Date: 20021220
Dockets: 2001-3756(EI)
2001-3757(EI)
BETWEEN:
STEFAN REID,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Bowman, A.C.J.
[1] These appeals are from two
decisions of the Minister of National Revenue dated July 18,
2001. These decisions were that the appellant, a football player,
was employed in insurable employment
(a) from May 11, 1996 to
February 15, 1997 with insurable earnings of $41,400 in the
period January 1, 1997 to February 15, 1997 and
140 insurable hours;
(b) from June 7, 1997 to
February 15, 1999 with insurable earnings of $91,397 and
1,700 insurable hours in the period.
[2] The appellant's employer,
whatever may have been the period when he was employed or the
number of insurable hours, was The Montreal Alouettes Football
Club (1996) Inc. until late 1996, and, after it went bankrupt,
9032-9756 Québec Inc., both of which operated under the
name of The Montreal Football Club (the "Club"). I
shall refer to the employer as the Club.
[3] The appellant's position is
that his periods of insurable employment in 1996, 1997 and 1998
ended on November 18, November 3 and November 15
respectively.
[4] The question can be stated
briefly. Mr. Reid plays football for the Club. His active
engagement is from late May or early June in each year when he
attends training camp until some time in November when the
football season is over. When he stops playing in November
depends, of course, on whether his team makes it to the Grey Cup.
When the season is over he goes back to British Columbia where he
looks for other work. He is not under the control of the Club
after the football season ends and he is free to work at anything
else that he chooses except that he may not play football for any
other football club.
[5] It is not contested that during
the period of employment, whatever that turns out to be, he was
engaged under a contract of service rather than a contract for
services. Both parties agree he was an employee, not an
independent contractor.
[6] Exhibit A-1 is a document
prepared by the appellant and it sets out the average Canadian
Football League schedule. It is accepted by the respondent as
accurate and it is applicable to each of the three years in
question. It reads:
CFL Seasonal Schedule
The CFL season consists of 18 regular season games and two
pre-season games. In addition, there is the potential of three
play-off games. Each regular season game is played on average of
one game per week. Pre-season games are held within the
three-week training camp period.
Pre-season consists of 18 days of daily practices. 10 days of
two 2.5 hr practices plus 3 hours of meetings. 8 days of one 2.5
hr practice plus 3 hours of meetings.
- 10 days @ 8 hours per day = 80 hours
- 7 days @ 5.5 hours per day = 38.5 hours
- 1 day of travel and practice = 8.5 hours
-
TOTAL
= 127 hours
Regular season consists of 18 games. Games are played on
average, once a week. A regular workweek consists of 5 workdays
of 4.5 hrs per day.
Mandatory practice times
- 5 days @ 4.5 hrs/day = approx 22.5 hrs/week
- 9 travel days for road games average 5 hours travel + 3.5
hours practice = 8.5 hours (8.5-4.5 = 4 hours times 9 games = 36
additional hours per regular season)
- 22.5 hrs for 18 weeks = 405 + 36 = approx 441 hours
Additional work
- 3 times per week - 2 hours per day for injury treatment
and/or weight and cardio training = 6 hours for 18 weeks = 108
hours
- Compulsory team promotions:
￮ Team introduction = 2 hours
￮ Blood drive = 2 hours
￮ Gold tournament = 8 hours
￮ Total promo work = 12 hours
- Total additional work = 120 hours
Total regular season = approx 561 hours
Play-off is a three-week work period. Eastern Championship
Game is a two-week work period.
- 22.5 hrs for 2 weeks = approx 45 hrs
- 3 times per week - 2 hours per day for injury treatment
and/or weight and cardio training = 6 hours for 2 weeks = 12
hours
- Total play-off = approx 57 hours
Total hours worked through average CFL season:
-
Pre-season
127
- Regular
season
561
-
Post-season
57
-----------------------------------
Total
approx 745 hours
[7] He was paid 18 instalments of
his salary over the course of the season. Clauses 1, 2 and 3
of the CFL standard player contract, which the parties agreed
governed the relations between the appellant and the Club during
the relevant periods, read as follows.
1. The term of
this contract shall be from the date of execution hereof until
the 15th day of February following the close of the football
season commencing in 19__, subject however to the right of prior
termination as specified herein.
2. The Player
agrees that during the term of this Contract he will play
football and will engage in activities related to football only
for the Club and will play for the Club in two Pre-Season games,
and eighteen (18) regular season games and Canadian Football
League playoff games and any other game approved by the Canadian
Football League Players' Association; and the Club, subject
to the provisions hereof, agrees during such period to employ the
Player as a skilled football Player. The Player agrees during the
term of this Contract to report promptly for the Club's
training sessions and at the Club's directions to participate
in all practice sessions.
3. For the
Player's services as a skilled football Player during the
term of this contract, and for his agreement not to play
football, or engage in activities related to football, for any
other person, firm, Club or corporation during the term of this
contract and for the option hereinafter set forth giving the Club
the right to renew this contract and for the other undertakings
of the Player herein, the Club promises to pay the Player the sum
of $ Canadian Dollars to be
payable as follows:
100% percent of said sum to be divided into eighteen (18)
equal instalments and paid to the Player within forth-eight (48)
hours of each regular season game whenever the Club schedule
permits it to be practicable. It is understood between the
parties hereto that payment to the Player by the Club for League
Playoff Games will be made as hereinafter provided.
[8] The appellant claimed employment
insurance benefits on the basis that his period of employment
ended in November when the football season ended and when the
Club stopped paying him and when he was free to seek other work.
The respondent's position is that the appellant was employed
by the Club during the period up to February 15 because the
contract specifically provides that its term was from the date of
execution (generally the spring of the particular year) until
February 15 of the following year.
[9] The record of employment
("ROE") for 1996 states that the appellant's first
day of work was June 1, 1996 and the last day worked was
November 17, 1996. The ROE for 1997 states the first day
worked to be May 31, 1997 and the last day for which he was
paid to be November 2, 1997. For 1998 the first and last
days shown are July 1, 1998 to November 15, 1998.
[10] The contract for 1996 was originally
with the Ottawa Rough Riders but it seems the appellant was
traded to Montréal and the contract was assumed by the
Club. The contract in Exhibit R-1 was dated on May 11,
1995, but the preamble to an addendum dated June 5, 1997
reads as follows.
ADDENDUM: TO THE 1996 C.F.L. STANDARD PLAYER CONTRACT (#0000)
BETWEEN THE OTTAWA ROUGH RIDERS FOOTBALL CLUB INC. (THAT HAS BEEN
ASSUMED BY THE MONTREAL ALOUETTE FOOTBALL CLUB) AND STEFEN REID
DATED MAY 11, 1996 ATTACHED TO AND FORMING PART OF SAID COTNRACT
AND PROVIDED ADDITIONALLY ...
[11] I presume therefore that the contract
covered both the 1995 and 1996 seasons.
[12] The contract for 1998 was signed on
December 26, 1997. Clause 1 reads:
The term of the contract shall be from the date of execution
hereof until the 15th day of February following the close of the
football season commencing in 1998 subject however to the right
of prior termination as specified herein.
[13] The result is that we have, on the one
hand, a period of actual work that extends from about May to
mid-November in any year, during which the appellant was under
the control of his employer and during which he was paid and, on
the other hand, a contract that provided that its term extended
to February 15 of the following year. Can it be said that
this provision extends the appellant's period of employment
to February 15?
[14] I shall set out in its entirety the
assumptions of fact upon which the decision relating to the
period June 17, 1997 to February 15, 1999 is based.
5. In making
his decision referred to in paragraph 4 herein, the Respondent
relied upon the following assumptions of fact:
(a) prior to the
Period, the Club was operated by The Montreal Alouettes Football
Club (1996) Inc. (the "Corporation";
(b) the Corporation
went into bankruptcy in late 1996 and the Club has been operated
since then by 9032-9756 Quebec Inc.;
(c) the Club is a
member of the Canadian Football League (the "CFL")
which has a collective agreement (the "Agreement") with
the Canadian Football League Players' Association (the
"Association");
(d) when the members
of the CFL enter into contracts with players, they use a CFL
Standard Player Contract (the "Contract") which binds
the parties to the terms and conditions of the Agreement;
(e) the term of the
Contract is from the date of execution until the 15th
day of February following the close of the football season that
the Contract is for, i.e., February 15, 1998 for the 1997
football season;
(f) the
Appellant initially entered into a contract with the Ottawa Rough
Riders Football Club for the 1995 and 1996 football seasons;
(g) sometime in
1996, the Appellant's Contract for the 1996 season was
assumed by the Club;
(h) the Appellant
subsequently entered into Contracts with the Club for the 1997
and 1998 football seasons;
(i) the
Contracts provided that the Appellant would play football and
engage in activities related to football only for the Club and
would play for the Club in 2 preseason games and 18 regular
season games and CFL playoff games and any other games approved
by the Association and that the Club agree to employ the
Appellant as a skilled football player;
(j) the
Contracts stated that for the Appellant's services as a
skilled football player and for his agreement not to play
football for any other person during the term of the Contracts,
the Club would pay the Appellant an agreed amount set out in each
Contract in 18 equal instalments payable within 48 hours after
each regular season game;
(k) the Contracts
also provided for additional amounts and bonuses to be paid to
the Appellant once certain conditions were met;
(l) pursuant
to the Contracts, the Club paid for the Appellant's travel
expenses including board and lodgings while he was travelling to
play football for the Club, except for games in the Club's
home city;
(m) the Club provided the
Appellant with the equipment necessary to perform the services
and also provided him with a uniform;
(n) the Club's
coaches and trainers trained the Appellant and supervised him in
the performance of the services;
(o) pursuant to the
Contracts, the Club could sell, exchange, assign and transfer the
Contracts and the Appellant's services to another CFL member
team, provided that all amounts to be paid under the Contracts
were paid to the Appellant by that other team;
(p) at any time
before the expiration date, the Contracts may be renewed until
the 15th day of February following the expiration date
and the Contracts provided the terms for such renewal;
(q) other terms of
the Contracts provided for:
· statutory
deductions,
·
contributions to the Association's medical and pension
plans,
· the use by
the Club of the Appellant's picture for publicity
purposes,
· medical
examinations,
·
disciplinary measures, suspensions and fines,
·
implications in case of injury to the Appellant,
· termination
of the contract, and
· the
Appellant's rights upon termination or retirement;
(r) the Appellant
subsequently entered into a Contract to play football for the
Club in the 1999 season;
(s) the Appellant
was employed by the Club during the entire term of the Contracts,
which is the Period in question;
(t) the
Appellant did not incur any expenses in performing the
services;
(u) the Appellant
was an integral part of the Club's business;
(v) the Club paid
the Appellant $91,397.00 in the Period; and
(w) no record was kept of
the actual number of hours worked by the Appellant in the
Period.
[15] A number of the assumptions relate to
the question whether the appellant was an employee, a point that
is no longer in issue, if it ever was. For the purposes of these
appeals the crucial assumption is (s), that he was employed by
the Club throughout the entire term.
[16] Do indicia of employment exist between
the end of the football season in mid-November and
February 15 of the following year? To start with, there is
the contract itself. There is the appellant's obligation to
keep himself in good physical shape or risk disciplinary action.
There is the obligation not to play football or engage in
activities related to football for any other person, firm, club
or corporation. There is also the option given to the Club to
renew the contract.
[17] Do these factors outweigh the fact that
he works for the club for about 23 weeks in the year and is
paid only during that period? His only obligation after the
season ends is to stay in shape and not play football for anybody
else. He could engage in any other type of work that he chose,
including professional sports. He was not under the control of
the Club after the end of the season. He did no work for it and
was not paid. It is unrealistic to conclude that because of the
option and the obligation not to play football for anyone else he
continued to be employed by the Club.
[18] Numerous cases were cited, most of
which deal with the position of teachers during the summer
vacation. I do not think that they are of much assistance here.
Teachers during the summer vacation are generally regarded as
continuing to be employed by the school board to whom they return
in the fall. That is in my view a far cry from saying a contract
providing for what is essentially a limited restrictive covenant
plus an option entitling but not requiring the employer to renew
the employment contract means that the employee, whose
obligations to work and whose right to be paid terminated in
November, continued to be employed until the following
February.
[19] I do not read the Federal Court of
Appeal decision in Canada v. Sirois,
[1999] F.C.J. No. 523, as supporting such a
proposition. Paragraphs 5, 6, 7 and 8 of the reasons read in
part as follows.
5 Under
that agreement the defendant's pre-retirement leave began on
December 20, 1995 and ended on December 20, 2000, the date on
which she undertook to take her retirement. During that five-year
period, the agreement stipulated that the defendant would be on
paid leave 14 hours a week, on paid sick leave 2.625 hours a week
and on unpaid leave 18.375 hours a week. Accordingly, during that
period the defendant did not have to provide any work to the
payer but, pursuant to s. 168 of the Regulation, she continued to
participate in group insurance plans and pay a contribution to
the pension plan for the 16,625 paid hours per week. By paragraph
8 of the agreement the employment relationship between the
defendant and the payer would not be finally broken until the
date on which the defendant was eligible for a retirement pension
without actuarial penalty, namely December 20, 2000.
6 During
the pre-retirement period the unemployment insurance premiums
were collected from the defendant's salary. On August 28,
1996, in response to a request for a decision by the defendant,
who objected to these premiums being deducted from the amounts
she was receiving from the payer, the Minister of National
Revenue ("the Minister") decided that the defendant had
to pay these premiums as an employer-employee relationship
continued to exist between herself and the payer during the
period in question. The Minister indicated in his decision that
it was based on ss. 3(1)(a) and 61(1) of the Act, which provided
the following:
...
7 The
defendant appealed this decision to the Tax Court of Canada. The
trial judge quashed the Minister's decision on the ground
that the defendant did not hold insurable employment within the
meaning of s. 3(1)(a) of the Act during the relevant period. He
wrote:
[TRANSLATION]
... since the pre-retirement agreement between the
appellant and the payer no control or supervision, or integration
of the appellant into the payer's business, or obligation by
the appellant to provide any service whatever, has existed: the
employer's only existing obligation has been to provide
remuneration, without any return on the part of the
appellant.
The Court accordingly arrives at the conclusion that this was not
a contract of service within the meaning of s. 3(1)(a) of the
Unemployment Insurance Act.
8 In my
opinion, the judge erred in concluding that no contract of
service existed on the ground that the defendant was no longer
providing any work. The courts have recognized that even if an
employee, who is still receiving money from his or her employer,
is no longer working it does not necessarily follow that there is
no longer a contract of service between the employee and the
employer. The Court has to consider whether the employment
relationship has been broken.
[20] The facts in that case are essentially
different from those which I have outlined above. It is obvious
that in the Sirois case the indicia of employment, and in
particular the payment of remuneration, continued until
December 20, 2000.
[21] I have concluded that the
appellant's employment relationship with the Club terminated
at the end of the football season of the Club and did not resume
until he attended training camp in the spring of the following
year and the hours of insurable employment in each of the years
1996, 1997 and 1998 were 745.
[22] The appeals are allowed and the
decisions of the Minister are varied in accordance with these
reasons.
Signed at Ottawa, Canada, this 20th day of December 2002.
A.C.J.
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