Citation: 2005TCC461
Date: 20051109
Docket: 2004-582(EI)
BETWEEN:
TEACH & EMBRACE CORPORATION,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
(Delivered
orally from the bench on May 31, 2005, in Montreal, Quebec
and modified for comprehensiveness.)
Archambault, J.
[1] Teach & Embrace Corporation (Payer)
is appealing a decision whereby the Minister of National Revenue (Minister)
concluded that Ms. Catherine Stathopoulos (Tutor) held insurable
employment during the period from January 9, 2003, to May 30, 2003 (relevant
period). The basic issue is: what was the true nature of the contractual
relationship between the Payer and the Tutor? Was it a contract of employment
or a contract of service?
The facts
[2] At the beginning of the hearing, the Payer admitted
the following facts described in subparagraphs 5 a), b), d) to i), k),
m) to p) and r) to w) of the Reply to the Notice of Appeal:
a) the Appellant was incorporated on
December 7, 1998;
b) the Appellant was providing a tutoring
service for elementary and high school students;
. . .
d) the Appellant registered the students
after an agreement was reached with their parents;
e) the Worker was studying at a University in
the Education Faculty;
f) the Worker was engaged by the Appellant
as a tutor;
g) on January 1, 2003, the Appellant and
the Worker signed a service contract;
h) the Worker's tasks were to prepare and
provide academic activities to students under her charge;
i) the Worker gave her availability of
working time to the Appellant;
. . .
k) the Worker taught to a group of 1 to
3 students;
. . .
m) the Worker worked approximately 6 to
8 hours per week for the Appellant;
n) the Worker had to inform the Appellant of
any change in the proposed working schedule;
o) in case of absence, the Worker had to
contact the Appellant to confirm a replacement;
p) the Worker was required to provide status
reports to the Appellant with academic progress of the students;
. . .
r) the Worker was paid $18 per hour by the
Appellant;
s) the Worker received her remuneration every
month;
t) the Worker had to establish an invoice to
receive her salary from the Appellant;
u) the clients were the clients of the
Appellant;
v) the Worker worked in schools [sic]
premises;
w) the Worker used the material and equipment
of the school or of the Appellant's clients in performing her tasks.
[3] Both, the president of the Payer, Mr. Kuperhause,
and the Tutor testified at the hearing. There is not much dispute about the
facts. The issue has to do with the interpretation to be given to them.
[4] Mr. Kuperhause described how the Payer's
business was established. He was working for the Montreal English School Board
as a kindergarten teacher. He started providing tutorial services on his own as
an extra-professional activity. Given the success that he achieved, he began
hiring other people to help in that particular endeavour. In the beginning, the
services were normally provided in the students' homes. To recruit its
clientele, the Payer distributed flyers to all the parents of children at a school
after having been properly authorized to do so.
[5] In order to provide tutoring services to its
clients, the Payer hired the Tutor. The written contract, called the Teach
& Embrace Corporation Tutoring Service Contract, was entered into on
January 1, 2003 (Contract). It provides as follows:
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TEACH & EMBRACE CORPORATION
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Service Contract
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Teach & Embrace Corporation
Tutoring Service Contract
With Catherine
Stathopoulos
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ENTERED BETWEEN
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Teach & Embrace Corporation
8341 Rejane
LaSalle, Qc H8N 3C3
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AND
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Catherine Stathopoulos
Address
[omitted for publication]
Telephone [omitted for publication] Cel
[omitted for publication]
Email address
(the "Tutor")
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Teach & Embrace Corporation retains the
services of the "Tutor" in order to provide tutoring services for
students enrolled in the "Corporation's" after‑school tutoring
programs.
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The "Corporation" will remunerate
tutoring services based on the number of hours tutored only. The remuneration
rate will be based on the conditions outlined in Annex A. The
"Tutor" will provide detailed monthly invoices no later than
72 hours after the last day of the billing month. If the invoice is
provided within the said deadline, the "Corporation" will process
invoices no later than fifteen (15) days after the 72 hour deadline.
Invoices submitted after the deadline will be processed the following billing
month.
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The "Tutor" declares that she/he will
respect her/his
responsibilities and the code of ethic [sic] as defined in
annex B.
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The "Tutor" recognizes, understands and
accepts that she/he may not in any way compete with the
"Corporation" by poaching, contracting or taking in any manner the
"Corporation's" clients. As long as the "Tutor" will be
contracted by the "Corporation" or in the case that this contract
has been terminated or annulled, the "Tutor" declares that
she/he will not compete with the "Corporation" directly or
indirectly or by an intermediary, company or society, neither as an
investor, employee, agent, consultant or administrator of an identical or
similar organization exercised by the "Corporation" and this, up
to a period of two (2) years after this contract will have been
terminated or annulled. This clause is not applicable to school boards,
cegeps or universities.
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The parties recognize expressively [sic] that
this stipulation of non-competition constitutes an essential condition to the
present service contract and also refers to all products, materials, services
and others owned or offered by the "Corporation".
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Any and all incidences [sic] of
solicitation or forms of solicitation of a Teach & Embrace Corporation
client during the timeframe of this contract will be considered a breach of
contract causing damages to the "Corporation" equivalent to the
value of the business in progress with said client; moreover, over and above
the current value of the said business in progress, damages equivalent to one‑hundred
[sic] dollars ($100) per day for the length of the breach of contract
will be claimed of the "Tutor" who contravenes the stipulations
herein of non‑competition. Said amounts of damages plus interests [sic]
accumulated and demanded over and above said damages, will be submitted to a
recognized tribunal in order to provide an ordinance [sic] against the
"Tutor" for her/him to discontinue contravening the stipulated non‑competition
clauses and such, without any prejudice to other recourses.
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Under the authority of the "Corporation", the "Tutor" is expected to
accomplish the following results:
1. Prepare and
provide academic activities appropriate to students under her/his charge
2. Respect
tutoring times provided by the "Corporation"
3. Modify, in
accord with the "Corporation", tutoring schedules
4. Provide individual
or group tutoring based on the continuums and resources offered by the
"Corporation"
5. Prepare and
provide lesson plans
6. Prepare and
provide academic progress reports based on the "Corporation's"
Continuums
7. Converse with
students in the language of instruction
8. Assure constant
client satisfaction and solve any lack of satisfaction
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The "Tutor" can terminate this contract
with written notice with a delay of no less than thirty (30) days. However,
the "Tutor" declares that she/he will respect the responsibilities
herein until her/his departure. Any breach of this clause will justify
damages to the "Corporation" equivalent to one‑hundred [sic]
dollars ($100) for each day that the "Tutor" will contravene the
said clause. These damages plus accumulated interests [sic] can and
will be deducted from any open invoices [not] yet processed for the
"Tutor" without any prejudice to other recourses.
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By the present, the "Tutor" assumes
all responsibilities of personally settling and remitting all provincial and
federal contributions including income tax, employment insurance, pension
premiums as well as any other contributions required because the Tutor
declares that she/he prefers and wants to work as a self‑employed,
autonomous worker or sub‑contractor [sic] in respect to
tutoring services.
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In witness whereof, this contract is signed on
this 01 day of January, 2003 in Montreal, Quebec.
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Signature of "Tutor"
(signature)
Name in print : Catherine
Stathopoulos
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Signature of authorized officer of the
Corporation
(signature)
Name of officer in print: Karim
Kuperhause
Position of officer: President
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Annex A
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Year of
contract
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1
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2
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3
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4
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Current
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Rate per
hour
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$15.00
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$16.00
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$17.00
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$18.00
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$18.00
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Name of tutor
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Hourly Rate
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Catherine (Kathy) Stathopoulos
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$ 18.00
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Annex B
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Code of Ethics and Policies
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Tutoring Policy
·
In case of
absence, tutors must contact an authorized Teach & Embrace tutor to replace them.
Furthermore, both the tutor and replacement tutor must call a Learning
Coordinator to confirm the change.
·
Students must
never be left unsupervised, therefore:
o
Tardiness [will] not
be tolerated.
o
Students should
only be permitted to use the restrooms before or after tutoring. The same
rule applies to tutors. In case of emergency, students should be assigned to
another tutor for supervision.
o
At the end of
tutoring, please ensure that students who attend the school daycare check‑in
[sic] with a daycare supervisor.
·
For security
purposes, tutors are required to wear their name tag at all times
while on a school's property (including outdoors).
·
The last five
minutes of tutoring should be reserved for a recap of the tutoring session. Lesson sheets
should be filled out with students. This is a great way of reinforcing
lessons.
·
Progress reports
must be done on a timely basis. They are due around the same time as school report cards unless
otherwise stated.
·
Please dress
professionally. Jeans are not permitted. You will be interacting with
school staff and parents, it is in your best interest to look and act
professional at all times. The school (and school board) you are tutoring at
could be your future employer!
A Learning Coordinator is assigned to your
tutoring location. Their role is to support your tutoring and to supervise
the operations of the tutoring programs. As such, they are Teach &
Embrace's link between students, schools, and parents. The Learning
Coordinators report directly to the president of Teach & Embrace.
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Discipline Policy
Teach & Embrace offers programs at many
schools. Each school has a different discipline policy. Having said that, Teach
& Embrace does have a standardized policy on discipline. However,
please note that due to specific school policies, there could be amendments
to the following:
· Tutors should be firm but fair.
· Teach & Embrace is not a public
institution and, as such, reserves the right to remove any student from any
of its programs at any time due to disruptive and/or unruly behaviour.
· Physical and verbal aggressiveness will
not be tolerated under
any circumstance. This applies both to tutors and students.
· Behaviour problems should be dealt with
immediately. Moreover, they should be noted in the lesson sheets and the
assigned Learning Coordinator should be informed of the situation.
Students who repeatedly display disruptive behaviour will be removed from
their program.
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Payment Policies
Teach & Embrace contracts its tutors as self‑employed
teachers. As such,
there are no deductions at source because you are deemed to have
received Professional Income in terms of income tax implications. This
means you retain the entire portion of your paycheques. It also means that
you may claim any allowable expense (see below) related to the
exercise of your tutoring. Therefore, you must invoice Teach & Embrace
who, in turn, will pay you based on the contents of your invoice. To simplify
matters, Teach & Embrace has its own invoice sheet that you may use
(included herein). Please note:
· Invoices must be received no later
than the last day of the month. Invoices that are not received by the last day
of the month will only be processed the following month. You may send your
invoice earlier than the last day of the month if you have completed your
scheduled tutoring sessions.
· You may only invoice Teach &
Embrace for the time you have actually been scheduled to tutor. Preparation
and travel time is at your own expense (and is considered an allowable
expense).
· If you are invoicing for one‑on‑one
tutoring done in a client's home, please ensure that a parent or legal
guardian has signed the attendance sheet. In case of discrepancy, the
attendance sheet will be used as an official record (and must be included
with your invoice sheet).
· Invoices will usually be processed and
mailed within 72 hours of the last day of the month.
· Please retain a copy of your invoice
and attendance sheet for your records.
· Because you are earning Professional
Income, you will not receive a T4 slip at the end of the
taxation year. However, Teach & Embrace does keep records of all invoices
and payments.
· To find out more about Professional
Income and Allowable Expenses, please visit Revenue Canada
at http://www.ccra‑adrc.gc.ca and do a search for T4002 Business and
Professional Income. Revenue Quebec has similar standards but you
may want to visit them at http://www.mrq.gouv.qc.ca.
[Emphasis added.]
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[6] A reading of the Contract
clearly reveals the Payer's intention: the Tutor was hired as a self-employed, autonomous worker
or subcontractor under a contract for services. When she testified, the Tutor
indicated, however, that she did not understand the technical meaning of
self-employed, autonomous worker or subcontractor and, as far as she was
concerned, she was being hired as an employee. This is rather surprising for
someone like the Tutor, who had previously worked for 10 years as a
teacher.
[7] When she entered into the Contract, the Tutor
had decided to go back to university. She informed the Payer as to the hours
that she would be available during her school term to provide her services to
the Payer's clients. The Payer then scheduled weekly hours of tutoring with four
different groups of students. The tutoring could take place either on the
premises of the students' school or, as was mainly the case here, at the Payer's
learning centre, located in Saint‑Léonard. The Tutor had to pay for her
own transportation from home to the learning centre or to a particular school. The
Payer would only pay for a taxi when there was an emergency, basically, in situations
beyond the control of the tutors.
[8] Tutors were expected to follow the
guidelines set out in a document called "Continuum", which basically described
the level of knowledge that each student should achieve at a particular grade level,
and it was expected that the tutors would propose activities that would meet
the goals thus set. They had quite a lot of freedom as to what material could
be used and what activities could be carried on during their tutoring. The
Continuum was also used in preparing student reports, which, according to the Tutor,
occurred four times a year. Tutors had to provide at the end of every class a
description of the activities that they had carried on during their tutoring.
The Tutor stated that these daily reports were monitored by the Payer because
she found annotations made by the Payer's learning coordinator.
[9] In terms of resources, the Tutor had access
to a library of games and tools provided by the Payer. Given that three out of
four hours of tutoring were carried out on the Payer's premises, she made use
of these resources, although she was free to use, and did use, her own material
as well.
[10] The Payer's learning
coordinator, whose role was supervisory, would normally attend at the schools where the tutors provided
their services in order to ensure that they showed up for their lessons,
otherwise the students might not be under proper supervision. The supervision
of the tutors could be either very limited, that is, just a visual verification
of their presence, or more extensive, so as to allow the Payer to observe the
way the tutoring services were provided. If required, the learning coordinator would
meet a tutor to discuss the tutor's weaknesses and suggest ways for that tutor
to improve his or her performance.
[11] Mr. Kuperhause acknowledged that
whenever complaints were made — and these were normally addressed to the Payer —
he would meet the parents and then follow up with the tutor to determine the best
action to take to improve the techniques of that tutor, or to determine if the
cause of the problem was the psychological state of the student or the school
environment in which the regular teaching took place. If a tutor required
assistance, he or she would have access to the Payer's professional resources, meaning
basically the Payer's salaried staff. This staff would suggest different
methods for dealing with a difficult situation.
[12] It should be
mentioned that the Payer was
satisfied with the work performed by the Tutor. No complaint was ever made with
respect to her work. She did not renew her contract with the Payer because her
remuneration was decreased from $18 per hour to $10 per hour. She lived in Brossard and had to travel to the Payer's learning centre in Saint‑Léonard,
which she did not think was worth the trouble.
Analysis
[13] The relevant statutory provision is
subsection 5(1) of the Employment Insurance Act (Act), which
defines insurable employment as being employment "under any express or
implied contract of service". As counsel for the Minister stated, given
that the Act does not define what a contract of service is, recourse must be
had to the Civil Code of Quebec (Civil Code), pursuant to the
interpretation principle of complementarity.
When, in interpreting a federal statute, it is necessary to refer to a civil law
concept of a province, to a nominate contract, for example, reference must be
made to the concept in force in the province. Here, given that the Contract was
entered into in Quebec, we have to refer to the Civil Code. Since
1994, the Civil Code defines the "contract of employment" and the "contract
for services". The relevant provisions are article 2085 for the
definition of the former and articles 2098 and 2099 for the definition of
the latter. They provide as follows:
2085 A contract
of employment 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.
2098 A contract
of enterprise or for services is a contract by which a person, the
contractor or the provider of services, as the case may be, undertakes to carry
out physical or intellectual work for another person, the client or to provide
a service, for a price which the client binds himself to pay.
2099 The
contractor or the provider of services is free to choose the means
of performing the contract and no relationship of subordination exists
between the contractor or the provider of services and the client in
respect of such performance.
[Emphasis added.]
[14] The three essential elements for a contract
of employment are: i) work, ii) remuneration, and iii) the
direction or control of the employer. In the case of the contract for services,
there must be services provided for remuneration, freedom for the provider of
services to choose the means of performing the contract and no relationship of
subordination between the parties. As stated
by counsel for the Minister, it is clear that the distinguishing factor between
a contract of employment and a contract for services is the existence or absence
of a relationship of subordination, i.e. the difference depends on whether the
contract was executed under the direction or control of an employer.
[15] This view is
espoused by Quebec scholars, including Robert P. Gagnon in Le droit du travail du Québec, 5th ed. (Cowansville Qc: Les éditions Yvon Blais Inc., 2003), at
paragraph 90:
[TRANSLATION]
90 — Distinguishing factor — The
most significant feature characterizing a contract of employment is the
subordination of the employee to the person for whom he works. It is by
this feature that a contract of employment can be distinguished from other
onerous contracts which also involve the performance of work for the
benefit of another person for a price, such as a contract of enterprise or a
contract for services under articles 2098 ff C.C.Q. Thus, while the
contractor or the provider of services "is free", under
article 2099 C.C.Q., "to choose the means of performing the
contract" and while between the contractor or the provider of services
and the client "no relationship of subordination exists . . . in
respect of such performance," it is a characteristic of a contract of
employment, subject to its terms and conditions, that the employee
personally performs the work agreed upon under the employer’s direction and
within the framework established by the employer.
At
paragraph 92, Gagnon describes
the notion of subordination:
92 — Concept — Historically,
the civil law first developed a so-called strict or classical concept of
legal subordination that was used as a test for the application of the
principle of the civil liability of a principal for injury caused by the fault
of his agents and servants in the performance of their duties . . . This
classical legal subordination was characterized by the immediate control
exercised by the employer over the performance of the employee’s work in
respect of its nature and the means of performance. Gradually, it was relaxed,
giving rise to the concept of legal subordination in a broad sense. The
diversification and specialization of occupations and work techniques often
mean that the employer cannot realistically dictate regarding, or even directly
supervise, the performance of the work. Thus, subordination has come to be
equated with the power given a person, accordingly recognized as the
employer, of determining the work to be done, overseeing its performance and
controlling it. From the opposite perspective, an employee is a person
who agrees to be integrated into the operating environment of a business so
that it may receive the benefit of his work. In practice, one looks for a number
of indicia of supervision that may, however, vary depending on the context:
compulsory attendance at a workplace, the fairly regular assignment of work,
imposition of rules of conduct or behaviour, requirement of activity reports,
control over the quantity or quality of the work done, and so on. Work in the
home does not preclude this sort of integration into the business.
[16] When the Quebec Minister of Justice tabled
the new Civil Code, which came into effect on January 1, 1994, he stated:
[TRANSLATION]
The definition indicates the essentially temporary
nature of a contract of employment, thus enshrining the first paragraph of
article 1667 C.C.L.C., and highlights the chief attribute of such a
contract: the relationship of subordination characterized by the employer’s
power of control, other than economic control, over the employee with
respect to both the purpose and the means employed. It does not matter
whether such control is in fact exercised by the person holding the power; it
also is unimportant whether the work is material or intellectual in nature.
[Emphasis added.]
[17] This view of the Quebec Minister of Justice corresponds with
that of the Federal Court of Appeal in Gallant v. Canada, [1986] F.C.J.
No. 330 (QL), a judgment rendered in 1986 prior to the enactment of the
new Civil Code.
[18] The distinction between a contract of
employment and a contract for services is not an easy one to make. The line of
demarcation between these two types of contracts can be uncertain and the fact
that the issue arises so often before this Court is certainly indicative of its
difficulty. In my article, I describe the approach which should be followed
before this Court. I state therein that the burden of proof in an appeal heard
in Quebec — as is also the case for an appeal
heard in a Canadian common law province — is on the appellants: they have to
establish that they are entitled to have the decision of the Minister reversed. Here, it is thus
up to the Payer to establish that no contract of employment existed.
[19] In this appeal, there is no problem regarding the fact that work
was done and that it was remunerated. The difficulty lies in determining whether
the Tutor's work was performed under the direction or control of the Payer.
This determination requires a two‑step approach. First, it must be determined
what agreement the parties entered into and, then, whether it corresponds to
reality, i.e., whether the agreement was executed as such: in other words, was the
contract executed in accordance with its terms and with the relevant Civil Code
provisions?
[20] Here we have a written contract which
states that it is a contract for services ("service contract" being
the actual term used by the Payer) and that the Tutor was to provide her
services as a "self‑employed, autonomous worker or sub‑contractor".
However, the Tutor states that she did not understand the scope of this
stipulation. She believed that she was entering into a contract
of employment. Indeed, the Contract does not provide expressly that it is not a
contract of employment. Had this been spelled out, it would have been more
difficult for the Tutor to allege that she did not understand the nature of the
contract. There is therefore an element of doubt as to the common intention of
the parties. In order to resolve this issue, it is necessary to refer to the general
provisions of the Civil Code applicable to all contracts. Among those
provisions, we have the following dealing with the interpretation of contracts:
1425. The common intention of the
parties rather than adherence to the literal meaning of the words shall be
sought in interpreting a contract.
1426. In interpreting a contract,
the nature of the contract, the circumstances in which it was formed, the
interpretation which has already been given to it by the parties or which
it may have received, and usage, are all taken into account.
1427. Each clause of a contract is
interpreted in light of the others so that each is given the meaning
derived from the contract as a whole.
1432. In case of doubt, a
contract is interpreted in favour of the person who contracted the
obligation and against the person who stipulated it. In all cases, it is
interpreted in favour of the adhering party or the consumer.
[Emphasis added.]
[21] I believe that we have here a "contract of adhesion" because the
Contract was not only drafted by the Payer but it is a printed form document
that had to be completed by hand by the parties. The name and address of the
Tutor are handwritten as is the hourly rate applicable to the Tutor. In
addition, the statement in the Contract that the "Tutor declares that
she/he prefers and wants to work as a self‑employed, autonomous worker or
sub‑contractor [sic]" is not accurate. Rather, it appears to
be a self‑serving statement for the benefit of the Payer. As provided by
article 1432 of the Civil Code, the contract has to be interpreted in
favour of the adhering party.
[22] In interpreting a
contract such as the one between the Payer and the Tutor, the courts have a
duty to determine its true nature and to ensure that it meets the requirements
of the Civil Code. This is what I wrote in my article:
[97] Even if the contracting parties have manifested their intention in
their written or oral contract or if their intention can be inferred from their
conduct, this does not mean that the courts will necessarily view it as
determinative. As Décary J.A. indicated in Wolf, supra,
performance of the contract must be consistent with this intention. Thus, the
fact that the parties have called their contract a “contract for services” and
have stipulated both that the work will be done by an “independent contractor”
and that there is no employer-employee relationship does not necessarily make
the contract a contract for services. It could in fact be a contract of
employment. As article 1425 C.C.Q. states, one must look to the real
common intention of the parties rather than adhere to the literal meaning of
the words used in the contract. The courts must also verify whether the conduct
of the parties is consistent with the statutory requirements for contracts.
According to Robert P. Gagnon:
[translation]
91 —
Factual assessment — Subordination is verified by reference to the
facts. In that respect, the case law has always refused to simply accept the
parties’ description of the contract:
In the
contract, the distributor himself acknowledges that he is working on his own
account as an independent contractor. There is no need to return to this point,
since doing so would not alter the reality; furthermore, what one claims to
be is often what one is not.
[Emphasis added.]
2 It
should be noted at the outset that the parties' stipulation as to the nature
of their contractual relations is not necessarily conclusive and the Court
which has to consider this matter may arrive at a contrary conclusion based on
the evidence presented to it: Dynamex Canada Inc. v. Canada, [2003] 305 N.R. 295 (F.C.A.).
However, that stipulation or an examination of the parties on the point may
prove to be a helpful tool in interpreting the nature of the contract concluded
between the participants.
[Emphasis
added.]
[99] Judges may therefore recharacterize the contract so that its name reflects
reality. In France, the recharacterization of a contract results from
the application of the reality principle. The Cour de cassation
has adopted an approach similar to the Canadian one:
[translation]
Whereas the
existence of an employment relationship depends neither on the expressed will
of the parties nor on the name they have given to their agreement but rather on
the factual conditions in which the workers’ activity is
performed . . . .
[100] In my opinion, this verification that the actual relationship and the
parties’ description of it are consistent is necessary when interpreting
contracts of employment since the parties may have an interest in disguising
the true nature of the contractual relationship between the payer and the
worker. Experience shows, in fact, that some employers, wanting to
reduce their fiscal burden with respect to their employees, sometimes decide to
treat them as independent contractors. This decision can be made either at the
outset of the contractual relationship or later on. Similarly, some employees
could have an interest in disguising their contract of employment as a contract
for services because the circumstances are such that they do not foresee that
they will need employment insurance benefits and they want to eliminate their
employee contributions to the employment insurance program, or they desire more
freedom to deduct certain expenses in computing their income under the Income
Tax Act.
[101] Since the EIA generally authorizes the payment of employment
insurance benefits only to employees who lose their employment, the courts must
be on the alert to unmask false self-employed workers. The courts must also ensure
that the employment insurance fund, which is the source of these benefits,
receives premiums from everyone who is required to pay them, including false
self-employed workers and their employers.
[102] The necessity of proving that the contract has been performed exists not
only where the parties have explicitly or implicitly manifested their intention
to enter into either a contract of employment or a contract for services, but
in all cases where proof of their intention is insufficient or lacking.
Proof that the contract has been performed involves the three essential
components required in order for there to be a contract of employment. In
general, proof of the first two elements (the work and the remuneration) will
not be much of a problem since these are physical facts that are relatively
easy to establish. Proving the existence of a legal relationship of
subordination, namely the power of direction or control that the employer
exercised or could have exercised, is, on the other hand, a very delicate task.
It will be all the more so if the employer has exercised little or no direction
or control.
[23] Here, a close
examination of the provisions of the Contract leads me to believe that its true
nature is that of a contract of employment. Although the intention of the Payer
is clear — it intended to have a contract for services — many of the
stipulations regarding the conditions under which the work was to be performed
are more consistent with a contract of employment. First, the provisions of the
contract reveal that the Payer had the power to direct and control the work
performed by the Tutor. In my view, one of the strongest stipulations
disclosing such a power is the following: "Under the authority of the
'Corporation',
the 'Tutor' is expected to accomplish the following results". (Emphasis
added.)
[24] In addition to this general statement, there are the
following:
— tutors had to "respect
tutoring times provided by" the Payer
— tutors
could modify tutoring schedules only "in accord with the Payer"
— tutors
had to provide tutoring "based on the Continuums and resources offered
by" the Payer
— tutors
were to provide academic progress reports "based on the [Payer's] Continuums"
— tutors were
required to contact an authorized tutor of the Payer to replace them and to
call one of the Payer's learning coordinators to confirm the change
— students
were never to be left unsupervised
— tutors
were required to wear their name tag at all times while on school property
— "the
last five minutes of tutoring [were to] be reserved for a recap of the tutoring
session"
— "progress
reports [had to] be done on a timely basis"
— "jeans
[were] not permitted"
— "a
learning coordinator [was] assigned to [a tutor's] tutoring location [and] their
role [was] . . . to supervise the operations of the tutoring programs"
— "physical
and verbal aggressiveness [of tutors would] not be tolerated under any
circumstance[s]"
[Emphasis added.]
[25] In addition to these
contractual provisions, there is the direct evidence that the power of
direction and control was exercised by the Payer. Mr. Kuperhause
acknowledged that parents
could complain to the Payer about the quality of the services performed by the
tutors and that the Payer exercised direction and control over the tutors in
giving them instructions as to how to improve their work. Given that it never received
complaints about the Tutor's work, the Payer never had to exercise this power
in relation to her. However, it had the power to do so should there have been
any complaints, as was done with respect to other tutors.
[26] Other evidence of
the power of direction or control that the Payer exercised over the Tutor is the
fact that through its learning
coordinator it controlled the presence of the Tutor and made annotations on her
daily written reports. Where, as was the case in Hôpital juif de réadaptation c. M.R.N., 2005 CCI 260, a decision of
mine, a worker reports to a supervisor to find a solution for a particular
problem and follows the directions given by that supervisor, that is yet further
direct evidence of the power of direction being exercised by a payer over a
worker.
[27] In addition to the aforementioned direct
evidence of the direction and control exercised by the Payer over the work of
the Tutor, there is circumstantial evidence disclosing many indicia of
subordination.
One of these indicia is the integration of the work of the Tutor into the
business of the Payer. Three quarters of the services of the Tutor were provided
on the premises of the Payer. She was supplied with all the material that was
required for her work because she had access to what is described as a "library
of games and tools". It is true that the Tutor had the right to provide
her own games and tools, and she did, but the fact is that the Payer had a
library of games and tools and this is consistent with the fact that this Tutor
was integrated into its business.
[28] Another indication of integration, and
therefore of subordination, is the fact that the clients belonged to the Payer.
In addition, the Tutor was subject to a non‑competition clause and this has
been accepted by the courts in the past as an indication of the existence of a
contract of employment.
[29] It is true that the Tutor was not working 35 hours
a week for the Payer. However, this is because she was a student attending university.
There is no indication either that she was working for somebody else. In law,
you can be a part‑time employee who works only for short periods of time.
[30] In conclusion, the Payer did not discharge
its burden of showing that the Minister's decision was wrong. On the contrary,
the Minister was right in concluding that the Payer and the Tutor had entered
into a contract of employment and that she held insurable employment during the
relevant period. Therefore, the Payer's appeal is dismissed.
Signed at Ottawa, Canada, this 9th day of November 2005.
"Pierre Archambault"
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