Citation: 2011TCC283
Date: 20110531
Docket: 2010-3834(EI)
BETWEEN:
GREG TOMYK,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Webb, J.
[1]
The issue is this
appeal is the number of hours that the Appellant had in insurable employment
for the purposes of the Employment Insurance Act (the “EI Act”)
during the period from November 2, 2009 to February 19, 2010.
[2]
The Appellant was
employed by Natureland Products Ltd., a company that is in the business of producing
and selling organic beverages. The Appellant started work on November 2, 2009
and was dismissed on February 19, 2010. The employment contract that the
Appellant signed stated that:
[y]our employment hours will be from 9 am to 5 pm.
[3]
The employment contract
also stated that:
3. Your remuneration and benefits shall be as follows, namely:
a) A fixed salary of not less than $35,000
annually, which is subject to annual review. The salary will be payable in
semi-monthly instalments.
[4]
The Appellant
determined his number of hours in insurable employment as follows:
8 hours / day x 5 days / week x 16 weeks =
640 hours
[5]
In the Reply it is
stated that the employer determined that the Appellant worked 7.5 hours per
day, was not paid for the November 11 holiday (as the Appellant had not been
employed for 30 days at that time) and that the Appellant was not paid for 3.75
hours on January 10, 2010 (as the Appellant went home sick that day). As a
result the number of hours in insurable employment determined by the employer
was 588.75, which, as a result of the provisions of
paragraph 10.2(b) of the Employment Insurance Regulations, would mean
that the number of insurable hours would be 589 hours.
[6]
The number of hours of
insurable employment is relevant for the purposes of section 7 of the EI Act
in determining whether a particular person qualifies for benefits under the
EI Act and for the purposes of section 12 of the EI Act in determining
the maximum number of weeks for which benefits may be paid. In each case the
number of insurable hours required will depend on the regional rate of
unemployment. Neither party identified why the number of insurable hours was
relevant or what number of hours was material in this matter.
[7]
Section 55 of the EI
Act provides that:
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.
[8]
Sections 10 and 10.1 of
the Employment Insurance Regulations provide that:
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.
10.01 (1) If a person is required
under their contract of employment to be available for a certain period
awaiting a request from their employer to work, the hours during that period
are deemed to be hours of insurable employment if the person is paid for those
hours at a rate equivalent or superior to the remuneration that would be paid
if the person had actually worked during that period.
(2) Despite
subsection (1), if a person is required by their employer under their contract
of employment to be present at the employer's premises for a certain period in
case their services are required, the hours during that period are deemed to be
hours of insurable employment if the person is paid for those hours.
10.1 (1) Where
an insured person is remunerated by the employer for a period of paid leave,
the person is deemed to have worked in insurable employment for the number of
hours that the person would normally have worked and for which the person would
normally have been remunerated during that period.
(2) Where an
insured person is remunerated by the employer for a period of leave in the form
of a lump sum payment calculated without regard to the length of the period of
leave, the person is deemed to have worked in insurable employment for the
lesser of
(a)
the number
of hours that the person would normally have worked and for which the person
would normally have been remunerated during the period, and
(b) the number of hours obtained by dividing
the lump sum amount by the normal hourly rate of pay.
(3) Where an
insured person is remunerated by the employer for a non-working day and
(a)
works on
that day, the person is deemed to have worked in insurable employment for the
greater of the number of hours that the person actually worked and the number
of hours that the person would normally have worked on that day; and
(b) does not work on that day, the person is
deemed to have worked in insurable employment for the number of hours that the
person would normally have worked on that day.
[9]
The Appellant did not
refer to these provisions but instead included excerpts from the Service Canada
website. The issue of the number of insurable hours that a person has worked will
be determined in accordance with the provisions of the EI Act and
the Employment Insurance Regulations, not the Service Canada website. In
particular subsection 10(1) of the Employment Insurance Regulations
provides that an employee who is not paid on an hourly basis will be deemed to
have worked that number of hours that he actually worked and for which he was
paid, provided that the employer provides evidence of such number of hours.
[10]
By a letter dated April
30, 2010, from the Canada Revenue Agency, the Appellant received a ruling that
included the following:
Under subsection Ss. 10(2) of the Employment Insurance Regulations,
we have established your insurable hours to be 589 for the period under review.
[11]
Subsection 10(2) of the
Employment Insurance Regulations provides that:
(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.
(emphasis added)
[12]
It seems clear that
there was no agreement between the employer and the Appellant with respect to
the number of hours and therefore there does not appear to be any basis for a
determination to have been made under subsection 10(2) of these Regulations.
No explanation was provided for this reference to subsection 10(2) of the Employment
Insurance Regulations.
[13]
The Appellant appealed
this ruling under section 91 of the EI Act. The decision of the Minister
of National Revenue was reflected in a letter dated November 3, 2010 from the
Canada Revenue Agency. In this letter it is stated in part that:
After conducting a complete and impartial review of all of the
information relating to the appeal, it has been determined that you had 589
hours of insurable employment for the period under review.
The decision is issued in accordance with subsection 93(3) of the Employment
Insurance Act and is based on subsection 10(2) of the Employment
Insurance Regulations.
[14]
Since the Appellant was
appealing the Ruling in relation to the number of hours that he had in
insurable employment, it must have been obvious that there was no agreement
between the employer and the Appellant with respect to the number of hours.
However, the letter clearly states that the decision is based on subsection
10(2) of the Employment Insurance Regulations. There is no basis for a
decision to have been made based on subsection 10(2) of these Regulations.
[15]
In the Reply there is
again a reference to subsection 10(2) of the Employment Insurance
Regulations as one of the two subsections of these Regulations on
which the Respondent is relying. The only other subsection of these Regulations
included in the paragraph that refers to the statutory provisions relied upon
is subsection 10(1) of these Regulations.
[16]
Since clearly there is
no agreement between the Appellant and his employer with respect to the number
of hours, there is no basis for a determination of the number of hours under
subsection 10(2) of the Employment Insurance Regulations in this appeal.
[17]
The Respondent did also
refer to subsection 10(1) of the Employment Insurance Regulations in the
Reply. This subsection provides that:
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.
(emphasis added)
[18]
In this case it is
clear that the Appellant’s earnings were not paid on an hourly basis. The
agreement provided that he was to paid an annual salary and Barry Seims,
who was the accountant for the employer, stated during his cross‑examination
that:
Q So
are you satisfied in saying that I was not an hourly employee?
A No,
you were an annual, you were paid semi-monthly.
Q So I
was a fixed salary employee?
A Yes.
[19]
In order to rely on
subsection 10(1) of the Employment Insurance Regulations to establish
the number of insurable hours worked by the Appellant, the employer
must provide evidence. This is a different basis for the
determination of the number of hours than was referred to in both the ruling
and the decision of the Minister. It seems to me that in this case the evidence
that the employer would be required to provide must be evidence presented at
the hearing. Since the onus is on the employer to provide evidence it does not
seem to me that the Respondent can satisfy this requirement simply by making
assumptions of fact in the Reply. The employer will be required to provide
evidence at the hearing to establish the actual number of hours worked.
[20]
One reason for the
discrepancy between the number of hours as determined by the employer and the
number of hours determined by the Appellant is that the Appellant used 8 hours
per day as the number of hours worked and the employer used 7.5 hours per day,
with the one-half hour difference representing a lunch break.
[21]
Both parties referred
to section 32 of the Employment Standards Act (British Columbia) which provides that:
32
(1) An employer must ensure
(a) that no
employee works more than 5 consecutive hours without a meal break, and
(b) that each
meal break lasts at least a 1/2 hour.
(2) An employer
who requires an employee to work or be available for work during a meal break
must count the meal break as time worked by the employee.
[22]
It is the Appellant’s
position that he was required to be available for work during his meal break.
During cross-examination, the Appellant stated as follows:
Q Okay.
Now you stated that you worked through your lunch hour.
A I
state -- I am stating that we were -- we worked through our lunch hour. We had
to be available during our lunch hour and breaks. The 30 minutes was not taken
away from work. You were at your desk, you had to answer the phone. If somebody
needed something, you had to put your sandwich down.
Q And
were you able to take that time later on, if you were -- if you happened to be
at your desk and the phone rang, could you take lunch later in the day?
A I
don't think so.
Q You
don't think so. Did you ever ask about that?
A It
was kind of frowned upon from the owner.
Q The
owner frowned upon it.
A Yes.
Q And –
A The
owner frowned upon us eating in the lunchroom.
[23]
The only witness that was
called by the Respondent was Barry Seims, a chartered accountant. The
Appellant’s employer was his client and, in addition to doing accounting work
for the employer he was also involved in some human resource issues. In
relation to the issue of whether the Appellant was provided with a lunch break,
the following exchange took place during his direct examination:
Q On
the first page, point 2, the contract reads:
“Your employment hours will be from 9:00 A.M. to
5:00 P.M. In addition, during these hours, you shall devote 100 percent of your
working time and personal attention to the discharge of the aforesaid duties,”
et cetera.
Could you please explain for the court what this
means?
A Well,
what we are trying to achieve by putting that in the contract was to make sure
the person wasn't working for someone else, or doing somebody else’s -- had a
second employment when they were working for the company.
Q What
is your interpretation of “employment hours”?
A Well,
we had a standard 9 to 5 for this particular employee, and that was his -- he
was required to get to work at nine in the morning, and leave at five at the
end of the day.
Q The
contract does not stipulate a lunch break.
A Mm-hmm.
Q Was
Mr. Tomyk provided with a lunch break?
A Yes,
everybody in the company took a lunch break. It is at one time or another
during the day. We followed the rules of the labour code that you have to give
someone a half hour lunch every day.
Q Now
you say everyone took a break at one point or another.
A Yes.
Yes.
Q Was
there -- there was a variance as to when people would take lunch?
A Yeah,
the company is not that large, and there is not many people in the company, so
there had to be some flexibility there, and people seem to be happy to -- if
they had to work from 12 to 1 they would take their lunch later in the day,
sometimes as late as 2 o'clock in the day. But they all got a lunch.
Q And
was it expressed that this was an unpaid lunch period?
A I
don’t think I actually expressed it that way, except for the fact that the pay
stubs I think show that the number of hours that were being paid. It was quite
clear on the pay stub how many hours each employee was being paid.
Q And
was this policy of a lunch hour expressed elsewhere in writing, if it is not in
writing in this document?
A There
were other memos issued during the years explaining what the policy was for the
company in terms of lunch breaks and extra time spent at work.
Q And
Mr. Tomyk would have received those memos?
A He
should have received copies of those memos in his employment manual, yes.
Q Employment
manual. When would an employment manual have been issued to him?
A That
would have been issued when he first started with the company.
Q Is
that issued to each employee?
A Yes.
Q So
not all of the terms of employment are contained within this document?
A No,
there are quite a lot of other issues that aren’t covered in here. When to take
vacations, for instance, and other issues such as that. What happens if you
have to work on a weekend or an evening, or a special event, as a salesperson
especially, and how we take time off in lieu if you have to spend extra time in
an event. Those types of issues aren’t really covered in here in this contract.
Q But
those issues would be covered in the employment manual?
A They
should be, yes.
[24]
No copy of the
employment manual was introduced into evidence. In
the Law of Evidence in Canada, third edition, by Justice Lederman,
Justice Bryant and Justice Fuerst of the Superior Court of Justice for Ontario,
it is stated at p. 377 that:
§6.449 In civil cases, an unfavourable inference can be drawn
when, in the absence of an explanation, a party litigant does not testify, or
fails to provide affidavit evidence on an application, or fails to call a
witness who would have knowledge of the facts and would be assumed to be
willing to assist that party. In the same vein, an adverse inference may be
drawn against a party who does not call a material witness over whom he or she
has exclusive control and does not explain it away. Such failure amounts to an
implied admission that the evidence of the absent witness would be contrary to
the party’s case, or at least would not support it.*
§6.450 An adverse inference should be drawn only after a prima
facie case has been established by the party bearing the burden of proof.*
(* denotes a footnote reference that is in the
original text but which has not been included.)
[25]
It seems to me that
this can also apply to a failure to produce a document that is within the
control of a witness called by a party. As noted pursuant to subsection 10(1)
of the Employment Insurance Regulations, the question is what number of
hours are established based on evidence provided by the employer. It seems to
me that an adverse inference can be drawn from the failure of the employer to
provide a copy of the employment manual when the particular subsection of the Employment
Insurance Regulations upon which the Respondent is relying, requires the
employer to provide evidence. The negative inference that I draw is that the
employment manual would require the workers (including the Appellant) to remain
on the premises during their lunch break and to be available during such breaks
for work.
[26]
Subsection 10.01(2) of
the Employment Insurance Regulations provides that:
(2) Despite subsection
(1), if a person is required by their employer under their contract of
employment to be present at the employer's premises for a certain period in
case their services are required, the hours during that period are deemed to be
hours of insurable employment if the person is paid for those hours.
[27]
The Appellant was paid
a salary of $35,000 per year and therefore he was paid for all of the time that
he was required to be at the employer’s premises. It seems to me that he was
required to be at the employer’s premises from 9:00 am to 5:00 pm each day. As
stated by Mr. Seims:
he was
required to get to work at nine in the morning, and leave at five at the end of
the day.
[28]
Therefore he was paid
for the lunch breaks and, as a result of the negative inference that I have
drawn, he was required to remain on the premises during these breaks in case
his services were required.
[29]
It should also be noted
Mr. Seims was not asked whether the Appellant was required to remain on the
premises during his lunch breaks in case his services were required during such
times. Also during cross examination Barry Seims stated that:
Q And
you mentioned that people took lunch breaks at work?
A Yes.
Q Where
did you see them take their lunch breaks?
A I
would often come into the office into the office later in the afternoons. I
didn’t usually get there until the afternoon, but when I got in there often
other employees would not be available in the office and I’d ask where they
where, and they’d say they were on the lunch breaks.
Q Did
you ever see employees eating at their desk?
A I
think I have seen a couple, yes.
[30]
Since he saw people
eating at their desk, this would suggest that the employees were required to be
present at the employer’s premises in case their services were required during
their lunch breaks. As well, Barry Seims was the external accountant and would
not, as he had stated, usually arrive at the employer’s premises until the
afternoon. The employer has not established that the Appellant would not have
been required to remain on the employer’s premises in case his services were
required during the lunch breaks. The times for the lunch breaks (one-half hour
per day) should have been included as insurable hours.
[31]
The other two matters
in dispute, based on the Reply, relate to the November 11 holiday and a
time when, as stated in the Reply, the Appellant went home sick. The only
evidence that was presented with respect to these matters was a copy of what
appears to be the pay stubs. One pay stub indicates that the pay period is from
October 31, 2009 to November 13, 2009 and states that the hours were 67.50.
Another one is for the period from December 12, 2009 to some illegible date in
2010. This indicates the number of hours as 71.25. The other stubs show the
hours as 75.
[32]
The explanation
provided by Barry Seims for the number of hours was as follows:
Q Can
you explain to the court the hours recorded and the hourly rate?
A Well,
what would have happened is Mary-anna would have taken the contract that I
prepared, which shows the annual salary and would divide the number of hours
into that annual salary to come up with an hourly rate, and then she would have
recorded it that way for the payroll, Ceridian Payroll, which is an external
payroll preparer.
[33]
The only explanation for
the change in the hours for these two pay stubs is contained in the Reply. In paragraph
6 of the Reply it is stated that:
6. In determining that the Appellant had 589
insurable hours of employment with the Payor during the Period, the Minister
relied on the following assumptions of facts:
…
t)
the Appellant was not paid for November 11, 2009
because he had worked for the Payor for less than 30 days;
u)
the Appellant was not paid for 3.75 hours for
the pay period ending on January 10, 2010 as he went home sick on one day in
this pay period.
[34]
As noted above, in
order to establish the number of hours under subsection 10(1) of the Employment
Insurance Regulations, the employer must provide evidence. These
statements in paragraph 6 of the Reply are not evidence. The only questions
that were asked of either witness in relation to these two matters were the
following questions that were posed during the cross-examination of the
Appellant:
Q Okay.
His Honour pointed out a difference in the calculation earlier, that there was
still a gap between the number of hours, 600 versus 589. If you look at the
reply, it sets out that you were not paid for statutory holidays, because you
were in the probationary period. Is that accurate?
A Where
are you looking?
Q I’m
looking at the point (o) in the reply. I’ll double-check here. My apologies.
It's (t) on page 4.
A An
hourly employee would not be paid for a statutory holiday.
Q Okay,
so that’s your response, just that an hourly employee –
A I’m
a salaried employee.
Q There
is no dispute that you were a salaried employee.
A Okay.
[35]
The Employment
Standards Act (British
Columbia) provides, in part,
that
1 (1) In this Act:
“statutory
holiday” means New Year's Day, Good Friday, Victoria Day,
Canada Day, British Columbia Day, Labour Day, Thanksgiving Day, Remembrance
Day, Christmas Day and any other holiday prescribed by regulation;
…
44 An employer must comply
with section 45 or 46 in respect of an employee who has been employed by the
employer for at least 30 calendar days before the statutory holiday and has
(a) worked or earned wages for 15
of the 30 calendar days preceding the statutory holiday, or
(b) worked under an averaging
agreement under section 37 at any time within that 30 calendar day period.
45 (1) An employee who is
given a day off on a statutory holiday, or is given a day off instead of the
statutory holiday under section 48, must be paid an amount equal to at least an
average day's pay determined by the formula
amount paid ÷ days worked
where
amount paid is the amount paid or
payable to the employee for work that is done during and wages that are earned
within the 30 calendar day period preceding the statutory holiday, including
vacation pay that is paid or payable for any days of vacation taken within that
period, less any amounts paid or payable for overtime, and
days worked is the number of days
the employee worked or earned wages within that 30 calendar day period.
(2) The average day’s pay provided
under subsection (1) applies whether or not the statutory holiday falls on the
employee’s regularly scheduled day off.
46 An employee who works on a statutory
holiday must be paid for that day
(a) 1 1/2 times the employee's
regular wage for the time worked up to 12 hours,
(b) double the employee's regular
wage for any time worked over 12 hours, and
(c) an average day's pay, as
determined using the formula in section 45 (1).
[36]
Since the Appellant
commenced work on November 2, 2009, he had not been working for 30 days by
Remembrance Day and therefore there was no requirement to pay the Appellant
under the Labour Standards Act. It seems to me that, on a balance of
probabilities, the Appellant did not work on November 11 and since his
paycheque for the period that includes November 11, was less than his
paycheques for the other pay periods, it is more likely than not that he was
not paid for this holiday. Therefore, the hours for this holiday should not be
included in insurable hours.
[37]
The final matter is related
to a reduction of 3.75 hours that, as stated in the Reply, was for January 10,
2010 and was made because the Appellant went home sick. However, the only
evidence related to this matter was the paycheque for the illegible period that
shows 71.25 hours. This is not evidence that he did not work each day during
this period from 9 to 5. It is evidence that he was paid less for this period
but it is not evidence that he worked fewer hours. He was not paid on an
hourly basis and therefore some explanation should have been provided by the
employer for this reduced paycheque. Evidence is not provided by simply making
an assumption of fact in the Reply. No explanation was provided in evidence for
this reduced pay for this period, and therefore the employer has not provided
evidence to support this reduction in the number of insurable hours.
[38]
As a result, the 8
hours for November 11, 2009 will be deducted from the number of hours as
determined by the Appellant and the
appeal from the decision of the Respondent dated November 3, 2010 is allowed
and this decision is varied to provide that the Appellant had 632 hours in
insurable employment for the purposes of the EI Act during the period
from November 2, 2009 to February 19, 2010.
Signed at Halifax,
Nova Scotia, this 31st day of May, 2011.
“Wyman W. Webb”
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