Citation: 2008 TCC 614
Date: 20081110
Docket: 2008-326(EI)
BETWEEN:
RÉMY ARSENAULT,
Appellant,
and
THE MINISTER OF NATIONAL
REVENUE,
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Hogan J.
[1]
The issue
raised in this appeal is whether the appellant had insurable hours during the
period covered in the notice, from September 4, 2006, to November 3, 2006 (the
"notice period").
The facts
[2]
The
appellant testified that he was an industrial mechanic who had been working for
the thermal energy production unit at the Produits Forestiers Arbec paper mill
(the payor) since March 1998. On June 3, 2006, the company closed the paper
mill and temporarily laid off 55 employees, including the appellant. Under the
collective agreement, the appellant was entitled to continue his health
benefits during the first three months after the layoff.
[3]
On July 26,
2006, the appellant was informed that the paper mill was closing definitively
and was laid off permanently by the company. In accordance with the Québec
Labour Standards Act, the company was required to give the employees eight
weeks' notice. It chose another solution and paid the appellant $9,302.78 in
lieu of notice. This amount was paid in weekly instalments of $1,033.60 during
the period in question, from September 4, 2006, to November 3, 2006. Employment insurance
premiums were deducted on these amounts.
[4]
The
appellant did not provide any services to the payor following the closure,
except for the week of October 8 to 14, 2006, for which he received
compensation of $1,042 for 40 hours of work, ensuring the maintenance of a
thermal energy production unit that supplied the sawmill operated by a sister
company. The collective agreement between the company and the union provided a
recall order based on seniority. Further to the layoff and the notice period,
the appellant was called back many times to perform maintenance work on an
energy production unit that supplied the sawmill.
Analysis
[5]
The
appellant noted that the employment relationship still existed because the collective
agreement was valid for three more years. Moreover, he argued that the payor
had deducted the applicable employment insurance benefits from the $9,302.78
that he had received as salary in lieu of notice and these wages should
therefore be considered as payment for insurable employment for the number of
hours the appellant would normally have worked, and for which he would have
been compensated.
[6]
The
respondent states that with the exception of the single week during which the
appellant worked during the notice period, the $9,302.78 received as notice
during the period in question does not correspond to hours of insurable
employment under section 9.1 of the Employment Insurance Regulations (the
Regulations); the respondent added that the appellant was not an employee at
the time and was not actually working since the paper mill had closed
permanently.
[7]
The term
"insurable employment" is defined at paragraph 5(1)(a) of the Employment
Insurance Act (the Act), S.C. 1996, c. 23:
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 fromthe employer or some other person and
whether the earnings are calculated by time or by the piece, or partly by time
and partly by piece, or otherwise;
The methods for determining the hours of insurable
employment are described in the Regulations, SOR/96-332, which state:
9.1 Where a person's earnings are paid on an
hourly basis, the person is considered to have worked in insurable employment
for the number of hours that the person actually worked and for which the
person was remunerated.
And subsection 10.01(1) of the Regulations:
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.
[8]
Section 9.1
of the Regulations states, "…the person is considered to have worked in
insurable employment for the number of hours that the person actually worked…"
[emphasis
added.]
[9]
In Gagné
v. Canada (Minister of National Revenue), [1997] T.C.J. No. 1357
(QL), a clarification of what "work" means can be found at paragraph
15:
What is generally meant by work or the doing of
work is the performance of physical and/or mental activities, performance of
which is useful to and assists in achieving a desired result which the payer
giving out the work wishes to achieve…
[10]
Except for
the week of October 8 to 14, 2006, the appellant did not work during the notice
period.
[11]
In order to
be entitled to insurance employment benefits, a person must meet certain
conditions set out at subsection 7(2) of the Act:
7(2) An insured person, other than a new entrant
or a re-entrant to the labour force, qualifies if the person
(a)
has had an interruption of earnings from employment; and
(b)
has had during their qualifying period at least the number of hours of
insurable employment set out in the following table in relation to the regional
rate of unemployment that applies to the person.
[12]
Section 9.1
of the Regulations, and subsection 7(2) of the Act specifically require the
beneficiary to have accumulated the required number of hours of insurable
emplyoment. It is not sufficient to show that the beneficiary might have been
in some type of employment relationship or another.
[13]
The
respondent states that the appellant's permanent layoff date was when his
employment was terminated. Except for one week in October, he did not truly
carry out any work during the rest of the notice period. I agree with the
respondent's argument that, under section 9.1 of the Regulations, the appellant
does not meet the criterion of number of hours actually worked during the
notice period.
[14]
The
appellant states that he has, without a doubt, insurable employment hours under
subsection 10.01(1) of the Regulations. Under this provision, hours during
which a person is available to work in accordance with their employment
contract are considered insurable hours.
[15]
Subsection
10.01(1) came into force on October 24, 2002. The regulatory impact analysis
statement indicates that the purpose of the provision regarding availability
is:
(a) to help
reduce discrimination towards women and health care workers;
(b) to recognize
that since the employer exercises control over the employee when he/she is on
standby, these hours are key components of the employee's employment contract
and should thus be considered insurable.
[16]
Section
10.01 was added following R. v. Murphy, No. A-402-99, October 5, 2000,
in which the Federal Court of Appeal confirmed a judgment by the Tax Court of
Canada, 1999 CarswellNat 3238. In the case submitted to the Tax Court, the
calculation of insurable hours of employment was challenged. The Tax Court
found that the hours during which an employee is on standby are insurable hours
if they are remunerated, even if the employee does not work. In Murphy,
the appellant was an X-ray technician in a hospital. Other than her usual
duties, she was on standby every night. When on standby, employees were
to:
(a) remain close
to a telephone and keep the hospital informed of the number at which he or she
could be reached;
(b) stay
sufficiently close to the hospital to permit him or her to reach the hospital
within a maximum period of twenty-five minutes.
The Court showed that, while on standby, technicians
were paid $2.50 an hour for each hour of availability if not called in to work.
However, if called in, the technician was paid at a higher rate. The Minister
noted that the appellant was free to do what she wanted during these standby
hours, for example, stay home, take care of her children or sleep at night; in
his opinion, these hours did not actually count as hours "actually"
worked. The appellant stated that she performed services during these standby
hours, for example by remaining close to a telephone and staying within a
twenty-five minute range to the hospital. The Tax Court found that the
appellant was doing what the employer legally required her to do. The standby hours
were therefore considered hours of insurable employment.
[17]
Subsections 10.01(1)
and (2) of the Regulations state:
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.
[18]
During the
notice period, the appellant did in fact work for the payor during the week of
October 8 to 14, 2006. Moreover, the payment records show that he worked for
the payor for one week in November 2006, and also for a total of six weeks in
2007. The fact the appellant worked for the payor after his permanent layoff
leads to the possibility that the employment relationship between the
appelllant and the payor continued, even after the general layoff.
[19]
As
explained by the Federal Court of Appeal in Canada (Attorney General) v.
Sirois, [1999] F.C.J. No. 523 (QL), even if an employee isno longer
working, it does not necessarily mean there is no longer a contract of
employment. The employment relationship might continue even if the worker no
longer provides services to his or her employer. In Sirois, the Court of
Appeal found that the respondent still had insurable employment after being
laid off.
[20]
Sirois must be distinguished from the
present case. In Sirois, under the regulations in force, the respondent
Sirois was available during his pre-retirement leave, meaning the employment
relationship was not severed. On the other hand, in the present case, there is
no regulation in effect that places the appellant on standby.
[21]
The
respondent states that the employment relationship between the employer and the
payor was severed on August 25, 2006, and all subsequent call backs were new
contracts entered into with the employer. This is a valid argument but the
baisis is not necessarily accurate or correct. The reality of the appellant's
situation was such that the employee-employer relationship was not completely
severed during the period in question because the appellant provided services
to the payor at various times after he was laid off, as noted above.
[22]
Moreover,
in his notice of administrative appeal dated November 2, 2007, the appellant
wrote that he worked part time for the payor at that time. Even if the
employment situation developed from a full-time job to a part-time job, the
employment relationship was not necessarily severed.
[23]
The
respondent's reasoning that the employment contract between the payor and the
appellant was severed following the layoff, and that the subsequent call backs
were new contracts between the payor and the appellant are not supported by the
case law. Despite the official character of the layoff notice, the reasoning is
debatable since the "new" contracts were essentially identical to the
"original" contract: same parties, same work, same compensation, same
duties and functions, same location, etc. There is nothing in the facts or in
the case law that leads to the conclusion that each subsequent call back was a
new employment contract.
[24]
The
appellant stated:
[translation]
I knew deep down inside that clearly, I would be
called back one day or another to work at that factory, considering the boiler
was still operational and I was assigned to the boiler during the years the
factory was in operation; I new very well that I would be called back because
the central boilers were still operating. At that level, I knew and the company
also knew it.
[25]
If the
payor had truly wanted to terminate the employment relationship with the
appellant at the time of the layoff, the call backs would not have occurred.
[26]
It can be
argued that the employment contract between the payor and the appellant
continued during the period in question and that the first condition of
subsection 10.01(1) of the Regulations was therefore met.
[27]
The second
condition under subsection 10.01(1) of the Regulations is: "[i]f a person
is required under their contract of employment to be available for a certain
period awaiting a request from their employer to work ."
[28]
However,
for the appellant to be correct, he must be able to prove that his employer
required him to be available and show up to work quickly during the notice
period.
[29]
Under the
collective agreement, it was possible for laid-off employees to be called back
according to their seniority. However, this is not the same thing as being on
standby. During the layoff, it is not a given that the same control can be
exercised over the employee. Following the group layoff, the appellant was free
to find another job. He was not at all required to be available, or be ready to
act or react or go to the work site immediately, by remaining close to a
telephone, carrying a pager or staying within a well-defined zone. As a result,
I feel that the appellant was not on standby during the notice period.
[30]
For the
above-noted reasons, the appeal is dismissed.
Signed at Ottawa, Canada, this
10th day of November 2008.
"Robert J. Hogan"
Translation certified true
on this 10th day of August 2009.
Elizabeth Tan, Translator
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