Monday, May 01, 2006

Ontario arbitrator determines that administration of employment is not "commercial activity" for the purposes of PIPEDA

The Personal Information Protection and Electronic Documents Act is a messy, difficult to understand statute. It is not clearly drafted and lay people have a heck of a time trying to figure out what it means. It should not be a surprise that many lawyers have a hard time getting their heads around its requirements. For those who deal with the statute on a daily basis, there is a consensus on how it works and how it is to be interpreted. These interpretations are generally confirmed by the Commissioners who enforce the laws and the courts, when privacy issues come before them.

It remains surprising to see parties to litigation (and their counsel) making arguments that go completely against the consensus view. It should not be suprising when the Courts make decisions that, with all due respect, are completely wrong. (See, for example, The Canadian Privacy Law Blog: Courts and PIPEDA: Why the federal law does not apply in British Columbia. )

In a recent arbitral decision from Ontario, an arbitrator was faced with the argument that (i) PIPEDA applies to employee information in the provincially regulated private sector in Ontario and (ii) because of PIPEDA, an employer is prohibited from providing certain information to the union as required under the province's occupational health and safety legislation. The union (oddly) did not seriously dispute argument (i). The panel of the Ontario Labour Relations Board didn't agree with the employer and went farther than the union desired: it concluded that the collection of employee information in connection with the administration of the employment relationship is not "commercial activity" for the purposes of PIPEDA. This is critical since section 4(1) of PIPEDA dictates the circumstances under which the law applies:


4. (1) This Part applies to every organization in respect of personal information that

(a) the organization collects, uses or discloses in the course of commercial activities; or

(b) is about an employee of the organization and that the organization collects, uses or discloses in connection with the operation of a federal work, undertaking or business.

Except for employee information of federal works, undertakings and businesses, PIPEDA can only apply if ther personal information in question is collected, used or disclosed in connection withe commercial activities. The arbitration panel concluded:

Although the definition of commercial activity is quite broad and, as a result, subsection 4(1)(a) of PIPEDA would include the collection, use or disclosure by the company of the personal information of its employees’ for commercial purposes, where the employees’ personal information is being collected, used or disclosed for employment-related purposes, subsection 4(1)(a) does not apply. First, the collection, use or disclosure by an organization of the personal information of its employees solely for employment-related purposes cannot reasonably constitute a “commercial activity” under any logical interpretation of that phrase. The mere fact that an organization carries on a commercial activity cannot, on its own, render the collection, use or disclosure of employee personal information for employment-related purposes into a commercial activity. Furthermore, if subsection 4(1)(a) of PIPEDA is intended to include the employment-related collection, use or disclosure by an organization of the personal information of its employees, subsection 4(1)(b) of PIPEDA (under which Part 1 of PIPEDA applies to the personal information of the employees of federal works, undertakings or businesses) would be unnecessary. (See: Re: McKesson Canada and Teamsters Chemical, Energy and Allied Workers Union, Local 424, 136 L.A.C. (4th) 102, G.F. Luborsky).

This conclusion is in accord with the position embraced by most privacy law practitioners and may help to settle some still broadly-held misconceptions.

The case is International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers and its Local 736 v. E.S. Fox Limited, [2006] O.L.R.D. No. 107 (QL) and the full text is available online here:,736-v-ESFox.pdf

Thanks to the CUPE Local 1356 blog for the pointer to the case.

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