Reference: 2005CCI215
Date: 20050323
Docket: 2004-4158(EI), 2004-4159(EI),
2004-4228(EI) and 2004-4229(EI)
BETWEEN:
9105-6432 QUÉBEC INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Lamarre J.
[1] These are appeals
against decisions of the Minister of National Revenue ("Minister") in
which it was decided that four workers who were in the service of the Appellant
during the periods set out below held insurable employment pursuant to
paragraph 6(g) of the Employment Insurance Regulations
("Regulations"). These four workers and the periods during which
they were in the service of the appellant are listed as follows:
• Iosif Neda, from June 15,
2001, to February 6, 2004;
• Jean-Paul Berthiaume, from
January 5, 2001, to February 1, 2003;
• Guy Fleurent, from May 14,
2001, to February 13, 2004;
• Jean Rochefort, from
February 6, 2001, to February 1, 2003.
[2] Paragraph 6(g) of
the Regulations reads as follows:
6. Employment in any
of the following employments, unless it is excluded from insurable employment
by any provision of these Regulations, is included in insurable employment:
...
g) Employment of a person who is placed in that
employment by a placement or employment agency to perform services for and
under the direction and control of a client of the agency, where that person is
remunerated by the agency for the performance of those services.
[3] It is not disputed
that, during the periods at issue, the Appellant, who was doing business under
the name of "Service de gestion Option-Ressources enr." was a
placement agency, and the workers were paid by the Appellant.
[4] Neither is it
disputed that, saving paragraph 6(g) of the Regulations, the four
workers in question were considered self-employed persons. The only issue is
whether these workers were performing their work under the direction and
control of the clients for whom they were called upon to provide services, at
the request of the placement agency, the Appellant. If so, they will be deemed
to have held insurable employment within the meaning of paragraph 6(g)
of the Regulations.
[5] Three of the four
workers appeared to give evidence, as did the owner of the agency, Réjean
Beauregard.
[6] Iosif Neda
described himself as a general building maintenance professional. He has been
involved in the technical maintenance of buildings for the past 25 years. He
works alone, for himself. In 2001, he contacted the Appellant, who had
advertised in the newspapers for the services of a general handyman. After
meeting with the owner, he signed an agreement on June 15, 2001 with
the Appellant. This agreement is entitled "sub-contract". Mr. Neda
undertook to perform maintenance and repair duties for the Centre d'Accueil de
Lachine at an hourly rate of $14. The contract was for six months, and was
renewable. It stipulated that the Appellant could terminate the agreement if
the client was dissatisfied with the services provided, or if the client no
longer needed his services. In his testimony, Mr. Neda explained that he was
not required to accept work under a contract with the Appellant. In the case of
the contract with the Centre d'Accueil de Lachine, he was hired as a day
labourer. He was asked to be present from 8 am to 4:45 pm. He did not report
his arrivals or departures to the Centre d'Accueil, but he did comply with the
schedule. He would receive requisitions from the Department of Technical
Services at the Centre d'Accueil and carried out his assigned tasks without any
supervision, since in any event no one had the necessary expertise to verify
what he was doing. He virtually never met the head of this department. Unless
there was an emergency, he performed his tasks at his own pace. He took his
lunch break when it suited him and took coffee breaks if he wanted to. He was
the one who decided if he would take holidays, without having to obtain
authorization from anyone. The situation was different for another person who
worked with him and who was an employee of the Centre d'Accueil. That other
person had to submit reports (for work, vacations) whereas this was not the
case with Mr. Neda.
[7] For his
remuneration, he kept a record of his hours of work and billed the Appellant,
who paid him by cheque. If he was sick, he would notify the Appellant, who
informed the Centre d'Accueil.
[8] Jean-Paul
Berthiaume has worked as a painter for the past 30 years. He has always
invoiced for his work under the name of Paul's Painting. He used to live in
Alberta. When he came to Quebec, he placed advertisements in the newspapers.
The Appellant then contacted him. He signed the same type of agreement as we
have seen previously in the case of Mr. Neda. In his case, he was hired to do
painting at the Villa Medica Hospital. His hourly rate was $14. A maintenance
employee of the hospital told him where he was to paint. Mr. Berthiaume
provided his own equipment and did the work according to his own schedule. If
he could not do it within the 8 am to 5 pm timeframe (for example, if he
had to work on another contract), he could work in the evening or on weekends.
He had the keys to the places that he was to paint. He was the one who decided
on his lunch hours and his breaks, and he took his vacations when it suited
him.
[9] He was almost
always alone when he was working. From time to time, the hospital maintenance
employee would come to check that the work was done properly.
[10] He recorded his
hours of work on a sheet provided by the hospital, and the hospital sent this
sheet to the Appellant once a week. He himself invoiced the Appellant directly
for his hours and was remunerated on that basis. He was never obliged to accept
a contract for the Appellant.
[11] Guy Fleurent is a
driver for the disabled. He worked for 23 years driving the disabled under
contracts with the City of Laval. Subsequently, on May 14, 2001, he
signed with the Appellant the same type of agreement as the two other workers
described above. Under this agreement, he agreed to work as a driver for the
Berthiaume du Tremblay Residence at an hourly rate of $15. He stated that he
also worked for other centres. He was paid by the Appellant for workdays that
began at 8 am and ended at 4:30 pm. Employees of the residence would give him a
list of the patients to be picked up from their homes and brought to the
residence. He was to take them back home the same day after their treatment.
Mr. Fleurent inspected the vehicle each morning, collected his itinerary and
fetched the patients at the time specified by the caseworkers at the residence.
Very often, he was free from 11 am onwards and did not return until the
afternoon. He organized his work on his own, without any supervision. If he
wanted to take vacations, he would advise the Appellant, who was responsible
for replacing him at the residence if necessary. He would himself invoice the
Appellant for his hours and the residence did not check them.
[12] Mr. Fleurent has now
become a regular employee of the residence. He is now required to dress in
accordance with certain standards, which was not the case when he was working
under contract with the Appellant. He can no longer leave the premises in the
middle of the day, as he did before when he was working with the Appellant,
when there was no transportation work to be done. He is now required to
maintain and inspect the vehicle and to eat with the patients at noon. His
vacations are now determined by the residence. His performance is now
evaluated, whereas that was never the case with the Appellant.
[13] Lastly,
Réjean Beauregard gave evidence to explain the situation of
Jean Rochefort, the fourth worker, who was unable to attend the hearing.
Mr. Rochefort signed, on February 6, 2001, the same type of contract with
the Appellant as the three other workers in this case, to perform maintenance
and repair work for the C.H.S.L.D. Mance Decary long-term care facililty.
Mr. Rochefort is a plumber and his hourly rate of pay was $20. Mr.
Rochefort looked after three facilities for this centre. The caretaker of each
of the three facilities would show him the work that needed to be done and he
would then perform the work at his own pace. He could work during the day or in
the evening. Initially, Mr. Rochefort spent three to four days a week working
for this client. Subsequently, he went there less than three days a week. He
had no fixed schedule and took his vacations when he wanted. No one supervised
his work. If he was unable to handle emergencies, the institution would contact
a plumbing company directly.
[14] Mr. Beauregard
explained that, when he referred people to clients, and these workers were
replacing employees who were accredited by the institution in question, and
were working under the direction of a department head, he regarded these people
also as employees.
[15] However, when he was
referring longer-term workers, who were not covered by the accreditation of the
institutions in question, he could sub-contact with these workers. They were
not supervised and that is why Mr. Beauregard and the worker in question agreed
to work on a sub-contract basis, as the workers did not regard themselves as
employees.
[16] Some institutions
would agree to keep records of the workers' hours and to forward them to the
Appellant so that the Appellant could subsequently bill the institution. The
Appellant directly paid the workers with whom he had contracts.
[17] Mr. Beauregard said
that there were 76 employees who worked for the Appellant and four
sub-contractors, namely the workers at issue in this case.
[18] Counsel for the
Appellant argued that the evidence demonstrated that the institutions with whom
the Appellant did business neither directed nor controlled the work done by the
four workers in question. With the possible exception of control of quality and
results, it was not possible to talk of real, effective control. No one told
these workers how to do their work. They were regarded as sub‑contractors
who each provided expertise in their own field. These workers were able to refuse
a contract at any time, were free in terms of their schedules and were not
supervised in any way. The fact that the work was carried out at a specific
location within the framework of a specific work schedule cannot automatically
mean that control was exercised over their work. Whether the individual is an
employee or an independent contractor, there are some constraints in terms of
place and time. This is accordingly not a criterion that can be used to
establish a relationship of subordination.
[19] Counsel for the
Respondent noted that pursuant to paragraph 6(g) of the Regulations, a
self-employed worker is eligible for Unemployment Insurance if he or she meets
certain conditions. She stated that it was necessary to give a broad
interpretation to the term "control" used in paragraph 6(g) of
the Regulations, a broader interpretation than that given to the control
required to establish the existence of an employment contract. Here, a degree
of control is exercised by the Appellant's clients, since they control the
quality of the work and can terminate a contract if they are not satisfied.
[20] In my opinion,
paragraph 6(g) of the Regulations does not require a different or
broader interpretation of the concept of control than in the determination of whether
one is dealing with a contract of employment or a contract for services.
[21] The criterion that
one finds at paragraph 6(g) of the Regulations, which is working
under the direction and control of a client of the agency, is the same
requirement as is found in Article 2085 of the Civil Code of Quebec to
determine whether one is dealing with a contract of work (employment contract).
In fact, Article 2085 stipulates that a contract of work:
Art. 2085. [...] is a contract by which a person, the employee,
undertakes for a limited period to do work for remuneration, according to the
instructions and under the direction or control of another person, the
employer.
[22] The concept of
control is the same. It cannot, in my view, entail a broader interpretation
because it is used to establish whether a self‑employed person becomes
insurable by virtue of the application of paragraph 6(g) of the Regulations.
[23] Recent case law has
established that it is possible to talk of control when orders and instructions
are given regarding the way in which the work is to be performed (see Vulcain
Alarme Inc. v. Canada (M.N.R.), [1999] F.C.J. No. 749, paragraph 7
(Q.L.)). Control regarding the places in general and the specific places where
the work is to be performed, or the fact that the tasks are performed according
to a specified schedule and remuneration, do not necessarily lead to the
existence of a relationship of subordination between the parties (see Poulin
v. Canada (M.N.R.), 2003 FCA 50, paragraphs 16 and 19). It is also quite
normal that the work performed under a service contract is also subjected to
controls in respect of its execution, productivity and quality. (See Poulin,
op. cit., paragraph 16). Exercising this type of control does not mean that the
worker is subordinate, or is under the control and direction of the person who
exercises it. The contractual intention of the parties is also an important
factor (see Wolf v. Canada (A.C.), 2002 FCA 96, paragraph 122).
Thus, if the worker chooses to offer his services as an independent contractor
and the business that hires him chooses independent contractors to perform
certain work, and they can terminate their contract at any time, and the
corporation doing the hiring does not treat its consultants in its daily
operations in the same manner as it treats its employees, it must be concluded
that the working relationship begins and is maintained in accordance with the
principle that there is no control or subordination (see Wolf, op. cit.,
at paragraph 118).
[24] In my view, this is
precisely the case here. The workers signed an agreement with the Appellant by
which they agreed to provide services to its clients on a contractual basis.
The evidence has revealed that each of the institutions for which the workers
provided services exercised no control over the performance of their work.
These workers were independent in terms of their schedule and in terms of the
way in which the work assigned to them was carried out. They were not treated
in the same way as the employees of these institutions.
[25] One can thus not say
that they were under the direction and control of the clients of the Appellant.
I am thus inclined to allow the appeals and to set aside the decisions of the
Minister on the basis that the workers in question did not, pursuant to
paragraph 6(g) of the Regulations, hold insurable employment
during the periods at issue.
Signed at Ottawa, Ontario, this 23rd day of March
2005.
"Lucie Lamarre"
Translation
certified true
on this 9th day of January
2006.
Garth McLeod,
Translator
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