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Freight Forwarding Companies: Federal or Provincial Employment Regulation?

Whitten and Lublin | Jun 13, 2018

Companies offering strictly freight-forwarding services on a national basis serve to organize shipment countrywide by using modes of transportation that are not owned by the company themselves. Such companies simply coordinate the shipments of their customers through third-party carriers, opting for carriers that offer the most competitive shipping rates. In effect, neither the equipment used to transport the goods nor the goods themselves are owned by the company coordinating the shipment. Likewise, no assets owned by freight forwarding companies cross any provincial borders. However, this is a service that links the provinces through trade and commerce, which is typically under federal jurisdiction.

The jurisdictional question as it pertains to freight-forwarders was answered in Consolidated Fastfrate Inc. v. Western Canada Council of Teamsters (SCC 2009). The issue came down to the interpretation of the Constitution Act, 1867, which gives jurisdictions to the provinces over local works and undertakings except in works classified as “Lines of Steam or other Ships, Railways, Canals, Telegraphs, and other Works and Undertakings connecting the Province with any other or others of the Provinces, or extending beyond the Limits of the Province [s. 92 (10)]” Although Fastfrate (a freight forwarder) offered services that linked trade and commerce across multiple provinces, and that each location was dependent and interconnected with each other through their work, the distinction came down to the ownership of assets physically crossing provincial borders. Ultimately, the Supreme Court of Canada, in a majority decision, concluded that since Fastfrate did not own physical assets crossing borders, the company fell under the jurisdictions of each respective province in which they held offices.

What does this mean in an employment context?

Fright-forwarders are therefore regulated by provincial employment laws. The key difference is that, under federal laws, an employer cannot dismiss an employee without just cause (ie. for misconduct). Conversely, provincial laws allow for employers to dismiss an employee, so as long as there is adequate notice or payment equivalent to earnings over the length of the notice period. Further, severance provisions under provincial and federals laws also differ, so it is important to be aware of which provisions to follow. Failing to do so could possibly leave an employer liable for further damages if challenged.

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