Citation: 2012 TCC 97
Date: 20120327
Docket: 2011-2079(EI)
BETWEEN:
SHIRAZ
VIRANI,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Woods J.
[1]
Shiraz Virani was employed by the
Lax Kw’alaams Indian Band (the “Employer”) as Director of Finance for the
period from December 10, 2008 to May 11, 2009. His remuneration was $90,000 per
annum, plus benefits.
[2]
After being dismissed following a
probationary period, Mr. Virani applied for benefits under the Employment
Insurance Act. The application was denied on the ground that Mr. Virani
only had 623 hours of insurable employment. A minimum of 910 hours are required
to qualify for benefits.
[3]
Mr. Virani appeals from this
decision and submits that he had 1,089 hours of insurable employment with the
Employer.
[4]
Mr. Virani testified on his own
behalf at the hearing. Wayne Drury, who had hired Mr. Virani and was the
Administrator of the Employer, was called as a witness by the Minister.
Legislative scheme
[5]
The
relevant legislative scheme is set out in sections 6(3) and 55 of the Employment
Insurance Act and section 10 of the Employment Insurance Regulations.
These provisions are reproduced below.
Employment Insurance Act
6. (3) For the purposes of this Part, the
number of hours of insurable employment that a claimant has in any period shall
be established as provided under section 55, subject to any regulations made
under paragraph 54(z.1) allocating the hours to the claimant’s qualifying
period.
55. (1) The Commission may, with the
approval of the Governor in Council, make regulations for establishing how many
hours of insurable employment a person has, including regulations providing
that persons whose earnings are not paid on an hourly basis are deemed to have
hours of insurable employment as established in accordance with the
regulations.
(2) If the Commission considers that it
is not possible to apply the provisions of the regulations, it may authorize an
alternative method of establishing how many hours of insurable employment a
person has.
(3) The Commission may at any time
alter the authorized method or rescind the authorization, subject to any
conditions that it considers appropriate.
(4) The Commission may enter into
agreements with employers or employees to provide for alternative methods of
establishing how many hours of insurable employment persons have and the
Commission may at any time rescind the agreements.
Employment Insurance Regulations
10. (1) Where a person's
earnings are not paid on an hourly basis but the employer provides evidence of
the number of hours that the person actually worked in the period of employment
and for which the person was remunerated, the person is deemed to have worked
that number of hours in insurable employment.
(2) Except where subsection (1) and
section 9.1 apply, if the employer cannot establish with certainty the actual
number of hours of work performed by a worker or by a group of workers and for
which they were remunerated, the employer and the worker or group of workers
may, subject to subsection (3) and as is reasonable in the circumstances, agree
on the number of hours of work that would normally be required to gain the
earnings referred to in subsection (1), and, where they do so, each worker is
deemed to have worked that number of hours in insurable employment.
(3) Where the number of hours
agreed to by the employer and the worker or group of workers under subsection
(2) is not reasonable or no agreement can be reached, each worker is deemed to
have worked the number of hours in insurable employment established by the
Minister of National Revenue, based on an examination of the terms and conditions
of the employment and a comparison with the number of hours normally worked by
workers performing similar tasks or functions in similar occupations and
industries.
(4) Except where subsection (1) and
section 9.1 apply, where a person's actual hours of insurable employment in the
period of employment are not known or ascertainable by the employer, the
person, subject to subsection (5), is deemed to have worked, during the period
of employment, the number of hours in insurable employment obtained by dividing
the total earnings for the period of employment by the minimum wage applicable,
on January 1 of the year in which the earnings were payable, in the province
where the work was performed.
(5) In the absence of evidence
indicating that overtime or excess hours were worked, the maximum number of
hours of insurable employment which a person is deemed to have worked where the
number of hours is calculated in accordance with subsection (4) is seven hours
per day up to an overall maximum of 35 hours per week.
(6) Subsections (1) to (5) are
subject to section 10.1.
Analysis
[6]
Mr. Virani’s employment as
Director of Finance was a management position for which he was paid on the
basis of an annual salary. His regular hours of work coincided with office hours,
which were seven hours per day.
[7]
The Employer did not expect that a
significant amount of overtime would be required. However, the contract of
employment made it clear that, since it was a management position, Mr. Virani
was required to work overtime as necessary to fulfill his duties.
[8]
The Minister submits that s. 10(3)
of the Employment Insurance Regulations is applicable and that the hours
of insurable employment are deemed to be as established by the Minister. The
Minister determined that there were 623 insurable hours, based on the
Employer’s Record of Employment and on the assumption that significant overtime
was not required or expected.
[9]
Mr. Virani submits that he had
over 1,000 hours of insurable employment. He took no view as to which legislative
provision should apply, leaving this determination in the hands of the Court.
[10]
The problem that I have with the
Minister’s position is that the contract of employment makes it clear that Mr.
Virani was required to work overtime, even significant overtime, if this was
necessary to fulfill his duties. The Employer may not have contemplated that
significant overtime was necessary, but it was clear that overtime was expected
if the duties required it.
[11]
The circumstances were that Mr.
Virani had just started work with the Employer and he had been given a list of
projects that he was going to be working on.
[12]
It is reasonable to expect that
many extra hours might be required for Mr. Virani to get up to speed
during the initial months on the job. Mr. Virani testified that this was the case. He gave detailed evidence
of the challenges that he faced and stated that he worked many overtime hours
trying to understand complex issues with several of the projects that he was
expected to handle.
[13]
Mr. Drury, on the other
hand, testified that Mr. Virani only worked on one project. I am sure this
reflects Mr. Drury’s state of knowledge. However, Mr. Drury likely would
have no way of knowing the extent of the work that Mr. Virani was actually
doing because he was not in close contact with him.
[14]
Mr. Drury did not live
in the same location as Mr. Virani and he only occasionally visited the work
site. In addition, it is relatively clear from the evidence that the employment
relationship went sour almost from the beginning. Although I did not find all
of Mr. Virani’s testimony to be persuasive, I accept his testimony that he
worked without much guidance from Dr. Drury.
[15]
The respondent submits
that Mr. Virani did not work much overtime because, according to Mr. Drury, Mr.
Virani did not have an office key or the security code.
[16]
This testimony was
challenged by Mr. Virani, but even if Mr. Virani did not have a key or access
code, it cannot be inferred that he did not work significant overtime. Mr.
Virani introduced evidence in the form of emails sent outside office hours that
indicated that he did work when the office was closed.
[17]
Based on the evidence
as a whole, I would conclude that the Employer did not know, and could not
ascertain, the hours that Mr. Virani actually worked and for which he was
compensated.
[18]
Subsection 10(4) of the
Regulations applies in these circumstances, and likely gives a result
that is more favourable to Mr. Virani than I would have determined based on the
evidence presented as to actual hours worked.
[19]
As for the application
of s. 10(3), I agree with the reasoning of Boyle J. in Mackenzie v
MNR, 2011 TCC 199 that there is
ambiguity as to whether s. 10(3) or (4) takes precedence in a case such as
this. I agree that there is no good reason to prefer the result that is less
favourable to Mr. Virani and that s. 10(4) should therefore be applied.
[20]
In the result, the appeal will be
allowed, and the decision of the Minister will be varied on the basis that
insurable hours should be determined in accordance with section 10(4) of the Regulations.
[21]
Each party shall bear their own
costs.
Signed at Toronto, Ontario this 27th day of March 2012.
“J. Woods”
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