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Jurisdictional puzzle: Nova Scotia worker’s termination sparks legal debate about federally versus provincially regulated employers

by HR Law Canada

Sometimes the line between federally regulated and provincially regulated businesses can be a little blurry. That’s what happened recently in a case involving a worker in Nova Scotia who was terminated for non-compliance with his employer’s mandatory vaccination policy.

The worker, S.B., who had worked for Canadian Maritime Engineering for four decades, was fired on Sept. 12, 2021, after failing to comply with the company’s COVID-19 vaccination policy.

At the heart of the dispute is CME’s assertion that it had just cause to terminate S.B.’s employment due to his refusal to comply with its vaccination policy, deemed an act of wilful misconduct or neglect of duty. In contrast, S.B. has contested his dismissal, arguing that it was unjustified and seeking compensation under sections 71 and 72 of the Labour Standards Code.

His complaint, initially filed with the Nova Scotia Labour Standards Division, led to a decision favouring him, awarding him $64,372.54 (less statutory deductions) for wrongful termination.

Employer argued it was under federal jurisdiction

However, CME has challenged this decision, arguing that the matter falls under federal jurisdiction due to its operations in the shipping and navigation industry, and thus should be governed by the Canada Labour Code.

The company’s appeal emphasizes the jurisdictional ambiguity, suggesting that as a federal undertaking, provincial labour standards should not apply.

The Nova Scotia Labour Board, tasked with resolving this jurisdictional dispute, has noted that the issue hinges on whether CME’s operations, particularly its ship repair and manufacturing business, fall within the scope of federal labour relations authority.

Labour and employment matters generally fall under provincial jurisdiction unless they pertain to industries like navigation and shipping, which are typically considered federal domains.

During the proceedings, it was revealed that CME is involved in a variety of services beyond ship repair, expanding into sectors such as oil and gas, mining, power generation, and national defense. This diversification complicates the determination of the company’s primary jurisdiction.

But the Board noted that, beyond some statements from the company’s website, it did not have any “documents, details, or submissions regarding the activities of CME, the scope of work of its employees, or the extent of any operations of CME that may be unrelated to navigation and shipping.”

CME falls under provincial jurisdiction: Board

In the absence of conclusive evidence delineating CME’s jurisdictional standing, the Labour Board ruled that the matter remains within provincial jurisdiction.

“SinceI am unable to determine that the matter falls under an exception that would bring it under federal jurisdiction, I find that the Board has jurisdiction to deal with the Appeal,” it said.

It also noted that, while it wasn’t determinative, CME has been involved in a number of reported matters before the Board.

For more information, see Canadian Maritime Engineering Limited v Baker, 2024 NSLB 17 (CanLII).

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