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09 October 2019
Ontario's Divisional Court recently found that Rouge River Farms Inc's employees are exempt from the overtime provisions of the Employment Standards Act 2000.(1) In so doing, the court overturned the Ontario Labour Relations Board's decision that Rouge River's employees were entitled to overtime pay because – the board found – they did not work on a farm and their work did not directly relate to the primary production of an agricultural product. Specifically, the court disagreed with the board's conclusion that Rouge River did not fall within the farm worker exemption provided by Section 2(2) of Regulation 285/01 (the farm exemption). In a rare move, the court substituted its own decision for that of the board, ruling that the only reasonable conclusion was that the farm exemption should apply to Rouge River.
The court's decision is now the leading authority on the farm exemption. It provides critical clarity to the farming community, which often relies on overtime work to produce agricultural products. It also provides guidance on the interpretation of employment standards legislation across Canada and the availability of a substituted decision as a remedy on judicial review applications.
Rouge River is a family farm that grows sweetcorn.
The dispute began after an employment standards officer conducted a proactive inspection of Rouge River's centralised facility. The centralised facility was used exclusively for post-harvest production and was located on a tract of land which was separate from the land on which the sweetcorn was grown. To perform their work, many Rouge River employees moved between the cornfields and the centralised facility.
The farm exemption applies if:
The employment standards officer concluded that the centralised facility was not a farm and issued a compliance order.
Rouge River challenged the order before the board. The director of employment standards defended the order. The board found that the farm exemption did not apply to Rouge River's employees at the centralised facility on the basis of a new 'double nexus' test that called for a consideration of a "constellation of factors" to determine whether the farm exemption applies.
The court overturned the board's decision, finding that the centralised facility "is a farm and those who are working there are employed in activities that are directly related to the primary production of sweet corn".
The court confirmed that there is a single statutory interpretation approach. It requires words to be interpreted contextually in accordance with their plain and ordinary meaning in light of the legislation's purpose.
Interpreting the farm exemption requires a balance between the purpose of the Employment Standards Act, which establishes minimum employment standards, with the purpose of Regulation 285/01, which identifies circumstances where the minimum standards do not apply. The court found the board's interpretation of the farm exemption unreasonable because it did not balance these two purposes.
Notably, the director presented no evidence at the hearing before the board. Conversely, Rouge River presented expert evidence from Dr Frank Ingratta, a former Ontario deputy minister of agriculture, food and rural affairs, and called two witnesses to describe the farm's history, its employees and its sweetcorn production. The court found the board's interpretation of the farm exemption unreasonable because the board had disregarded, without any explanation, this unchallenged evidence.
What is a farm?
Since the word 'farm' was neither defined in the legislation nor previously interpreted by case law, Ingratta defined a 'farm' as an enterprise that performs all of the functions involved in the production of plant and animal products. He expressly stated that a farm includes tracts of land where post-harvest work is conducted. Therefore, Rouge River argued that the centralised facility was part of its enterprise, all of which was a farm.
The director offered a narrower definition, contending that a 'farm' is a tract of land used to grow agricultural products. The centralised facility was not a farm because it was located on a tract of land separate from the growing land. The board concluded that a tract of land is a farm if it has a nexus or connection to the location where the agricultural product is grown.
The court found the board's interpretation of a farm unreasonable. Specifically, the board had disregarded Ingratta's unchallenged expert evidence that Ontario farms commonly operate on non-contiguous tracts of land and sometimes locate aspects of post-harvest primary production on non-growing land. Further, the board's interpretation depended solely on where the employees had been standing while doing work, even though the work itself was the same. Finally, the board's interpretation imposed significant record-keeping challenges on employers that were required to track where their employees were working every day.
What does "directly related to primary production" mean?
Relying on a 2009 decision,(3) which interpreted the requirement that the work directly relate to primary production, Rouge River argued that the farm exemption should apply to farms where the primary production process is seamlessly integrated, regardless of where the agricultural product is grown. To that end, Rouge River led extensive evidence about its operations. Ingratta also stated that in Ontario, aspects of post-harvest production are commonly geographically distinct from the land on which the agricultural product is grown.
The director argued that the farm exemption applies only if the work is being done at the physical location where the agricultural product is grown. Considering a constellation of factors, the director also required an employer to demonstrate a nexus between the work performed and the agricultural product. The board accepted the director's interpretation.
The court found the board's interpretation unreasonable. Among other things, the board had ignored important contextual evidence led by Ingratta and the other witnesses, relied on case law for a proposition that actually contradicted the board's findings in that decision and chose an interpretation that was not easily understood by the farmers affected by the farm exemption.
In exceptional circumstances, a court on an application for a judicial review may substitute its own decision for that of a tribunal rather than return the matter for redetermination. This happens where there is only one possible acceptable outcome that is defensible in respect of the facts and law. In this case, the court concluded that the farm exemption applied to Rouge River.
This decision confirms important principles applicable to the interpretation of employment standards legislation. First, the court endorsed a common-sense interpretive approach that must consider the real word context in which employers and employees work. Second, administrative decision makers must interpret employment standards legislation so that it is easily understood by those it applies to, "particularly so that employers can avoid inadvertently running afoul of the statute". An interpretation that creates uncertainty because it is confusing, overly complex, uses vague terms or poses significant challenges in record keeping may be unreasonable.
For further information on this topic please contact John DR Craig, Jackie VanDerMeulen or Tala Khoury at Fasken by telephone (+1 416 366 8381) or email (email@example.com, firstname.lastname@example.org or email@example.com). The Fasken website can be accessed at www.fasken.com.
(1) Ontario Superior Court of Justice, Rouge River Farms inc v Director of Employment Standards  ONSC 3498 (CanLII), Online.
(2) Subject to Sections 24, 25, 25.1, 26 and 27 of this regulation, Parts VII, VII.1, VIII, IX, X and XI of the act do not apply to a person employed on a farm whose employment is directly related to the primary production of eggs, milk, grain, seeds, fruit, vegetables, maple products, honey, tobacco, herbs, pigs, cattle, sheep, goats, poultry, deer, elk, ratites, bison, rabbits, game birds, wild boar and cultured fish.
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John DR Craig