Home > Resource Centre > Publications > Publication

On December 12, 2005, the Commission des lésions professionnelles ("CLP"), sitting as a bench of three commissioners (Marie Lamarre, Neuville Lacroix and Carmen Racine), handed down four important decisions on the question of the identification of the real employer in a tripartite relationship involving a personnel agency, a company that is the agency's client, and a group of workers. The rulings were based on similar reasons, but the outcomes of the four cases (Aliments Danac inc., Nostrano inc., Fondrémy inc. and Les viandes Guy Chevalier inc.) differed according to the specific facts present in each case.

More than 500 original files involving various personnel agencies were consolidated to form these cases and the proof and hearing took place over the period from January 22, 2002 to January 6, 2005.

In the course of an audit of the personnel agency sector, the Commission de la santé et de la sécurité du travail ("CSST") had found that the client companies were still the workers' real employers even though the total wages paid to them had been declared by the personnel agencies.

In the first two cases identified above, the CLP held that the client companies were the workers' real employers, while in the last two, it held that the personnel agency was in fact the employer of the workers in question.

The CLP began by affirming the legitimacy of personnel agencies. Acknowledging that they were a reality of the work world, the CLP noted that the use of such agencies could not be assumed, out of hand, to be a façade put up by the client companies to circumvent their obligations, and more specifically, avoid paying the contributions owed to the CSST. The objective sought in dealing with a personnel agency was not to save on CSST contributions, but rather to relieve the company of the burden of personnel management so that it could devote itself exclusively to its business operations. Accordingly, it could not be concluded, barring proof to that effect, that the personnel agency or the client company was in bad faith or that the structures put in place by them were illegal.

That said, the workers' real employer still had to be identified in each case, and section 5 of the Act respecting industrial accidents and occupational diseases did not exempt the personnel agency from making the necessary proof in that regard.

Thus the substantive issue consisted in determining who the real employer was. In fact, the sequence of events in the cases being reviewed by the CLP was generally as follows. The client company would sign a contract with a personnel agency in which the personnel agency took over responsibility for the client company's personnel. The client company would proceed to lay the workers off and an official of the personnel agency would meet with the workers and explain that they had the choice or leaving or staying on, and that those who stayed on would be hired by the agency and would sign a contract of employment with the agency. Thereafter, the agency, having become their employer, was in charge of discipline, wages and other working conditions. A personnel agency official who was on the premises of the client company served as a link between the hired out workers and the personnel agency. In the circumstances, the CSST auditors, focussing on the subordination relationship, employment continuity, hiring, remuneration, the contract and the various facts gathered, had concluded that, in all cases, the client companies were the real employers of the workers hired out by the personnel agencies.

The CLP noted that a CSST working document had indicated that the real employer should be determined on the basis of such factors as the regularity of work performed and the imposition of a schedule, the method of remuneration, the provision of a place of work or work tools, the ability to exert control over how the work is carried out, and the exercise of disciplinary power. However, the CLP went on to point out that the Supreme Court of Canada, in City of Pointe-Claire, [1997] 1 S.C.R. 1015, had concluded that the identification of the real employer should be considered from the perspective of the distinct object and specific purpose of the particular law concerned, even if that led to a certain inconsistency in the attribution of the status of employer for purposes of the different laws. Moreover, the criteria of control over the employees' day-to-day work and their integration into the business, while important, were too limited, and a more comprehensive approach was needed to the concept of legal subordination, encompassing a number of factors, namely, the selection process, hiring, discipline, training, evaluation, assignment of duties and the length of time the services are provided. The CLP further noted that the Act respecting industrial accidents and occupational diseases and the Labour Code contained different definitions of the terms "worker" and "employee".

In the CLP's view, it was clear that a contract for the hire of services did not have to be in writing. However, where there was a written contract, the identity of the parties and the purpose of the contract had to be examined and it was necessary to verify whether the contract was true to the reality of the situation or a screen designed to mask a different contractual relationship. It was also necessary to analyse what provision the contract made for the workers' remuneration and whether that situation reflected the actual relationship between the various parties involved.

Lastly, for purposes of determining which of the personnel agency and the client company should be attributed the status of the workers' employer, it was necessary to examine who was responsible for the selection process, hiring, training, discipline, evaluation, supervision and assignment of duties and to verify the degree to which the workers were integrated into the business, the whole with a view to identifying who, in the words of the Supreme Court, was "the party that exercised the greatest control over all aspects of the work."

Applying these criteria to the cases under review, in Aliments Danac inc. and Nostrano inc., it turned out that the personnel agency did not conduct any selection process and merely transferred the workers over. The managers of the client company went on to play an active role in subsequent recruitment initiatives, meeting candidates, being present when information was gathered and soliciting candidates directly. A manager at one of the client companies also became involved in matters related to working conditions, not just in connection with the cost associated with wage increases, which the CLP acknowledged might have been justified, but even offering his opinion on the individual increases the workers were seeking. The same manager approved the wage increases, gave instructions regarding the work to be performed and expressed his dissatisfaction when the work did not meet his standards, all of which was conduct indicative of an employer's role. Finally, the client companies were responsible for paying workers' expense accounts themselves.

On the other hand, in Fondrémy inc. and Les viandes Guy Chevalier inc., it was the personnel agency that handled the selection and hiring of workers from its own bank of candidates or from the bank generated from the job applications filed directly with the client companies, without any interference by the companies. The personnel agency was in charge of drawing up work schedules, compiling hours worked, preparing the payroll and distributing paycheques, granting vacation requests, setting working conditions, discipline and relations with third parties. In addition, the structure put in place was such that the personnel agency's workers were effectively shielded from dealing with the client companies. Working conditions, disciplinary action and, generally, supervision of the work were the domain of the personnel agency exclusively. The client companies did not interfere or intervene in labour relations issues and simply paid for the services provided to them. Accordingly, in these two cases, the personnel agencies were recognized as the real employers.

In the aftermath of the decision of the Supreme Court of Canada in City of Pointe-Claire, these decisions by the CLP have elucidated the criteria that are to be used for purposes of identifying the real employer. In these rulings, the CLP highlighted the distinctions to be made in light of the differences between the Act respecting industrial accidents and occupational diseases and the Labour Code and affirmed the legitimacy of using the services of personnel agencies, emphasizing that such agencies will be considered the workers' real employer where they are the party with the greatest control over all aspects of the work.

The purpose of this document is to provide information as to developments in the law. It does not contain a full analysis of the law nor does it constitute an opinion of Ogilvy Renault LLP or any member of the firm on the points of law discussed.

© Ogilvy Renault LLP 2006 - All Rights Reserved

 Back to Publications

Contacts

Lukasz Granosik
Montréal
514.847.4996
lgranosik@ogilvyrenault.com
Profile

Diane Lajeunesse
Montréal
514.847.4601
dlajeunesse@ogilvyrenault.com
Profile

Marc A. Tremblay
Montréal
514.847.4896
matremblay@ogilvyrenault.com
Profile

Jean Houle
Québec
418.640.5036
jhoule@ogilvyrenault.com
Profile

Jocelyn F. Rancourt
Québec
418.640.5003
jrancourt@ogilvyrenault.com
Profile