Working for a federally regulated business does not automatically make a contractor’s employees federally regulated. But the relationship between the operations can cross that constitutional line.
In Quebec (Attorney General) v. SGS Canada inc., 2026 SCC 37, the Supreme Court of Canada ruled 5-4 that federal labour jurisdiction applies to 14 inspectors and graders in SGS’s Montréal branch. The November 6 decision concerned employees serving federally regulated grain elevators.
SGS did not operate those elevators. The majority instead applied derivative federal jurisdiction: the branch’s services were integral to the federal operations and represented a significant part of its own business.
The majority also treated the Montréal branch separately from the larger company because its functions and operations were sufficiently distinct. Quebec’s labour tribunal therefore could not certify the proposed bargaining unit under the provincial Labour Code. Four judges would have allowed Quebec’s appeal.
For employers and unions, the practical question extends beyond the client list. Which operation is being assessed? How independently does it function? What work does it perform, and how closely does that work connect to the federal undertaking?
Those questions should be addressed with operational evidence before assuming which certification regime applies.
The constitutional answer may depend on the branch doing the work - not simply the company signing the contract.
Sources: Supreme Court case summary; Judgment announcement; Full judgment; Supplied Law360 index - a general index, not an article-specific source.
Verification scope: The analysis above follows the Court’s official summary; it does not attribute additional reasoning to the dissent.