Executive Summary: Key Legal and Evidentiary Issues

• Constitutional division of powers was central, focusing on whether Holland L.P.’s labour relations fell under federal derivative jurisdiction or remained within provincial authority.
• The evidentiary record concerning Holland’s flash-butt and thermite welding work for CN and CP was undisputed, and the case turned on how those accepted facts fit within the Tessier and Ramkey derivative jurisdiction framework.
• CN and CP’s operational dependence on Holland’s track welding services was assessed as infrastructure maintenance support rather than an integral part of the railways’ interprovincial transportation operations.
• The degree of integration between Holland’s employees and the railways’ own workforce, including supervision, control, and “on call” uptime obligations, was examined and found insufficient to displace the presumption of provincial jurisdiction.
• The prematurity issue was addressed, with the Court deciding that it could hear the judicial review even though one industrial certification application remained outstanding, because the relevant factual nexus and five certification outcomes were already final.
• The Divisional Court ultimately upheld the Ontario Labour Relations Board’s jurisdiction decision as correct on a standard of correctness review, dismissed Holland’s application for judicial review, and awarded $7,500 in costs against Holland in favour of the respondents.

Factual background and the nature of Holland’s business

Holland L.P. is a multinational company specializing in track welding and repair work. In Canada, its core business consists of maintaining and constructing railway track infrastructure, primarily for the two major federally regulated railways: Canadian National Railway (CN) and Canadian Pacific Railway (CP). More than 90 per cent of Holland’s Canadian revenue is derived from CN and CP contracts, although Holland also performs work for other, provincially regulated entities such as transit systems and smaller railways. Those non-CN/CP jobs typically account for less than ten per cent of its Canadian revenues and are contracted on a project- or location-specific basis without the same “uptime” commitments.

The key service provided by Holland to CN and CP is flash-butt welding, a process that uses electrical resistance technology to fuse lengths of rail into continuous welded rail. Holland uses a proprietary mobile flash-butt welding unit that travels along the track, enabling it to perform this work efficiently. Flash-butt welding is significantly faster, stronger and longer-lasting than thermite welding. A typical flash-butt weld can be completed in about seven minutes, compared with roughly an hour for a thermite weld. Flash-butt welds also allow faster train speeds and last about seven times longer than thermite welds, offering substantial operational advantages for the railways. Holland is the only company in Canada providing flash-butt welding services of this nature for CN and CP.

Alongside flash-butt welding, the industry also relies on thermite welding, which involves placing a form around a rail joint, pouring molten steel into the form, and allowing it to solidify and weld the pieces of rail together. Thermite welding is cheaper and remains necessary in remote or otherwise constrained locations where flash-butt equipment cannot practically operate. Several contractors, including Holland, perform thermite welding for CN and CP. Other thermite welding contractors are already bound by provincial collective agreements with the Labourers International Union of North America (LIUNA) and fall squarely under provincial labour jurisdiction.

Holland’s commercial arrangements with CN and CP are non-exclusive agreements with fixed terms of three to five years, which have generally been renewed. At one point, CN internalized flash-butt welding by purchasing Holland’s equipment and using its own employees, but later reversed course, selling the equipment back and ceasing to perform flash-butt welding itself. Since then, neither CN nor CP has done its own flash-butt welding; they rely on external service providers such as Holland. Under the current contracts, Holland must maintain a high “uptime” level—between 95 and 98 per cent availability. This means Holland must be “on call” and ready to respond to CN and CP’s track welding needs, and is paid for uptime even when its workers are not actively welding.

Work must be scheduled during track windows when trains are not operating. When CN or CP require work, they contact Holland’s sales managers, who coordinate with Holland’s operations team to assign crews and designate a foreperson. On site, Holland’s employees work alongside CN or CP personnel and sometimes other contractors. Overall job direction lies with a CN or CP foreman, but Holland’s employees remain under Holland’s own supervision and management. Holland provides daily reports, including data from its proprietary technology on weld performance and integrity. During seasonal shutdowns at CN and CP, Holland scales down operations correspondingly, although its limited work for other clients may continue, generally without uptime provisions.

The evidence before the Ontario Labour Relations Board (OLRB) and later the Divisional Court included an important factual contingency: if Holland ceased operating in Canada, CN and CP could either purchase the equipment and bring the work in-house again, engage another company capable of flash-butt welding (albeit likely outside Canada), or revert to extensive use of thermite welds performed by other contractors. The Board accepted there was at least one American company capable of flash-butt work, but that company had no operations in Canada.

The certification applications and the Board proceedings

The Labourers International Union of North America, Ontario Provincial District Council, brought six applications for certification to the OLRB to represent Holland’s employees in Ontario. Five of those were construction sector certifications, each covering different geographic “Board Areas” across the province, including Areas 8 and 21. The sixth application concerned a non-construction (industrial) group of Holland employees in the District of Algoma.

Before dealing with the merits of the union certification drives, the OLRB had to determine whether Holland’s labour relations were subject to federal or provincial jurisdiction. Holland argued that its employees should fall under derivative federal jurisdiction because their work was so closely tied to federally regulated interprovincial rail transportation that federal labour law should apply. The Union and the Board took the opposite view, arguing that Holland’s business was a provincially regulated construction and maintenance undertaking whose labour relations properly belonged in the provincial sphere.

In a 2021 interlocutory ruling (the “jurisdiction decision”), the OLRB held that Holland’s labour relations were governed by provincial, not federal, jurisdiction. Applying the presumption that labour relations are provincial and looking to the derivative federal jurisdiction doctrine, the Board concluded that Holland’s work supported the infrastructure of the railways but was not integrally bound to the core interprovincial transportation function of CN and CP. On that basis, the Board ruled that the six certification applications could proceed before it.

Holland first attempted to challenge the jurisdiction decision directly through a judicial review application to the Divisional Court in 2023. The Court, however, found that the challenge was premature because the OLRB had not yet decided the merits of the certification applications. The judicial review was dismissed without prejudice, leaving Holland free to renew its challenge once the Board had reached final decisions on the merits of those applications.

In July 2025, the OLRB issued its final certification decision. The Board dismissed three of the five construction-sector certification applications, but held that the Union was properly certified as the bargaining agent for Holland’s employees in Board Areas 8 and 21. The Board set out procedural directions for how the outstanding industrial certification application (covering the District of Algoma employees) was to be handled, but that application had not yet been fully adjudicated. Importantly, none of the parties challenged the Board’s reasoning on the merits of the certification decisions themselves, apart from the underlying jurisdictional question.

The renewed judicial review and the prematurity argument

Following the 2025 certification decision, Holland renewed its judicial review application. This time, the company focused solely on contesting the OLRB’s earlier jurisdiction decision, arguing that the Board had erred in concluding that Holland was subject to provincial rather than federal labour jurisdiction. Holland did not challenge the Board’s reasoning on any other aspects of the certification decisions.

The Union and the OLRB opposed judicial review on two fronts. First, they raised procedural prematurity, contending that because the industrial certification application remained undecided, the jurisdiction decision was still partly interlocutory and should not yet be judicially reviewed. They relied on recent Divisional Court authority, particularly Malekzadeh v. Ontario Labour Relations Board, in which the Court refused to entertain judicial review until all related proceedings before the Board had been resolved. Second, they argued in the alternative that, on the merits, the Board had correctly applied the constitutional derivative jurisdiction test and that Holland’s labour relations were indeed within provincial authority.

The Divisional Court decided to hear arguments on prematurity together with the merits. It distinguished Malekzadeh on the basis that in that case, the Board still had to decide a substantive duty of fair representation claim, an outstanding proceeding that could materially change the overall legal context. In Holland’s case, by contrast, five of the six certification applications had reached final outcomes, and no party disputed the Board’s findings or reasoning on those five decisions beyond the jurisdiction issue. The “underlying factual nexus” was fully set; waiting for the outcome of the industrial application would not meaningfully alter the record or the legal question.

The Court ultimately held that the application was not premature, because the certification decisions on five applications were final, the central facts were established, and no new material issues would arise from the remaining certification matter. Even if there had been some technical prematurity, the Court indicated it would exercise its discretion to hear the case. Counsel for Holland confirmed that any delay for the sixth decision would add nothing of substance, and the respondents did not seriously contest that. Accordingly, the Divisional Court proceeded to a full merits review of the jurisdiction decision.

The legal framework: presumption of provincial jurisdiction and derivative federal jurisdiction

At the core of the legal analysis was the constitutional division of powers under the Constitution Act, 1867, particularly the interaction between section 92(13) (provincial authority over property and civil rights, including labour relations) and section 92(10)(a), which places interprovincial undertakings such as railways under federal jurisdiction. Canadian law presumes that labour relations fall within provincial legislative authority, and that presumption can only be displaced in limited circumstances.

The leading Supreme Court of Canada decision Tessier Ltée v. Québec frames the inquiry in two main ways. First, where an employer itself operates a federal work, undertaking or business, its labour relations will fall under federal jurisdiction. Second, even where the employer is not directly a federal undertaking, federal jurisdiction may extend “derivatively” where the employer’s operations are so integrally connected to a federal undertaking that the provincial character of the business effectively disappears. This “derivative jurisdiction” test is applied cautiously because the federal power is exceptional and should not be extended beyond what is necessary to support the interprovincial or federal undertaking. The jurisprudence, including cases such as Westcoast Energy and subsequent appellate interpretations, stresses that derivative jurisdiction is narrow, fact-specific and multi-factorial.

The Ontario Court of Appeal’s decision in Ramkey Communications Inc. v. LIUNA further clarifies the analysis in a context analogous to Holland’s. In Ramkey, a contractor installed and maintained infrastructure for telecommunications companies. The Court held that the focus must be on how dependent the federal or federally regulated entity is on the particular contractor’s employees, and on whether those employees’ work is an integral part of the federal undertaking or merely supports its infrastructure. The proper lens is: to what extent is the effective performance of the federal undertaking dependent on these particular workers, and are they engaged in core operations or in ancillary infrastructure construction and maintenance?

Against that background, all parties accepted that CN and CP are interprovincial railways, clearly falling under federal jurisdiction. The central legal question was whether Holland’s workers, by virtue of their welding and track maintenance work, were so integrally bound up with the railways’ federal undertaking that their labour relations should be federally regulated as well.

Arguments advanced by Holland and the Board’s application of the test

Holland challenged the OLRB’s jurisdiction decision on several fronts. First, it argued that the Board had adopted an unduly narrow approach to derivative federal jurisdiction, effectively hollowing out the doctrine and ignoring the functional importance of its services. Holland emphasized that it is the only company in Canada capable of performing flash-butt welding for CN and CP and that its proprietary technology delivers faster, stronger and longer-lasting welds than thermite methods. In its view, the combination of high “uptime” obligations, heavy revenue dependence on CN and CP, and the practical importance of continuous welded rail made its operations functionally integral to the safe and efficient operation of the national rail network.

Second, Holland said the Board had improperly distinguished between the technology used (flash-butt vs. thermite) and the nature of the work, drawing what it characterized as an artificial line. Holland argued that, technologically, its services allowed CN and CP to maintain and operate their interprovincial transportation system, and that this should suffice to bring its workers within federal jurisdiction.

Third, Holland objected to the Board’s reliance on the Quebec Court of Appeal’s decision in Madysta Télécom, where derivative jurisdiction was denied for a contractor that did roughly similar volumes of work for multiple telecommunications companies. In Holland’s view, Madysta introduced a requirement that a contractor be integrated into a “single” federal undertaking to qualify for derivative jurisdiction, a requirement that Holland argued was unsupported and overly restrictive in the context of its work for both CN and CP.

The Board’s analysis, which the Divisional Court reviewed on a correctness standard, began from the orthodox presumption that labour relations are provincial. It accepted that CN and CP are federally regulated interprovincial undertakings but concluded that Holland itself was not. The Board then carefully applied the Tessier and Ramkey framework, looking at the functional relationship between Holland’s services and the railways’ operations.

Crucially, the Board characterized Holland’s activities as maintenance and construction work on railway infrastructure, not as part of the core transportation operation itself. While the quality and speed of flash-butt welds were clearly beneficial to CN and CP, the Board reasoned that the fundamental service was still infrastructure maintenance—akin to other construction and maintenance performed by provincially regulated contractors. The Board pointed out that other companies performing thermite welding for CN and CP were undisputedly under provincial jurisdiction and that CN had previously brought flash-butt welding in-house, demonstrating that this work could be internalized by the railways if necessary.

From the perspective of integration and control, the Board noted that Holland’s workers remained under Holland’s supervision. On job sites, overall direction might come from a CN or CP foreman, but Holland’s employees were not blended into the railways’ workforce to the extent seen in cases where derivative jurisdiction has been recognized. Nor were they supervised directly by railway supervisors in a way that erased the independence of the contractor’s business. The Board contrasted this with cases such as R.F. Welch and Murrin Construction, where contractors’ employees were more deeply embedded in railway operations and supervision, justifying a federal classification. The Board treated Holland’s high uptime requirements and business dependence on CN and CP as relevant but not decisive; they were part of a commercial arrangement rather than proof that Holland’s workforce had lost its separate provincial character.

On Madysta, the Board treated the Quebec Court of Appeal’s reasoning as one factor among many. Madysta suggested that for derivative jurisdiction to apply, the local entity should be integrated into a single federal undertaking, not a sector or group of companies. Holland did roughly comparable levels of work for both CN and CP over the relevant period. The Board regarded this as one more indication that Holland was not so integrated into a single federal enterprise that it had ceased to be a distinct provincially oriented construction and maintenance business.

The Divisional Court’s analysis and ultimate ruling

The Divisional Court agreed that the applicable standard of review on this constitutional division of powers issue was correctness. As set out in Vavilov, questions of constitutional jurisdiction and division of powers engage the rule of law and require the reviewing court to reach its own conclusion on the matter, though the administrative decision-maker’s reasons are still an important part of the analysis.

The Court accepted that the OLRB had properly stated the governing legal test from Tessier and Ramkey and that the parties were essentially aligned on the principles; the dispute was about how those principles should be applied to Holland’s specific factual situation. In addressing Holland’s claim that the Board’s approach was too narrow and effectively emptied derivative jurisdiction of content, the Court made two main points.

First, the Court emphasized that derivative jurisdiction is deliberately narrow and exceptional. Extending federal labour jurisdiction to all maintenance and construction work associated with a federal undertaking would overshoot the “purpose that animates” the federal power. The case law consistently limits derivative jurisdiction to situations where the contractor’s operations are functionally connected to the federal undertaking in such an integral way that they lose their distinct provincial identity. Work on infrastructure—such as the installation, maintenance or upgrading of facilities that the federal undertaking uses—will often remain provincial unless it forms a core operational component, similar to loading and unloading railcars as part of an interprovincial journey.

Second, the Court focused on the particular relationship between Holland and the railways. While acknowledging that Holland is “on call” and that its services are highly specialized, the Court agreed with the Board that CN and CP did not directly supervise Holland’s employees in a manner that would integrate them into the railways’ ongoing operations. Holland remained an independent contractor, with its own employees and management structure, providing infrastructure maintenance services. The Court accepted that other contractors performed similar thermite welding services under provincial jurisdiction and that CN had previously internalized flash-butt welding. These facts supported the conclusion that Holland’s work, while important, was not constitutionally vital to the railways’ interprovincial operations in the strict sense required for derivative jurisdiction.

The Court distinguished cases relied on by Holland, such as the British Columbia decisions in R.F. Welch and Murrin Construction. In Welch, the employees were effectively under the direct control of railway supervisors and deeply integrated into the railway’s operations, justifying a federal classification. Murrin was factually closer but still involved a higher degree of dependence and integration than what the evidence showed in Holland’s relationship with CN and CP. Likewise, the Court endorsed the Board’s use of Madysta as a valid, though not determinative, factor. The fact that Holland did substantial work for two different federally regulated railways, rather than being embedded in a single enterprise, underscored its distinct, contractor-style provincial identity.

Overall, the Divisional Court concluded that the Board had conducted a “holistic” assessment, considering factors from both the perspective of the federal undertakings (CN and CP) and Holland’s business. It agreed that the effective performance of the railways was not so dependent on Holland’s employees that their work could be characterized as an integral part of the core federal undertaking. The welding services, while beneficial and in some respects unique, remained in the realm of infrastructure construction and maintenance, a classic domain of provincial labour jurisdiction.

As a result, the Court held that the OLRB’s jurisdiction decision was correct. Holland’s employees fall under provincial labour relations jurisdiction, and the Board was entitled to hear and decide the union certification applications.

Outcome and monetary consequences

In its disposition, the Divisional Court dismissed Holland L.P.’s application for judicial review and upheld the OLRB’s decision that Holland is provincially regulated for labour relations purposes. This confirmed that LIUNA’s certification as bargaining agent for Holland employees in Board Areas 8 and 21 stands and that the Board may continue to exercise its jurisdiction over Holland’s labour relations, including the outstanding industrial certification application. As between the parties, the successful respondents were the Union (Labourers International Union of North America, Ontario Provincial District Council) and the Ontario Labour Relations Board. The Court ordered Holland to pay total costs of $7,500, all-inclusive, in favour of the respondents, and there were no additional damages or monetary awards beyond that costs order.