A 5-4 ruling says a distinct branch of a larger company can fall under federal jurisdiction when its work is integral to a federal undertaking

OTTAWA — LEGAL NEWS – The Supreme Court of Canada has ruled that 14 grain inspectors and graders in Montreal are governed by federal labour law because their work is integral to federally regulated grain elevators.

The 5-4 decision released Friday dismissed Quebec’s appeal and upheld rulings from the province’s labour tribunal, Superior Court and Court of Appeal. The immediate result is that Quebec’s Labour Code cannot be used to certify a union for the workers at SGS Canada Inc.’s Montreal agriculture branch.

This case could echo into Thunder Bay, Churchill and into British Columbia.

The case clarifies when a branch of a company that is not itself a federal undertaking can still come under federal labour jurisdiction. Labour relations normally belong to the provinces, but the Constitution gives Ottawa authority over certain industries and work closely tied to them.

A fact-specific test

SGS provides testing, inspection and certification services across Canada. Its Montreal agriculture branch works almost exclusively for six grain elevators along the St. Lawrence River. Those elevators are federally regulated.

Writing for the majority, Justice Andromache Karakatsanis said a branch can be assessed separately when its functions and operations are sufficiently distinct from the rest of the company. The court found that the Montreal branch was largely managed on its own, performed specialized grain work and served clients different from those of other SGS branches.

The branch did not directly operate the elevators, so direct federal jurisdiction did not apply. The majority instead found derivative federal jurisdiction: about 90 per cent of the branch’s work supported the elevators, and its inspection services were integral to their operation.

Four judges dissent

Justice Nicholas Kasirer dissented, joined by Chief Justice Richard Wagner and Justices Suzanne Côté and Michelle O’Bonsawin. The dissent would have allowed Quebec’s appeal. Justice Karakatsanis wrote for the majority, joined by Justices Malcolm Rowe, Sheilah Martin, Mahmud Jamal and Mary Moreau.

The ruling does not automatically move all contractors serving federally regulated businesses into the federal system. The court’s test depends on how distinct a branch is, how much of its work serves the federal undertaking and whether those services are essential or integral to that undertaking.

For unions, employers and labour boards, the decision provides a current framework for jurisdiction disputes involving specialized service companies. The result may be cited beyond the grain sector, but future cases will still turn on their own operational facts.

Source notes

• Supreme Court of Canada — Quebec (Attorney General) v. SGS Canada inc., Case in Brief — Decision and summary dated Nov. 6, 2026; accessed Nov. 7 at 5:02 a.m. EST.
• Supreme Court of Canada — Full decision, 2026 SCC 37 — Decision dated Nov. 6, 2026; accessed Nov. 7 at 5:02 a.m. EST.