Thus, both entities, the agency and the City, could be seen as the employer since the former paid Ms. Lebeau’s wages directly while the latter bore the cost of those wages by fully reimbursing the agency for them on the basis of the hours she worked and paying an additional amount for the agency’s services. Whenever the legislature has wanted to make the paying of remuneration to an employee probative in identifying the employer, it has made this intention explicit. Thus, the definitions of “employer” in the Act respecting the Québec Pension Plan, R.S.Q., c. R‐9, and the Taxation Act, R.S.Q., c. I‐3, both specify that the employer is the person who pays the wages:
1. . . .
(i) “employer”: a person, including Her Majesty in right of Québec, who pays an employee a remuneration for his services; [R.S.Q., c. R‐9]
1. . . .
“employer”, in relation to an employee, means the person from whom the employee receives his remuneration; [R.S.Q., c. I‐3]
It is therefore not patently unreasonable that the Labour Court did not give predominant weight to the fact that the agency paid the temporary employee’s wages. Since both parties had a role to play with respect to Ms. Lebeau’s wages, those wages could not be a decisive criterion for identifying the real employer.
56. With respect to discipline, Judge Prud’homme acknowledged that the City had to inform the agency if it had any grounds for complaint against Ms. Lebeau. However, the judge also noted that the only possible disciplinary action would have been for the agency to remove Ms. Lebeau from her work assignment. The agency did not have a system involving a continuum of penalties or a disciplinary system such as is normally found in businesses. Moreover, Judge Prud’homme noted that the agency would not have taken disciplinary action in a vacuum: since it had no authority over Ms. Lebeau’s day‐to‐day performance of her work, the agency would have had to be notified first by the City that there was some problem with the employee. Once again, the City was not uninvolved in this additional component of the employer-employee relationship. For these reasons, the Labour Court did not give predominant weight to the criterion of discipline.
57. Finally, although Judge Prud’homme did not explicitly state that Ms. Lebeau viewed the City as her employer, he noted that the temporary employee felt as though she worked for the City and not the agency. According to the evidence, when she was late or absent, she contacted the City directly, without informing the agency. I also note that the facts show that Ms. Lebeau worked twice for the City for relatively long periods of time, namely 6 weeks and 18 weeks. Although the judge did not specifically raise this point, the length of assignments is an important factor in assessing the feeling of integration into the business. Moreover, at the end of her first work assignment, Ms. Lebeau passed tests administered by the City in order to qualify for a possible position as a clerk. Her second work assignment with the City was in fact as a clerk.
58. In my view, the Labour Court’s reasoning is not patently unreasonable. It used a comprehensive approach by not basing its decision solely on the criterion of legal subordination. The approach taken is not inconsistent with the analytical framework set out in Vassart or in the Court of Appeal’s judgment in this case. Judge Prud’homme certainly gave greater probative value to working conditions and the criterion of legal subordination, but he also considered other factors that define the employer-employee relationship, such as the role of the agency and the City with respect to remuneration and discipline, and the specific facts of Ms. Lebeau’s case. Nor did Judge Prud’homme ignore the agency’s role in recruiting, training and evaluating Ms. Lebeau. However, he justified giving predominant weight to working conditions and the legal subordination test by relying on the ultimate objective of the Labour Code. According to the judge, working conditions are [translation] “essential aspects of an employee’s experience” and not “trivial matters” (p. 10). Indeed, the purpose of certification is to promote bargaining between the employer and the union in order to determine the employees’ working conditions. Moreover, the Labour Court is a highly specialized agency with expertise in labour law, and is protected by a privative clause. For these various reasons, I conclude that the approach taken by the Labour Court was not patently unreasonable and that the Court of Appeal did not err in reaching a similar conclusion.
2. Is the Result Patently Unreasonable?
59. Does the conclusion that the City was Ms. Lebeau’s employer for the purposes of the Labour Code lead to a patently unreasonable result? I raise this question in relation to two grounds that were argued before this Court. First, I must consider whether the application of the City’s collective agreement to Ms. Lebeau would in fact have created a problem and, if so, whether it would therefore be patently unreasonable to uphold that conclusion. The City also raised the issue of inconsistency in the application of two Quebec labour statutes. According to the appellant, it is unreasonable to find that the City was Ms. Lebeau’s employer under the Labour Code when the agency already had that role for the purposes of the Act respecting labour standards, R.S.Q., c. N‐1.1.
60. The City’s collective agreement would have applied to Ms. Lebeau during the two work assignments in question. When she was assigned to the City first as a receptionist and later as a purchasing clerk, she performed her work in unionized positions. Those positions were covered by the collective agreement and specific wages applied to them. Thus, Ms. Lebeau’s wages would have had to be the same as those established by the collective agreement. This conclusion is not contrary to common sense, since the working conditions established by the collective agreement applied to Ms. Lebeau. In so far as she did not receive the wages that the union had negotiated with the City for those two positions, she would have been entitled to receive the difference. The agency would then have had to adjust her wages to take account of the wage rate determined by the collective agreement for the assigned positions. Moreover, a grievance could have been filed if there had been any disagreement as to the interpretation or application of the collective agreement. The applicability of the City’s collective agreement to Ms. Lebeau does not raise any major difficulties. Accordingly, I do not feel that the result of the decision is patently unreasonable.
61. The City argued that the Labour Court’s decision leads to inconsistency in the application of two statutes that govern employer-employee relations in Quebec: the Act respecting labour standards and the Labour Code. By assuming the obligations set out in the Act respecting labour standards in respect of Ms. Lebeau, the agency acknowledged that it was her employer under that Act. The evidence showed that the agency paid an amount representing about 20 percent of Ms. Lebeau’s wages to cover its employment‐related costs (such as vacation pay) and that it had an employer number from the CSST. The City argued that since the definition of “employer” is practically the same in both statutes, it would be inconsistent for two separate entities to be the employer of the same employee. There is no doubt that the principle that statutes dealing with similar subjects must be presumed to be coherent means that interpretations favouring harmony among those statutes should prevail over discordant ones: P.‐A. Côté, The Interpretation of Legislation in Canada (2nd ed. 1991). However, I cannot find any inconsistency in the application of these two statutes. Each of the labour statutes has a distinct object and its provisions must be interpreted on the basis of their specific purpose. Moreover, the case at bar relates to provisions of the Labour Code, specifically whether the Labour Court’s decision was patently unreasonable, and not to the Act respecting labour standards.
62. I am aware that the arrangement is not perfect. However, it must not be forgotten that the relationship in question here is not a traditional bipartite relationship but a tripartite one in which one party is the employee and the other two share the usual attributes of an employer. In such a situation, it is natural that labour legislation designed to govern bipartite situations must be adjusted in some ways. The Court is dealing with a decision of a highly specialized tribunal that has significant labour law expertise. Like the Court of Appeal, I cannot unjustifiably override the privative clause, which protects the Labour Court’s decision, in order to interfere in the world of labour and its organization and checks and balances unless there has been a patently unreasonable error. After analysing the facts of this case, the legislation and the cases, I conclude that there is a basis for the Labour Court’s decision in the Labour Code and the evidence and that it is therefore not patently unreasonable.
63. Unfortunately, tribunals and courts must often make decisions by interpreting statutes in which there are gaps. The case at bar shows that situations involving tripartite relationships can cause problems when it comes to identifying the real employer if the labour legislation is incomplete in this regard. The tripartite relationship does not fit very easily into the classic pattern of bilateral relationships. The Labour Code was essentially designed for bipartite relationships involving an employee and an employer. It is not very helpful when a tripartite relationship like the one at issue here must be analysed. The traditional characteristics of an employer are shared by two separate entities—the personnel agency and its client—that both have a certain relationship with the temporary employee. When faced with such legislative gaps, tribunals have used their expertise to interpret the often terse provisions of the statute. In the final analysis, however, it is up to the legislature to remedy those gaps. The Court cannot encroach upon an area where it does not belong.
VI. Disposition
64. For these reasons, I would dismiss the appeal with costs.
The following are the reasons delivered by
65. L’Heureux-Dubé J. (dissenting) -- This appeal concerns the interpretation by the Quebec Labour Court of the terms “employer” and “employee” in s. 1(k) and (l) of the Labour Code, R.S.Q., c. C-27, which read:
1. . . .
(k) “employer” -- anyone, including Her Majesty, who has work done by an employee;
(l) “employee” -- a person who works for an employer and for remuneration, but the word does not include: [a number of exceptions not relevant to this appeal].
The appellant alleges that the Labour Court’s interpretation is patently unreasonable because it leads to an absurd result.
66. More precisely, this case raises the issue of a tripartite relationship involving the employee of a temporary services agency, the agency itself, and a client of the agency, in this case, the appellant, the City of Pointe-Claire (the “City”). The question to be decided by the Labour Court is as follows: who is the employer for the purposes of union certification under the Code, the agency or the City? The Chief Justice concludes that the Labour Court’s decision finding the City to be the employer is not patently unreasonable. I conclude that it is and, accordingly, I dissent for the following reasons.
I. The Standard of Patent Unreasonableness
67. As the Chief Justice has observed, the exclusive jurisdiction of the labour commissioner to determine whether the employee is included in the bargaining unit is not contested in this appeal. The Labour Court also acted within its jurisdiction when hearing an appeal of a commissioner’s decision. These powers are clear from the wording of ss. 39, 118, 119, and 122 of the Code. Moreover, a strong privative clause in s. 139 protects the decisions of the Labour Court from appeal and review except on jurisdictional matters. I agree with the Chief Justice that given the Labour Court’s exclusive and specialized jurisdiction to answer this question as well as the privative clause, courts may only intervene where a patently unreasonable error in the tribunal’s decision gives rise to courts’ powers of judicial review.
68. After describing the evolution of the concept of patently unreasonable error in the jurisprudence of this Court, the Chief Justice concludes that a reviewing court must determine whether the tribunal’s decision is founded on the evidence before it, viewed reasonably, and whether or not its interpretation of the provisions of its enabling statute is patently unreasonable. I agree, but would add a comment which is particularly relevant in this case. A patently unreasonable error requires review by courts as it constitutes an excess of the tribunal’s jurisdiction. In applying the standard of patent unreasonableness, courts must therefore be careful not to divest themselves of their basic supervisory responsibility as regards the jurisdiction of such tribunals. While remaining mindful of the need and rationale for deference to administrative decision-makers, courts must nonetheless discharge their duty of ensuring that the tribunal has remained within its jurisdiction, however broadly conceived by the legislature.
69. While this Court has, on occasion, stressed the stringent nature of the standard of review and has phrased the standard in somewhat strong terms, such as “clearly irrational” or “without rational basis”, it has nonetheless maintained a meaningful supervisory role as regards administrative decision-making. This Court has recently affirmed that this standard of review is not so stringent as to remove a court’s power and duty to ensure that administrative tribunals remain within the specialized jurisdiction accorded them by the legislature: Toronto (City) Board of Education v. O.S.S.T.F., District 15, [1997] 1 S.C.R. 487. While a high degree of deference is warranted in reviewing the decision of the Labour Court, if such a decision fundamentally contradicts the underlying principles and intended outcomes of the enabling legislation and interferes with the effective implementation of other statutes which support and protect employees, intervention by this Court is in order.
70. Judicial review may, for example, require a careful review of the record before the tribunal. As Gonthier J., writing for the majority in National Corn Growers Assn. v. Canada (Import Tribunal), [1990] 2 S .C.R. 1324, observed, at p. 1370:
In some cases, the unreasonableness of a decision may be apparent without detailed examination of the record. In others, it may be no less unreasonable but this can only be understood upon an in-depth analysis.
More recently, in Toronto Board of Education, supra, at para. 46, after discussing the high degree of deference that must be shown a tribunal in the labour relations context, Cory J. nonetheless reminds us that, “courts also have a duty to protect parties from a decision which is patently unreasonable”. Moreover, as Iacobucci J. explains, in discussing the function of a reviewing court, in Canada (Director of Investigation and Research) v. Southam Inc., [1997] 1 S.C.R. 748, at para. 57:
If the decision under review is sufficiently difficult, then perhaps a great deal of reading and thinking will be required before the judge will be able to grasp the dimensions of the problem.
71. The appeal before us certainly presents a complex problem. As the Chief Justice explains in his reasons, the issue before the Labour Court is not whether the employee in question has the essential qualities of an employee (as opposed to an independent contractor, for example) but rather whose employee she is. This dilemma has arisen by virtue of the tripartite relationship within which the employee, the agency, and the City find themselves, an arrangement where the traditional qualities of an employer appear to be shared by the City and the agency. As Lamer C.J. has acknowledged, labour legislation, more specifically the Labour Code, was not conceived with this “triangular” phenomenon in mind.
72. The Labour Court also recognized this gap in the legislation and that either answer it might reach would present inherent difficulties. The appellant has argued that the Labour Court’s decision, in this particular factual context, will bring not only unreasonable, but absurd results. As a labour relations tribunal is created to implement a principled, policy-oriented legislative scheme, the practical consequences of its decision for these objectives are important considerations for the reviewing court, CAIMAW v. Paccar of Canada Ltd., [1989] 2 S.C.R. 983, per L’Heureux-Dubé, dissenting. Generally, the tribunal will be best placed to make the policy decision as to the desirable effects of a decision in a particular context. Where the consequences of a decision are demonstrated to be absurd and fundamentally at odds with the purposes and objectives of the legislation governing the tribunal, however, the decision will be rendered patently unreasonable and the Court must intervene. The concerns raised by the appellant, therefore, warrant serious attention by this Court. It is to these considerations that I will now turn.
II. Analysis
A. Background
73. Before undertaking an analysis of the issue before the Labour Court and the reasonableness of its approach, some background information as regards these two elements of its decision should prove helpful. Pursuant to its powers under s. 39 of the Labour Code, the Labour Court had been asked to determine whether, for the purposes of the Code’s certification regime, the employee of an agency hired by the City was an employee of the City and, therefore, included in the bargaining unit which encompassed most of the City’s staff.
74. I observe that the principal purpose of the Code, like its counterparts in other Canadian jurisdictions, is the facilitation of peaceful, constructive, and effective negotiation of the conditions of employment between an employer and a representative of the workers he or she employs. The role played by the Code’s certification regime is to identify the employee association, often a union, which is sufficiently representative of a group of employees to negotiate on their behalf. The certified union is empowered by the legislation to conclude a collective agreement binding the employer and the employees in a specified bargaining unit to agreed-upon terms. It is noteworthy that under this legislative regime, any grievance as to the application or interpretation of the terms of a collective agreement which arises during its term must be submitted to arbitration (s. 100 of the Labour Code). Section 139 of the Code provides that labour arbitrators, whether chosen by the parties or appointed by the Minister, have exclusive jurisdiction in settling these grievances. This ensures industrial peace for the duration of the agreement in a manner which serves the interests of both the employer and its employees. See R. P. Gagnon, Le droit du travail du Québec: pratiques et théories (3rd ed. 1996), at p. 243; R. P. Gagnon, L. LeBel and P. Verge, Droit du travail (2nd ed. 1991), at pp. 487, 511, 521, 537 and 700-704.
75. In the case before us, the certification process of the Code has authorized the respondent Union to represent the following individuals in negotiations with the City:
[translation] All office employees within the meaning of the Labour Code, including regular part-time office employees of the library, the cultural centre and the swimming pool, parking meter agents, engineering work inspectors, surveyors general, surveyors, stockroom clerks, tape persons, messengers and water meter service workers, but not including the manager’s secretary, the mayor’s secretary, the assistant clerk, the assistant treasurer, the chief accountant, the purchasing officer, the clerk of the Municipal Court, the design engineer, librarians and employees already covered by a certification certificate.
(Application for judicial review (art. 846 C.C.P.) filed by the appellant on April 20, 1993.)
76. It is immediately apparent that nowhere in this detailed description of the certified bargaining unit are temporary agency employees mentioned, and this, where the positions held by a number of City employees are specifically enumerated in the interests of greater clarity. As stipulated in the collective agreement, those employees who are replaced by agency staff for a sick or maternity leave of absence or otherwise do continue to be employees covered by the collective agreement, and, therefore, remain in the bargaining unit. Thus, employees of an agency who replace these employees on leave must be understood, within this regime, as holding a position which is distinct from that held by these regular employees and it would be surprising, indeed, that the collective agreement would foresee the inclusion of two employees for the same position at the same time. It becomes evident, then, that nothing in the collective agreement indicates that either the Union or the City contemplated the inclusion of special positions held by temporary services agency employees assigned to replace the regular employees of the City.
77. Unlike the case of a private contract of employment, which is subject to the principle of relativity of contract, the Code extends the scope of the legal rights and obligations in a collective agreement beyond the parties who have signed it. As stipulated by s. 67 of the Code, the terms of the present collective agreement bind the employer vis-à-vis not only the Union, which is the other signatory to the collective agreement, but also all present and future employees who are contemplated by the certification (and thus included in the bargaining unit description), whether or not they are union members. The scope of the collective agreement does not extend, however, to individuals who are not originally mentioned or contemplated in the bargaining unit description. The Union’s application to have the agency employee declared an employee of the City within the meaning of the Code, therefore, seeks to change the terms of the collective agreement and subject the employee of the agency and the City to the correlative rights and obligations concluded within this collective agreement. See Gagnon, LeBel and Verge, supra, at pp. 520-21.
78. Not only were the employees of an agency not included in the collective agreement, but, as I have already established, neither the Union nor the City concluded the collective agreement with these employees in mind. Moreover, neither the employee of the agency, nor the agency itself, contemplated such a result, particularly since there is no reference whatsoever to the terms of this collective agreement in either the course of their own negotiations surrounding the eventual assignment of the employee to the City or in the contract they entered into. Indeed, there is no evidence that any of the three parties to the tripartite relationship negotiated, discussed, or indicated the possibility that this collective agreement would apply to the agency or its employee. Given this background, the Union is seeking to impose a legal regime --that created by the collective agreement and the provisions of the Code -- on two complete outsiders and unwilling parties, the employee and the City, parties which were not part of or intended to be part of the collective agreement. In so doing, the Union is seeking to add parties to the collective agreement who were never even intended to be covered thereby.
79. As a consequence, in response to the Union’s application, the question which both the commissioner and the Labour Court purported to answer was the following: who was the true employer of the employee for the purposes of the Code -- the agency or the City? In addressing this question, Judge Prud’homme of the Labour Court proceeded to determine which party had the greatest degree of de facto control over the employee of the agency in its immediate work environment.
80. At this point the following preliminary points must be emphasized.
81. First, as the Labour Court itself recognized at the outset, the City’s reliance on the agency’s temporary services to replace regular personnel was a legitimate use as opposed to an attempt to prevent unionization or otherwise undermine the purpose of the Labour Code. In other words, the forming of this tripartite relationship in no way constituted a “sham”.
82. Second, the Code as well as the collective agreement are completely silent on the issue of determining who is the employer in a triangular arrangement. It has not been contested that a tripartite relationship of the kind with which we are dealing here was not a situation which was envisaged or intended to be covered by the Code. Indeed, this is precisely what the Labour Court qualified as the “gap” in the legislation.
83. Third, the issue here is not who is the employee in the tripartite arrangement, but rather who is the employer.
84. Fourth, in a tripartite relationship of the kind at issue here, there is absolutely no legal link of a contractual nature between the client, here the City, and the employee, contrary to the case in a bipartite employment relationship. Indeed, the legal link is between the City and the agency.
85. This being said, I will now turn to the central issue before the Labour Court.
B. The Central Issue
86. Given this background, the central issue for the Labour Court in this case was, therefore, one of statutory interpretation. More precisely, the Labour Court was asked to interpret the “employer-employee relationship” within the scope of the Code’s regime governing certification and the collective bargaining process.
87. The basic modern rule in statutory interpretation was reformulated as follows in Driedger on the Construction of Statutes (3rd ed. 1994), by R. Sullivan, at p. 131:
There is only one rule in modern interpretation, namely, courts are obliged to determine the meaning of legislation in its total context, having regard to the purpose of legislation, the consequences of proposed interpretations, the presumptions and special rules of interpretation, as well as admissible external aids. In other words, the courts must consider and take into account all relevant and admissible indicators of legislative meaning. After taking these into account, the court must then adopt an interpretation that is appropriate. An appropriate interpretation is one that can be justified in terms of (a) its plausibility, that is, its compliance with the legislative text; (b) its efficacy, that is, its promotion of the legislative purpose; and (c) its acceptability, that is, the outcome is reasonable and just. [Emphasis added.]
88. In the case at bar, the relevant aspects of the modern rule are as follows: courts determine the meaning of legislation having regard to the consequences of proposed interpretations, and the presumptions of interpretation. After taking these into account, courts must then adopt an interpretation that is appropriate in terms of its acceptability, that is, the reasonableness of its outcome. One such presumption of interpretation is the presumption against absurdity, which was codified as follows in F. A. R. Bennion, Statutory Interpretation: A Code (2nd ed. 1992), at p. 679:
Section 312. Presumption that ‘absurd’ result not intended
(1) The court seeks to avoid a construction that produces an absurd result, ... [including] virtually any result which is unworkable or impracticable, inconvenient, anomalous or illogical, futile or pointless, artificial, or productive of a disproportionate counter-mischief. [Emphasis added.]
89. Results which are “unworkable or impracticable” and “anomalous or illogical” have been further explained by Bennion, at pp. 680 and 692:
Section 313. Avoiding an unworkable or impracticable result
The court seeks to avoid a construction of an enactment that produces an unworkable or impracticable result, since this is unlikely to have been intended by Parliament.
. . .
. . . so the court will be slow to find in favour of a construction that leads to these consequences.
Section 315. Avoiding an anomalous or illogical result
The court seeks to avoid a construction that creates an anomaly or otherwise produces an irrational or illogical result.
. . .
This subsection of the Code deals with an aspect of the principle that Parliament is taken to expect its Acts to be applied with common sense. [Emphasis added.]
90. See also the reformulation of the presumption against absurdity in Driedger on the Construction of Statutes, supra, at pp. 79 and 85-86. The meaning of “absurdity” has been examined in P.-A. Côté, The Interpretation of Legislation in Canada (2nd ed. 1991), at pp. 378-80:
An interpretation is considered absurd if it leads to ridiculous or frivolous consequences.
. . .
Another approach considers “absurd” to be synonymous with extremely unreasonable or inequitable: in other words, a result which cannot be imputed to a fair and reasonable legislator.
. . .
“Absurd” can also be used to mean something illogical, incoherent or incompatible with other provisions or with the object of the legislative enactment. [Italics and underlining added.]
91. Thus, an absurd interpretation is synonymous with extreme unreasonableness which, in my view, is even greater unreasonableness than patent unreasonableness, let alone correctness. Accordingly, where an administrative tribunal contrives an absurd interpretation, it commits an error of law that warrants judicial intervention pursuant to any standard of review.
92. The next step is to review the interpretation of the “employer-employee relationship” arrived at by the Labour Court in the case at bar. In my view, the Labour Court used the wrong definitional test, and, in doing so, produced an interpretation that leads to a series of absurd consequences including, inter alia, confusion as to the employment contract, and unenforceability and/or denial of various employment rights. These consequences are absurd because they involve unworkable and/or impracticable results, anomalies and irrationalities. Therefore, the Labour Court’s interpretation is patently unreasonable and stands to be reviewed. I will first review how the interpretation fits contextually in the general legislative scheme, with appropriate emphasis on the issue of tripartite contractual relationships. Secondly, I will review the definitional test which should have been used by the Labour Court, given this context. Thirdly, I will show how the multiple absurd results brought about by the Labour Court’s interpretation make it patently unreasonable.
C. Contextual Analysis
93. As I said earlier, as a starting point, the Labour Court rightly identified a gap in the Code’s definitions of the terms “employer” and “employee” as regards an arrangement involving a personnel agency, at least one indication that the inclusion of an employee of one of these agencies within these definitions, when the employer is the agency’s client, was not intended.
94. This may well be contrasted with analogous legislation in other jurisdictions, such as the U.S., where the National Labor Relations Act, 29 U.S.C. §151 (1994), has been found to foresee the possibility that there be “joint employers”. A finding of “joint employer” status on the part of a client of a temporary services agency pursuant to this legislation has been limited, however, to the provisions sanctioning unfair labour practices. These, arguably, have objectives and use wording which differ from other sections of the Act thereby allowing for shared employer liability while remaining consistent with the purposes of the legislation. However, in most cases involving the identification of the employer for the purposes of certification, the agency which hires, trains, disciplines, and pays the temporary employee will be qualified as the employer for the purposes of the Act, not as a “joint employer”. Consequently, in the U.S. it seems clear that an employee of an agency of the type here at issue would generally not be considered an employee of the City for the purposes of the legislation. See H. L. Dennard and H. R. Northrup, “Leased Employment: Character, Numbers, and Labor Law Problems” (1994), 28 Ga. L. Rev. 683, at pp. 699-702; R. B. Moberly, “Temporary, Part-Time, and Other Atypical Employment Relationships in the United States” (1987), 38 Lab. L.J. 689, at p. 693.
95. This being said, the above background as to the provisions and structure of the Quebec Labour Code, as well as its underlying policy goals, reveal the Code’s core objective of facilitating relations between an employer and the representative of its employees, with the aim of setting adequate terms of employment and fostering industrial peace. The Code further seeks to achieve these ends for the benefit of the parties to the collective agreement, and the present and future employees it contemplates.
96. In the type of tripartite relationship at issue in this appeal, all of the traditional elements of an employment relationship exist between the temporary services agency and its employee. Such an agency typically interviews, tests, hires, trains, negotiates a work assignment with, sets the wages for, and establishes its disciplinary measures as regards these employees. An agency and an employee will conclude a contract whereby that employee agrees to fulfill intermittent temporary replacements of personnel of the agency’s clients, under the particular client’s supervision, in exchange for an hourly wage and other employment benefits.
97. This type of agency will also conclude contracts with various clients, such as the appellant in this case, whereby it provides a trained, skilled employee to fulfill the duties of a regular employee who is temporarily absent from his or her position, and this, under the daily supervision of the client’s staff. The agency is also, therefore, both obligated and entitled to replace an employee who proves incapable of performing these duties adequately. The client’s obligation will be generally to pay an hourly rate to the agency, a rate set by the agency, commensurate with the level of responsibility and skill required by the position, the costs of staffing and overhead, and the targeted profit for the agency. Neither the client nor the employee are necessarily aware of the rate received, or paid, by the other. The client does not assume any other special legal obligations towards the employee of the agency, except perhaps those related to obligations which would flow from the day-to-day work done by the employee, such as to keep the premises safe and others of the same nature. An agency may further stipulate, as was done in this case, that the client cannot hire as its own employee the employee of the agency, until a certain period has elapsed, unless it pays a specified penalty. Consequently, there exists absolutely no legal link of a contractual nature between the employee of the agency and the client.
98. Thus, two distinct contractual relationships flow from employment through these agencies, one with an employee and one with a client. The client is, therefore, a stranger to the negotiations between an agency and an employee while the employee is a stranger to those between an agency and a client. As the Code only envisages and regulates the negotiation of a bipartite employment relationship, and does not contemplate the existence of two simultaneous employers for one employee, for the same work, done at the same time, logic would dictate that an agency in such circumstances is the employer of such an employee for the purposes of this regime.
99. As a consequence, the inevitable conclusion which the Labour Court should have reached prima facie is that the Code’s regime governing collective bargaining was not intended to cover tripartite arrangements. Furthermore, the Labour Court should have avoided adding wording to the Code and the collective agreement, in the absence of any clear indication having regard to the text of the agreement or the legislation, the intent of the legislature in adopting the Code, the intent of the parties in entering into the collective agreement, and the underlying policy objectives of this labour relations regime.
100. At the same time, as I have already observed, such an agency and its employees will be strangers to the collective agreement binding the client, its own employees, and the union which represents these employees. The Labour Court’s decision subjects a client and the employee of an agency to the binding legal relationship established by a collective agreement, a relationship which was established with a union which was not certified to represent such an employee and a relationship which was never intended to be covered by the Code. The Labour Court’s decision involves altering an agreement which was collectively negotiated between the City and the representative of its employees in a manner which flies in the face of the objectives of the Code in establishing this regime. In my view, this is a peremptory argument.
101. I have already demonstrated that the wording, history, context and purpose of the Code reveal that it never contemplated a tripartite employment relationship of the nature at issue here. The external context relevant to the Code further supports such a finding. It is well recognized that the relationship which any labour or employment legislation is intended to regulate is that of a bipartite contract of employment. Arthurs et al., in Labour Law and Industrial Relations in Canada (4th ed. 1993), at pp. 67-68, provide the following statement of this fundamental concept in the labour law of all jurisdictions in Canada, including Quebec:
The term contract of employment denotes an essential concept in labour law. There must be a relationship recognized by law to be one of contract between an employer and employee before any of the incidents of labour law will be applicable. This is so whether the labour law sought to be applied relates to the making, administering or enforcing of agreements between employers and trade unions, or to the exercise of rights and imposition of obligations arising out of long established rules of custom or the common law in respect of working conditions, or to the rights arising under legislation dealing with working conditions. It is so, even though some of the legislation, such as workers’ compensation statutes, refers to ‘workers’ rather than ‘employees’ in describing its scope and it is so when a statute defines ‘employee’ for its own limited purposes. The interpretation of such statutory provisions has been to require the establishment of a contract of employment whatever the terminology used to describe the persons covered by them, unless there is a specific legislative direction to the contrary. [Emphasis added.]
102. A further indication of the legislative intent is as follows. The Quebec Code was clearly devised to identify the employee on the basis of a bipartite contractual relationship. In Quebec, a contract of employment arises between two parties when three essential elements are established: (1) an obligation of remuneration on the part of the employer; (2) an obligation to perform work on the part of the employee; and (3) a sufficient level of “legal subordination” in the relationship linking the employee to the employer. As I will explain in more detail below, this last element essentially refers to the degree of de facto control over the employee’s day-to-day work, by the employer, which originates from the legal relationship binding the two parties. If there were no such contract, there would be no such obligation.
103. As many authors have observed, these three elements are reflected in the definitions of “employer” and “employee” in the Quebec Code. It is not surprising, then, that where the Labour Court has been asked to determine whether an individual involved in a bipartite relationship is an employee or an independent contractor, it has relied upon the existence of these three elements in identifying the employment contract, and therefore the employee, for the purposes of the Code. See Gagnon, LeBel and Verge, supra, at pp. 10-14; Gagnon, supra, at pp. 46-51; C. Masse, “Le nouveau Code civil du Québec et l’entrepreneur précaire”, in L. Lamarche, ed., Emploi précaire et non-emploi: droits recherchés (1994), 37, at pp. 47-52.
104. That third element, “legal subordination”, has traditionally received the greatest emphasis by the courts, the Labour Court, and other bodies which administer employment-related regimes when faced with interpreting or qualifying a bipartite contractual relationship. This element has been defined in various ways in the jurisprudence of these bodies. These definitions all focus on the de facto control by the employer over the employee’s work. As Gagnon, LeBel and Verge, supra, explain, the level of de facto subordination required to establish a bipartite employment relationship is the means by which the scope of a particular legal scheme is delimited. Doctrinal sources have labelled the two principal tests the “classic” conception of “legal subordination” and the “broad” conception. Economic subordination is another means of defining this notion, but has not generally been applied as a determinative test. See Gagnon, LeBel and Verge, supra, at pp. 10-15.
105. Gagnon, LeBel and Verge, supra, at pp. 11-12, provide the following description of the two primary conceptions of “legal subordination” which have been relied upon in the context of a bipartite contract:
[translation] There is legal subordination in the classic sense when the person who performs the work is subject to the direct supervision and control of another person (the employer) with regard to how the work is done. This concept arose in the civil law, in which it has traditionally been used as a test for applying the principle that an employer is civilly liable for damage caused by his or her employee in the performance of the duties for which the employee is employed.
In the case of legal subordination in the broad sense, the control is not over how the work is done, but rather over the agreed regularity with which it is done and its quality. In short, it is a [translation] “personal obligation to be at work and to perform one’s work oneself in a satisfactory, verifiable and regular manner, (... or a) very specific requirement of personal performance under supervision” [citing Gaston Breton Inc. v. Union des routiers, brasseries, liqueurs douces et ouvriers de diverses industries, local 1999, [1980] T.T. 471, at pp. 480 and 485]. In practical terms, there are a number of indications, which vary from one situation to the next, from which it can be concluded that one person is working for another. . . . Such factors demonstrate the existence of control over the quality and quantity of work done; the duties to be performed are thus overseen by the employer. [Emphasis in original.]
106. Obviously, application of the classic approach will result in fewer bipartite relationships being defined as employment contracts than would application of the broader test. One must, however, be careful to avoid confusing this type of subordination with the legal status of the parties. De facto control in no way creates a legal link of a contractual nature between the parties. Rather, it simply indicates the intensity of the de facto subordination created by the legal obligations to which the two parties have agreed. As Gagnon, LeBel and Verge, supra, assert, this unequal aspect of the relationship linking the employer and the employee provides the rationale for imposing a legal or regulatory regime, such as the one put in place by the Quebec Labour Code which creates special protection and support for employees. See also J.-L. Dubé and N. Di Iorio, Les normes du travail (2nd ed. 1992), at pp. 16-17 and 27-37; Masse, supra, at pp. 49-52.
107. Both of these tests for de facto control have been applied by the Labour Court to qualify a bipartite contract as an employer-employee relationship for the purposes of the Code, an approach which makes abundant sense in that context. The purpose of the exercise in such cases is to determine who is an employee, given that there is a contractual legal relationship at the outset, i.e. contractual hiring of a party either verbally or in writing. This de facto test, among other purposes, by revealing the real relationship which exists between the parties, prevents an employer from pretending, for example, to use an outside contractor when in reality it has hired an employee.
108. It may, perhaps, have seemed quite natural for the Labour Court to turn to the same concepts when determining the identity of the employer in a tripartite relationship, see M. Grant and P. Laporte, “Salarié d’accord, ... mais de qui (à la recherche du véritable employeur) -- Analyse de la jurisprudence du Tribunal du travail concernant les entreprises de ‘placement de main-d’{oe}uvre’” (1987), 47 R. du B. 1205, at p. 1213, cited in Hôpital Royal Victoria v. Vassart, [1990] R.J.Q. 1961, at pp. 1967-68. In my view, this makes no sense in a tripartite relationship. The foregoing discussion of these notions reveals that, in so doing, the Labour Court is relying on a concept developed to determine whether a particular bipartite contractual relationship falls within the scope of the Code, to resolve a completely different type of problem. Here, faced with a tripartite relationship, the Labour Court was asked to determine who is the employer, i.e., not whether, but with whom an employee involved in such an arrangement has entered an employment relationship. This is, in my view, where the Labour Court fell into error.
D. The Test
109. The proper analysis, in my opinion, begins, as did Judge Girouard in Centre d’accueil Mgr Coderre v. Union des employés de service, local 298 (F.T.Q.), [1985] T.T. 291, by setting out the appropriate legal framework for identifying the employer-employee relationship within a tripartite arrangement. In that case, Judge Girouard describes the task before the Labour Court in the following terms (at p. 293):
[translation] [I]t is necessary to determine the precise, true legal status of a worker and, primordially, to identify the real employer to whom the worker is, essentially and continuously, legally subordinate. [Emphasis added.]
110. In answering this question, Judge Girouard proceeds, on the basis of the facts of the case, to determine with which party the employee had entered a contract of employment. At p. 294, he explains why such a contract exists between the agency and the employee in a traditional case of short-term, successive replacements of a client’s permanent personnel:
[translation] [I]t is the personnel agency that selected and hired the worker, trained the worker as required and assigned the worker duties and work to be performed on the clients’ premises, and it is the agency that pays the worker according to the conditions they have negotiated solely between themselves and has control over the worker for the purposes of evaluation, choice of assignments and any necessary sanctions. In short, the worker is integrated into the personnel agency: the worker is the agency’s employee and owes allegiance only to it, as it is primarily to the agency that the worker is ultimately accountable for his or her performance, even though that performance must also be satisfactory to the client to whom the worker has been sent. If the worker is an employee within the meaning of the Code, he or she may be included in a bargaining unit defined by a certification vis-à-vis that employer; [Emphasis in original.]
111. According to Judge Girouard, the fact that the work was performed at the work sites of successive clients and under their supervision is not sufficient to displace the primary, legal, and ongoing employment relationship established between the employee and the agency. As he concludes at p. 295:
[translation] [The worker’s] fundamental, ongoing employment relationship was therefore with the mis en cause [the agency], while his work was performed on the premises of the various clients of the mis en cause, including at times the appellant. His only real employer was the mis en cause; his “integration” was initially, and continued to be, into the business of the mis en cause. On the appellant’s premises, he was merely a “passer-by”, a provider of services furnished by the mis en cause to the appellant. [Emphasis added.]
112. In Coderre, therefore, Judge Girouard advocates an approach which aims at determining, first and above all, the legal status of the parties, through examining all the rights and obligations agreed to by the various parties in a tripartite arrangement, and, thereby, at finding who the real employer is. This is, of course, consistent with the essential concept of labour law as defined by Arthurs et al., supra.
113. In Vassart, supra, the only judgment of a superior court which addresses this particular issue, other than those of the Superior Court and Court of Appeal in this case, the Superior Court’s critique of applying the de facto test in the tripartite context reflects a comparable analytical framework. In that case, Grenier J. describes the “integration” test in Coderre, supra, as more “global” than the Labour Court’s usual focus on de facto control over the work of the employee.
114. Grenier J. further affirms both Judge Girouard’s focus on identifying the employer to whom the employee is legally subordinate and his consequent attention to certain elements which are essential to a more global determination of the true employer in a tripartite relationship. As she states, at p. 1969:
[translation] From this perspective the following elements are of paramount importance: selection, hiring, discipline, staff training and evaluation, payment of remuneration, assignment of work and length of service with the client company.
115. Grenier J. concludes by rejecting the test of de facto control over the work performed by the employee as much too rigid. This type of control is found to be only one of a series of factors which define the employment relationship in this context. She specifically advocates attention to the other factors enumerated above, factors she recognized as deriving from the decision in Coderre, supra. Grenier J. also criticizes the de facto focus used by the Labour Court on the grounds that the test, which was developed in the bipartite context, has a very different objective from that at issue in a tripartite arrangement. Like Judge Girouard in Coderre, Grenier J. seeks a more global test designed to determine not whether the employee was sufficiently subordinate in a de facto sense, which is not the issue here, but who the real employer is, which is the central question. Deschamps J.A., dissenting in the Court of Appeal in the present case, also adopts this position. I agree entirely.
116. The Chief Justice, while agreeing with the approach advocated in Vassart, supra, nonetheless concludes that it has been followed in the present case. His conclusion is based on two propositions. First, Lamer C.J. relies on the jurisprudence from the Ontario and Canadian Labour Relations Boards (OLRB and CLRB) which he believes to reach a similar result to the Labour Court in this case through applying a global approach. Second, he considers that the Labour Court has addressed the factors of discipline, remuneration, and integration. This, in his view, reflects sufficient integration of the Vassart test. I disagree with his analysis for the following reasons.
117. First, the OLRB did, in fact, initially apply a global approach to address the issue of the true employer in a tripartite relationship. This “fundamental control” test was relied upon by the OLRB in Labourers’ International Union of North America, Local 183 v. York Condominium Corp., [1977] O.L.R.B. Rep. 645. In that decision, at p. 648, the Board articulated a test, based on previous decisions, which required the global examination of a number of factors similar to those identified in Coderre, supra, and Vassart, supra:
(1) The party exercising direction and control over the employees performing the work.
(2) The party bearing the burden of remuneration.
(3) The party imposing the discipline.
(4) The party hiring the employees.
(5) The party with the authority to dismiss the employees.
(6) The party who is perceived to be the employer by the employees.
(7) The existence of the intention to create the relationship of employer and employees.
118. Soon thereafter, in Hotel and Club Employees’ Union, Local 299 v. Sutton Place Hotel, [1980] O.L.R.B. Rep. 1538, at p. 1552, the OLRB described the central issue before a board in such cases as: “who exercises fundamental control over the employees”. These and other earlier cases obviously reflect an analysis of the legal status of the parties, as was the case in Coderre, supra, and Vassart, supra. The “fundamental control” test seeks to determine, through a global appreciation of all of the relevant factors in an employment relationship, which employer is the source of fundamental legal control over the duties performed by the employee.
119. Given this test, it is not surprising that the OLRB in these cases reached the result of finding the agency to be the employer, unless it was clear that no contract existed between it and the employees in question. See also United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local 819 v. Tower Company (1961) Ltd., [1979] O.L.R.B. Rep. 583; United Brotherhood of Carpenters & Joiners of America, Local Union 93 v. Templet Services, [1974] O.L.R.B. Rep. 606, at p. 608.
120. However, the “fundamental control” test appears to have become diluted in more recent cases. The factor of de facto control seems now to have been assigned determinative importance regardless of the legal status of the parties. The Chief Justice has pointed to such cases where the OLRB and CLRB appear to reach a similar result as the Quebec Labour Court’s de facto test. In my opinion, this case law does not add to the discussion of the proper test to be applied to the interpretation of the provisions of the Quebec Labour Code at issue here. One may speculate as to the reasons why the former test, the correct one in my view, has been more or less abandoned, but “two wrongs do not make a right”; that is, case law based on an erroneous test does not render such a test more reliable or valid. This jurisprudence is, therefore, of limited assistance, if any, in the disposition of the present appeal.
121. Second, the Chief Justice’s finding that the Labour Court’s decision in the present appeal incorporates the Vassart test is equally problematic. Rather than undertaking a global review of the various elements of the tripartite arrangement to determine who maintained legal control over the employee, the Labour Court enumerated the various factors which govern the quantity and quality of work done by the employee of an agency in the performance of her work, and then, on this basis, determined which employer had de facto control over the greatest number of these factors.
122. In so doing, in fact, the Labour Court rejected the Vassart approach -- with its focus on the legal status of the parties -- in favour of a test where de facto subordination is the controlling element. The purpose of the Code, the intent of the legislation, and the negotiated collective agreement between the City and its employees’ certified union were not analysed in great detail and were given only cursory mention by the Labour Court. It adopted instead the test of the City’s de facto control over the work of the employee of the agency. Discipline, remuneration, recruitment, hiring, training, evaluation and assignment of tasks, all functions undertaken by the agency vis-à-vis the employee, were virtually ignored. Although lip service was paid to these elements, in the final analysis they were not given any real weight.
123. Deschamps J.A., in her dissenting opinion in the Court of Appeal, concludes that it is inconceivable that a client finds itself the employer of the temporary agency’s employee simply because it controls the day-to-day tasks of that individual. In her view, it is absurd to find an employment relationship where one finds none of the other traditional elements of selection, hiring, training, remuneration, discipline, integration, continuity of employment, and sense of belonging on the part of the employee. I could not agree more.
124. Although the Labour Court may have purported to consider the legal relationships negotiated and formed by the parties, in the end it, in fact, relied on the test of de facto control over both the general overview of the quality and quantity of work and the more specific daily task completion by the employee. The traditional Labour Court focus on de facto control, whether in the classic or broad sense, provides the overriding reasoning here. The legal obligations negotiated between the employee and the agency as regards all other key factors are virtually dismissed. This decision, and indeed the trend of such decisions in the Labour Court to which it refers, reflect the very reasoning which is impermissible here given the rules of interpretation, the context, the collective agreement, the wording and objective of the Code itself, as well as the intent of the parties. Vassart, supra, and Coderre, supra, were virtually ignored, although, in the case of Vassart, supra, at least, the Superior Court had, in my view authoritatively, decided the issue.
125. I conclude, therefore, that the Labour Court was in error in failing to apply the proper test for identifying who is the employer in a tripartite arrangement.
E. Absurd Results and Patent Unreasonableness
126. An error by an administrative body, where it is a specialized tribunal, acting within its jurisdiction, and protected by a privative clause, does not permit courts to substitute their opinion for that of the administrative body. The Labour Court is a specialized decision-making body shielded by a strong privative clause whose decision is challenged on review. This is not in dispute. The test for a reviewing court in such a case, as I said earlier, is one of patent unreasonableness. Nonetheless, on the basis of the following reasons, the error here does qualify as patently unreasonable for it leads to an absurd result.
127. The absurd result produced by the Labour Court’s error is that it creates two legal relationships, binding one employee to two separate employers simultaneously, for the same work done at the same time, with all of the consequences this entails for the parties. As I explained at the outset, the Labour Court’s decision has the effect of subjecting the employee and the City to the reciprocal rights and obligations contained in the collective agreement between the City and the union representing its regular employees. Neither the City nor the agency nor its employee intended or agreed to such a result, no more, in fact, than did the Union.
128. At the same time, the agency and the employee have also entered a contract of employment, as was the case in Coderre, supra, comprised of the terms and conditions which they negotiated on an ongoing basis before the employee even began her first assignment at the City. Furthermore, the agency is considered an employer by law, with all of the rights and obligations this involves, pursuant to a number of statutes, such as, the Act respecting labour standards, R.S.Q., c. N-1.1, s. 1(7); the Act respecting industrial accidents and occupational diseases, R.S.Q., c. A-3.001, s. 2 “employer”; the Act respecting occupational health and safety, R.S.Q., c. S-2.1, s. 1 “employer”; and the Act respecting the Québec Pension Plan, R.S.Q., c. R-9, s. (1)(i). I note that the board of appeal under the Act respecting industrial accidents and occupational diseases has recently decided that the agency must be the true employer for the purposes of that Act as the employer-employee contractual relationship can only exist between the agency and the employee, Zeller’s Inc. v. Agences de personnel Cavalier Inc., [1994] C.A.L.P. 719.
129. As the appellant has argued, in the context of a tripartite relationship of the nature at issue in this appeal, the establishment of two simultaneous employers for the same employee, for the same work done at the same time, occurs precisely because de facto control over either a general structure governing the quality and quantity of work or the daily assignment and supervision of tasks is an ambiguous indicator of the ultimate legal power to compel the employee to fit herself within this structure. Viewed alone, these conditions could be seen to indicate control on the part of either the agency or the client.
130. When an employee undertakes vis-à-vis the agency to replace a regular employee in another work site, the working conditions governing the employee are effectively imposed by the agency. At the same time, these can be seen to be within the control of the client. According to the City’s contract with the agency, the agency cannot change the rules and conditions which govern how work is carried out in that environment. Judge Girouard referred to this difficulty in Coderre, supra, in deciding to address other significant factors in the tripartite relationship. Thus, a focus on the de facto control aspect of the relationship will often result in qualifying the client as the employer for the purposes of the Code, while the agency and the employee remain bound by an individual contract of employment with all of the agreed upon and legislated terms and conditions this may entail.
131. The employee in this case thus finds herself with two simultaneous employers for the same work, done at the same time, during her temporary assignments with the City, one employer for the purposes of collective bargaining, and another for all other purposes. This situation creates a number of impracticable, anomalous, and irrational consequences for the parties involved. First, confusion will inevitably arise as to who the employer is, particularly as regards important rights in the workplace. Second, the Labour Court’s decision creates incoherence within labour and employment legislation. Third, some of the most important of an employee’s rights pursuant to the collective agreement binding the City are unenforceable against the agency and, therefore, virtually meaningless for the employee within this arrangement. Fourth, many conditions of employment which are of great concern to a temporary services employee will be completely absent from such a collective agreement. Fifth, the employee is prevented from exercising her rights, pursuant to the Code, to collective negotiation with the agency of these and other important terms of employment. Sixth, and finally, the employee is denied many other rights pursuant to legislation aimed at ensuring minimum standards of employment. It is simply inconceivable to me that a tribunal empowered to give effect to the collective bargaining regime established by the Code would deny a vulnerable group of employees the right to avail themselves of not only this regime, but others intended to protect employees.
132. The significance of the first absurd consequence is great. Essentially, the employee will be left confused as to who her employer is, especially as regards her employment-related human rights, pursuant to the Charter of Human Rights and Freedoms, R.S.Q., c. C-12. The protection against discrimination in employment in s. 16 of the Charter provides an excellent example. Confusion will likely arise as to the source of discrimination experienced in her “hiring, apprenticeship,...promotion, transfer, displacement, laying-off, suspension, dismissal or conditions of employment”, which is prohibited by s. 16. This will occur because she is simultaneously bound by two employment relationships for the same work assignment -- that is, for the same tasks done at the same time -- the contract of employment with the agency and the collective agreement with the City. This confusion can only serve to complicate and impede the complaint process for such an employee, a process which is often already difficult to embark upon.
133. Incoherence within labour and employment legislation, a second, anomalous consequence, arises because the agency is considered the employer for all purposes other than collective labour relations, when a common goal of employment law generally, of many employment-related statutes, and of the Labour Code itself, is to ensure that employees not be denied basic and important conditions of employment by virtue of their unequal bargaining position vis-à-vis their employer. It seems quite strange, contrary to the basic principles of labour law, and at odds with the regime governing labour relations, that the Code should not require the employer to negotiate a legally binding agreement with the employee, while most other statutes do require the existence of such an employment contract. See Act respecting industrial accidents and occupational diseases, s. 2 “employer”; Act respecting occupational health and safety, s. 1 “employer”. See also Act respecting labour standards, ss. 1(12) and 124.
134. The third absurd consequence is that the employee’s obligations and rights established under her contract of employment with the agency will preclude her access to many of the important conditions of employment included in the collective agreement between the City and the Union. Wages provide an excellent example. If the collective agreement provides for a higher rate than that agreed to by the agency, against whom can the employee exercise this right? The agency has been found not to be an employer for the purposes of certification under the Labour Code and is certainly not a party to the collective agreement. There is, therefore, no legal basis for an obligation on the part of the agency to pay more than was originally agreed upon. The agency’s obligations will only arise from the individual employment contract or pursuant to legislation.
135. Consequently, I disagree with the Chief Justice’s proposed solution that the City or the employee can somehow compel the agency to pay the wage rate set in the collective agreement and bill the difference to the employer. One might argue that the collective agreement would compel the client to include such terms in its contract with the agency. This was not done in the case at bar, however, and is unlikely to occur where, as in this case, the City and the Union clearly did not contemplate these employees when concluding the collective agreement. Absent the agreement on the part of the agency to such a term, there is no legal basis for its compliance with the terms of the collective agreement. There is no source of redress under the Code which could force the agency to abide by the conditions of employment of a collective agreement to which it is not a party.
136. Such a right may only be exercised against the City, through the grievance procedure established in the collective agreement or imposed by the Minister. One might well conclude that the City could be ordered to “top up” the employee’s wages through some type of premium, yet this solution, too, is impracticable. It is very difficult to imagine a method of accounting for these wages which would not violate various legislative regimes which establish benefits and obligations on the basis of hourly wages or salary for particular work. By way of example, the agency is the employer for the purposes of the Unemployment Insurance Act, R.S.C., 1985, c. U-1, s. 13 (now the Employment Insurance Act, S.C. 1996, c. 23, s. 14), a regime where the employee’s benefits depend upon the average weekly insurable wages earned for a particular period.
137. Another example is the regime governing disciplinary measures for employees covered by the collective agreement. In the event of a conflict between this and the disciplinary regime governing the employee and the agency, the employee again finds herself in an absurd position. The regime in the collective agreement may provide for a grievance procedure to challenge disciplinary action, yet this is in no way binding on the agency. Indeed, the agency may need, and certainly has the right, to replace the employee in order to fulfill its own contractual obligations to its clients. In accordance with its own contract with its employees, the agency may reprimand, remove, replace, or reassign an employee for a variety of reasons, including a complaint by a client or the realization that the work is too difficult for the employee. In this tripartite relationship, as the Labour Court acknowledged, final say in disciplinary matters vis-à-vis the employee has clearly been left to the agency. Moreover, in making these decisions, the agency is in no way subject to the arbitration process imposed by the City’s collective agreement or the Code. Once again, placing the temporary services employee under the regime of conditions set by the client’s collective agreement results in an important condition of employment being essentially unenforceable if it conflicts with the obligational content of the contract of employment concluded between the agency and the employee.
138. The fourth absurd consequence is that many conditions of employment which are of great concern to a temporary services employee will be completely absent from such a collective agreement. These include, inter alia: evaluation and future placement, training, arrangement of time off between assignments, and the consequences of the inability to perform the duties asked by the client. As I have said, these employees were clearly never contemplated as being included in the bargaining unit covering the City’s employees. Indeed, many of these terms have their most significant effects in the period where the employee’s obligation to perform work is temporarily suspended. This provides a further indication of the limited protection offered an employee of an agency under the collective agreement binding the agency’s client to its regular employees and the anomalous nature of the result reached by the Labour Court.
139. Moreover, under the Labour Court’s approach, this employee is prevented from collectively bargaining an agreement with the agency in order to include the terms and conditions of employment which may be important to her and enforceable within the tripartite arrangement. This constitutes a fifth absurd consequence of the Labour Court’s decision. This is wholly unnecessary as these employees could unionize as employees of the agency. To illustrate this point, in Sutton Place Hotel, supra, the OLRB certified the Hotel and Club Employees’ Union, Local 299 to represent the employees of the management company vis-à-vis not the client, Sutton Place Hotel, but the company which provided maintenance services to that client. To the same effect, see Tower Company, supra. In Ontario, unions have also successfully sought certification for bargaining units comprised solely of employees of personnel agencies, see Niagara Employment Agency Inc., [1989] O.L.R.D. No. 921 (QL); I.M. Personnel Agency Inc., [1989] O.L.R.D. No. 970 (QL); First Team Personnel Inc., [1994] O.L.R.D. No. 2630 (QL).
140. Furthermore, in its decision in All-Work, Inc., 193 N.L.R.B. 918 (1971), in response to a petition by a union to establish a bargaining unit comprised of employees of a temporary help agency, the U.S. National Labor Relations Board found there to be no legal impediment to the establishment of such a unit pursuant to the National Labor Relations Act. In concluding that the agency was, indeed, the employer of these employees, the Board made the following observation (at p. 919):
Nor do we believe that the fact that the Employer does not exercise control over the entire employment relationship is a sufficient reason for failing to grant the laborers their statutory right to engage in collective bargaining. The Employer herein controls the wage rates, the manner in which they are paid, the assignment of work, and, in many cases, the transportation of the laborers to the jobsites. Although the Employer does not actually supervise the work performed it thus has control over some of the most important aspects of the employer-employee relationship. We therefore find that effective and meaningful collective bargaining could take place between the Employer and the Petitioner and that the laborers, as employees of the Employer, are entitled to such bargaining if they indicate that they desire it. [Emphasis added.]
Moberly, supra, further explains, at p. 693, after citing this decision, that the employees of temporary services agencies continue to have the right to unionize, and thus bargain collectively, vis-à-vis the agency for which they work. In the U.S., collective agreements establishing important terms, such as wages, hours, and other conditions of employment, have been successfully concluded with such agencies.
141. A sixth absurd consequence of the Labour Court’s approach is its significant interference with the employee’s rights under other fundamental pieces of legislation aimed at protecting employees. The appellant draws our attention to the fact that many rights and benefits for employees established by the Act respecting labour standards depend upon a period of continuous service with one employer. An example of such a right is the recourse against unjust dismissal found in s. 124. Were the client of an agency to be considered the employer in the tripartite arrangement for the purposes of this legislation, the rights under this legislation which depend upon a given period of continuous service with one employer will be denied the employee or, at the very least, limited, given the relatively short duration of the temporary replacement.
142. At the same time, the employee may well work for the agency for a long enough period to establish these rights. The contractual employment relationship between the agency and the employee will generally continue through successive assignments with either the same client or different clients of the agency. As Gagnon, LeBel and Verge, supra, have observed, at pp. 62-63:
[translation] Subject to statutory, regulatory or contractual provisions to the contrary, the continuity of the employment relationship is not normally interrupted by a temporary break in the performance of work, which is usually characterized as a layoff. Although a layoff may amount to a dismissal, especially if it continues, it does not usually terminate the employment relationship; the performance of work is merely suspended until the employee is called back to work. Thus, an employment relationship may, in a fairly regular manner, involve successive periods of work separated by periods of annual, seasonal or other inactivity without the continuity of that relationship being interrupted.
In fact, the Act respecting labour standards expressly contemplates this type of contract of employment. Section 1(12) defines “uninterrupted service” for the purposes of this Act as
the uninterrupted period during which the employee is bound to the employer by a contract of employment, even if the performance of work has been interrupted without cancellation of the contract....
143. It would be irrational to qualify the client in a tripartite relationship as the employer for this regime, as to do so would deny the employees of the agency the very protection this legislation is intended to provide. This result was clearly rejected by Grenier J. in Vassart, supra. The Chief Justice acknowledges this problem, yet attempts to resolve it by holding that the employer need not be the same for all labour and employment statutes, particularly where these have different aims. In other words, the agency could be considered the employer for the purposes of ensuring minimum labour standards while the client would become the employer for the purposes of collective bargaining. Such an interpretation would also place the employee in an unworkable situation, however. Identifying the agency as the employer for the purposes of labour standards based on continuous service cannot protect these rights in a meaningful way for the employee where they have not been obtained pursuant to the collective agreement to which that employee is bound.
144. By way of example, while an employee may have worked long enough for the agency to earn the right under ss. 66 et seq. of the Act respecting labour standards to a certain period of paid holidays from the agency as employer, that employee’s obligations pursuant to the collective agreement, which will be based on a shorter period of employment, may mandate her continued attendance at work. Any condition of employment in the collective agreement which interferes with such a right will not violate the Act respecting employment standards as the client is not the employer under this model. In any event, given the shorter period of employment with the client, such a condition would not violate the Act as regards the client’s obligations as employer to that employee. The Labour Court decision thus results in denying basic legislated terms of employment for employees involved in tripartite employment arrangements, a consequence equally disturbing to those previously mentioned.
145. As I stated at the outset, the Labour Court is charged with overseeing the certification scheme which enables employee associations, usually unions, to bargain collectively on behalf of the employees in a particular workplace. The tribunal thus plays a very important role in this legislation aimed at regulating an employer’s inherent power over its employees. Nonetheless, it has used an interpretation of its enabling legislation which creates confusion for employees who wish to enforce important rights in the workplace, prevents these employees from benefitting, in a meaningful way, from collective bargaining, whether in the client’s workplace or with the agency, and interferes with their access to other rights and benefits in legislation which has the goal of protecting employees through enforcing minimum employment standards. This result arises from the simultaneous failure of the Labour Court to recognize the fundamental legal control of the employee by the agency in the circumstances of this appeal and placement of that employee within the legal regime of the collective agreement binding the City and its regular employees.
146. While the Labour Court has the broad jurisdiction to interpret its legislation and decide the question before it, even when this requires filling gaps and resolving ambiguities in statutes, this jurisdiction cannot extend to an interpretation which essentially ignores the fundamental requirement that an employer and an employee have actually agreed to enter a legal relationship of employment and brings results diametrically opposed to those intended by the Code and other pieces of labour legislation. Such a result is not only patently unreasonable, it is absurd. Moreover, as I have demonstrated, there is a straightforward solution to this problem, the test proposed in Coderre, supra, Vassart, supra, and by Deschamps J.A. in the Court of Appeal decision. Such a test avoids these absurd results while permitting the fulfilment of the fundamental objectives of the Code. For this reason, this Court must intervene to correct the error committed by the Labour Court in this case. The decision of the Labour Court cannot be sustained.
147. It is important to recall here that at no point has there been a finding or allegation that the City was inspired by anti-union intentions. Absent a policy-related concern of this type, the effect of the Labour Court’s decision is fundamentally to determine the conditions of employment governing the employee of an agency. Doctrine cited by both the appellant and the respondent supports the conclusion I reach in these circumstances. In discussing how best to determine the true employer in employment relationships such as the one at issue in this appeal, I. Christie, G. England and B. Cotter, Employment Law in Canada (2nd ed. 1993), provide the following commentary (at p. 36):
Of course, policy concerns play a dominant role in the approach of arbitrators and labour boards, and in the collective bargaining context it will often make good sense to hold the user [client of the agency] to be “employer” in order to combat union busting. However, different policies come in to play when the question is who should bear the burden of statutory and contractual benefits that depend on uninterrupted seniority with a single employer. To make the user the “employer” would impede the accrual of seniority for agency workers who are assigned relatively regularly to different users. It is submitted, therefore, that in only the clearest of situations should the agency worker be regarded as “employed” by anyone other than the agency for the purpose of statutory and contractual benefits. [Emphasis added.]
148. The present appeal certainly does not present “the clearest of situations”. On the contrary, as Deschamps J.A. concluded in this case at the Court of Appeal, the decision of the Labour Court brings results so absurd as to be at the very least patently unreasonable. For this reason, I cannot agree with the result reached by the Chief Justice in disposing of this appeal.
III. Conclusion and Disposition
149. The Labour Court was in error in that it did not apply the proper test in its interpretation of the Labour Code as regards a tripartite relationship involving an agency, its employee, and its client. This error is patently unreasonable because it brings about an absurd result. Consequently, I would allow the appeal, set aside the judgments of the Superior Court and the Court of Appeal, quash the decisions of the labour commissioner and Labour Court, and dismiss the Union’s request under s. 39 of the Labour Code, the whole with costs throughout.
Appeal dismissed with costs, L’Heureux‐Dubé J. dissenting.
Solicitors for the appellant: Bélanger Sauvé, Montreal.
Solicitor for the respondent: Pierre Gingras, Montreal.