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In the recent case Canada (Attorney General) v. Munsee-Delaware Nation, the Federal Court was asked to review an adjudicator’s decision that the employment relations of Indian Act bands are provincially-regulated. Until 2012, the Four B Manufacturing decision provided the test to be applied when determining whether an Indigenous organization’s employment relations were federally or provincially regulated. In its first decision on employment law in the aboriginal context since the 1979 Four B Manufacturing case, the Supreme Court has once again changed the legal landscape.

In NIL/TU,O Child and Family Services Society v. B.C. Government and Service Employees’ Union from 2010, the Supreme Court of Canada reiterated that labour relations are presumptively a provincial matter. The presumption can be displaced by conducting a two-step test. The first step, the “functional test”, looks at the nature, operations and habitual activities of the entity to determine if it is a federal undertaking. If the “functional test” is inconclusive, then the court will proceed to the second step, and ask if the provincial regulation of that entity’s labour relations would impair the federal head of power.

The NIL/TU,O decision taught us that it is necessary to consider the funding, composition and the usual activities and operations of an entity when determining whether its employment relations are federally or provincially regulated.

It was on the basis of the two-step test that the Federal Adjudicator in Munsee-Delaware Nation determined that the First Nation’s employment relations were provincially regulated. This decision was appealed to the Federal Court.

The Federal Court found that the Supreme Court did not discard the principles set out in Four B Manufacturing. In fact, the Court often refers to the Four B Manufacturing test in the NIL/TU,O decision.

Furthermore, the Federal Court distinguished the present matter from NIL/TU,O, which concerned labour relations of aboriginal entities as opposed to bands established under the Indian Act. The Court found that the Federal Court of Appeal’s 1981 decision Francis v. Canada Labour Relations Board was still good law and had not been overruled by NIL/TU,O. This decision analysed the involvement of Indian Act bands and their councils in the administration of band affairs, and the overall purpose of band employees’ functions aimed at the status, rights and privileges of the band members.

As such, the Federal Court determined that the employment relations of the Munsee-Delaware Nation were federally regulated. The Federal Adjudicator had mischaracterized the nature of the habitual activities and operations of the band by failing to consider the core purpose and nature of those activities and operations; namely, to ensure the proper administration of the band and its programs and services. The adjudicator erred by restricting the analysis to the type of services provided by the band and not the purpose or core of those services.

This decision illustrates the importance of understanding the fundamental and habitual activities carried out by an aboriginal organization when applying the NIL/TU,O test.


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This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2021 Nelligan O’Brien Payne LLP.

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