Docket:
2008-754(EI)
BETWEEN:
MERCK FROSST CANADA LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
DALE CHOQUETTE,
Intervener.
[OFFICIAL ENGLISH
TRANSLATION]
____________________________________________________________________
Motion to amend reasons
for judgment
rendered on September 24, 2008
by: The Honourable Justice
Louise Lamarre Proulx
Appearances:
|
Counsel for the Appellant:
|
Pierre Barsalou
Anna Szuminski
|
|
Counsel for the Respondent:
|
Simon-Nicolas Crépin
|
|
For the Intervener:
|
The Intervener
herself
|
____________________________________________________________________
JUDGMENT
Whereas
this Court issued a Judgment with Reasons for Judgment dated September 24,
2008;
Whereas
counsel for the Appellant advised the Court that an error crept into the second
phrase of paragraph 23 of the Reasons for Judgment and that the reference to
the Appellant should have rather been a reference to the Intervener;
Whereas
it is a palpable error and does not affect the substance of the judgment;
It
is ordered that paragraph 23 of the Reasons for Judgment be amended ex parte
to read as follows:
[23] My opinion, after hearing the witnesses and
reviewing the relevant documents, is that the amount of $71,713.43 was
unquestionably not received as salary, but rather as a retiring allowance. The
Intervener did not perform any work and did not receive any salary
during the period in issue. Thus, I find that the leave that the Intervener was
offered for the period from March 4, 2006, to March 31, 2007,
was truly unpaid leave, and did not constitute insurable employment.
Signed at Ottawa, Canada, this 12th day of November 2008.
"Louise Lamarre Proulx"
Translation certified true
on this 29th day of July 2010.
Daniela Possamai, Translator
Citation: 2008TCC538
Date: 20081112
Docket:
2008-754(EI)
BETWEEN:
MERCK FROSST CANADA LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
DALE CHOQUETTE,
Intervener.
[OFFICIAL ENGLISH
TRANSLATION]
AMENDED REASONS FOR JUDGMENT
Lamarre Proulx J.
[1] This is an appeal from a decision of the Minister of
National Revenue ("the Respondent") dated
December 10, 2007, that the Intervener Dale Choquette was employed in
insurable employment from March 25, 2006, to March 3, 2007
("the period in issue").
[2] A few days before
the hearing, counsel for the Respondent notified the Court, the Appellant
and the Intervener that the Respondent would be taking the same position as the
Appellant, namely, that Dale Choquette was not employed in insurable employment
during the period in issue. In this regard, counsel for the Respondent asked
the Court for an adjournment in the event that the Intervener might wish to
have more time to prepare.
[3] The Intervener
chose to proceed on the scheduled hearing date.
[4] The Appellant filed a book of documents, containing eight
tabs, as Exhibit A‑1.
[5] The Intervener
testified. She said that she began working for Merck Frosst Canada
Ltd. ("Merck Frosst") on November 20, 1989. In December 2005, she and
some of her co-workers received a mass layoff notice.
[6] On November
28, 2005, Merck Frosst had announced the first phase of its restructuring
program, which included 235 job cuts across Canada (Exhibit A-1,
tab 1).
[7] The documents,
issued by the employer, which notified the Intervener of the termination of her
employment and informed her about the retirement options and pension plan
benefit options available to her, are dated December 7, 2005
(Exhibit A‑1, tab 2).
[8] The statutory
termination notice period was from December 10, 2005, to
March 3, 2006. During that period, the Intervener retained all the
rights of an employee, even though she had ceased to work on
December 9, 2005, when she gave her employer all the property
belonging to the company, as stated on the sheet at tab 4 of
Exhibit A‑1.
[9] In exchange for a
signed release, the employer offered the Intervener an "Enhanced
Termination Compensation Package", the terms of which are set out in
section 9 of the agreement of December 7, 2005. Among other
things, the proposed package added one year to her length of service in order
to give her better access to the employer's pension plan benefits. The employer
did this by granting the Intervener one year of unpaid leave from March 4, 2006,
to March 31, 2007.
[10] The package also
provided for a $71,713.43 lump sum, which could be paid in bi-weekly
instalments commencing March 4, 2006, or in a single payment on
March 31, 2007. The employer and the employee ultimately agreed on a
payment method that differs slightly from the first method proposed but is
nonetheless bi‑weekly.
[11] The Record of Employment (ROE) (Exhibit
A-1, tab 6) states that the last pay period began on March 4, 2006, and
that the remuneration was bi-weekly. The ROE also refers to bi-weekly severance
pay, ending in March 2007.
[12] Ms. Choquette appears to have applied for
EI benefits in February 2007, one month before the final instalment
on the $71,713.43, and one month before the end of the one-year unpaid leave that
she was offered in order to enable her to increase her pension plan rights.
[13] It appears that the Department of Human Resources
and Skills Development Canada initially refused the EI benefit claim on the
basis that the worker had not accumulated enough hours of work from
January 29, 2006, to January 27, 2007. She had
accumulated 184 hours, but needed 630 to qualify. Ms. Choquette appealed on
March 6, 2007. The appeal was not tendered in evidence. On
April 25, 2007, she received a letter from the Department,
notifying her that the Commission had changed its decision and was granting her
full entitlement to EI benefits, which would begin two weeks after
March 5, 2007, the date on which she had ceased to hold insurable
employment with her employer.
[14] Counsel for the Appellant is not disputing the
fact that the Intervener was employed during the period in issue, but he
submits that the employment was not insurable because it was unpaid. He argues
that remuneration for services rendered is an essential element of insurable
employment within the meaning of the Employment Insurance Act ("the Act").
In this regard, he refers to paragraph 5(1)(a) of the Act:
5. (1) Subject to subsection (2), insurable
employment is
(a) employment in Canada by one or more employers,
under any express or implied contract of service or apprenticeship, written or
oral, whether the earnings of the employed person are received from the
employer or some other person and whether the earnings are calculated by time
or by the piece, or partly by time and partly by the piece, or otherwise;
. . .
[15] Counsel submits that the payment that was received
is indeed in the nature of a retiring allowance. According to the agreement
between the parties, produced at tab 2 of Exhibit A‑1, the amount of
$71,713.43 was paid as compensation for long service. It was a single amount,
broken into bi-weekly payments for the employee's benefit and at her request.
[16] In this regard, counsel for the
Appellant referred to the definition of "retiring allowance" in
subsection 248(1) of the Income Tax Act:
248. (1) Definitions
– In this Act,
. . .
"retiring
allowance" means an amount
(other than a superannuation or pension benefit, an amount received as a
consequence of the death of an employee or a benefit described in
subparagraph 6(1)(a)(iv)) received
(a) on or after
retirement of a taxpayer from an office or employment in
recognition of the taxpayer's long service, or
(b) in respect of a loss of an office
or employment of a taxpayer, whether or not received as, on account or in
lieu of payment of, damages or pursuant to an order or judgment of a competent
tribunal,
by the taxpayer or, after the taxpayer's death, by a
dependant or a relation of the taxpayer or by the legal representative of
the taxpayer;
[17] He also referred to paragraph 2(3)(b) of
the Insurable Earnings and Collection of Premiums Regulations:
2(3) For the purposes of subsections (1) and (2), "earnings"
does not include
. . .
(b)
a retiring allowance;
. . .
[18] Counsel referred, inter alia, to the
following decisions of the Federal Court of Appeal and the Tax Court of Canada:
Élément v. Canada (Minister of National Revenue), [1996] F.C.J. No. 718;
Forrestall v. Canada (Minister of National Revenue), [1996] F.C.J. No. 1638; and
Overin v. The Queen [1997] T.C.J. No. 1264.
Counsel quoted paragraph 2 of the
decision in Élément, supra:
2 We are all of the opinion that
the Minister and the Tax Court of Canada judge reached the proper conclusion
when they decided that the applicant did not hold insurable employment during
the period in question. Despite Mr. Lepage's very able argument that the
applicant's employment contract continued to exist because he had a right to be
recalled, the fact remains that a person who does not perform any work or
receive any wages does not hold insurable employment within the meaning of
paragraph 3(1)(a) of the Act.
[20] The Intervener relied on the Respondent's initial
position.
Analysis and determination
[21] The confusion in the Respondent's position appears
to have arisen from the type of leave that the employee was offered. Paragraph
(g) of the Reply to the Notice of Appeal states that the employer offered the
worker the benefit of unpaid leave for the period from March 4, 2006, to
March 31, 2007. In addition, paragraph (k) states that the worker
continued to receive bi-weekly remuneration from the employer during that
period. At paragraph (p) of the Reply, the Respondent states that the worker
was on paid leave during the period in issue.
[22] The instant case turns on the nature of the
$71,713.43 payment.
[23] My opinion, after hearing the witnesses and
reviewing the relevant documents, is that the amount of $71,713.43 was
unquestionably not received as salary, but rather as a retiring allowance. The
Intervener did not perform any work and did not receive any salary
during the period in issue. Thus, I find that the leave that the Intervener was
offered for the period from March 4, 2006, to
March 31, 2007, was truly unpaid leave, and did not constitute
insurable employment.
[24] The appeal is allowed and the intervention is
dismissed.
Signed at Ottawa, Canada, this 12th day
of November 2008.
"Louise Lamarre Proulx"
Translation certified true
on this 29th day of July 2010.
Daniela Possamai, Translator
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