|
Citation: 2003TCC591
|
|
Date: 20030904
|
|
Docket: 2001-1852(EI)
|
|
BETWEEN:
|
|
DOUGLAS LUSSIER,
|
|
Appellant,
|
|
and
|
|
|
|
THE MINISTER OF NATIONAL REVENUE,
|
|
Respondent.
|
REASONS FOR JUDGMENT
(Edited from transcript of Reasons for Judgment
delivered orally
from the bench at Prince Rupert, British Columbia
on August 7, 2003.)
Hershfield, J.
[1]
The Appellant was employed by Jasper Labour Services as a
qualified licensed carpenter to work on the construction of a
water treatment plant. He was a member of the Christian
Labour Association of Canada, which is affiliated with the
Construction and Allied Workers Union, Local 68.
[2]
Jasper and the Union had entered into a collective agreement
governing the project and the employment of union member
workers. The Appellant worked on the project from March 20,
2000 to April 19, 2000 and had insurable earnings during this
period. After April 19 to the end of the project in August
of 2000 he was paid $12,000 under the terms of a settlement
agreement entered into among Jasper, the Union and the
Appellant. The issue in this appeal is whether the
Appellant had insurable earnings during this latter period.
[3]
The Appellant provided no services under the employment contract
after April 19. He had been told by the supervisor of the
project that he would be called back. He was not called
back. He did check in again and was told again he would be
called back. He still was not called back. He
promptly filed a grievance with the Union. It is clear that
he was improperly replaced and that the employer never intended
to call him back. There was a conflict between the
Appellant and the supervisor, which was acknowledged by the
Appellant. It seems clear from the testimony of the
Appellant, from the terms of the collective agreement and from
the general framework of the settlement agreement that the
employment was to continue for the duration of the construction
period. Replacing the Appellant was in breach of the
employer's obligations. However, no notice of
termination was given as required by the collective agreement.
That is, the supervisor did not do what was required under the
collective agreement to effect the termination and in other
respects it would seem that he did not comply with the agreement
as well. For example, the Appellant testified that the
supervisor did not advise the Union in accordance with the
collective agreement when the project started.
[4]
In any event, the grievance was resolved under the terms of the
settlement agreement. The agreement does not suggest that
the employee was terminated. There is reference to
termination but it is a defined term under the agreement.
Paragraph (b) of the preamble to the settlement agreement says
simply that the Appellant Lussier "was sent home" and
"not recalled to work" and then refers to that state of
affairs as "the Termination". That to me is not
an acknowledgement of termination but rather is an
acknowledgement of the circumstances exactly as described by the
Appellant in his testimony. The agreement goes on and
stipulates that the employer will pay $12,000 "for lost
wages" less income tax deductions and EI and CPP. The
EI portion for which the employee was responsible was also to be
covered by the employer under the terms of the agreement.
The agreement is expressly acknowledged at paragraph 5 as a
compromise not intended as an admission of any wrongdoing.
[5]
The Appellant applied for E.I. benefits in respect of the period
after April 19, 2000. The Canada Employment Insurance
Commission ruled that the $12,000 paid was not insurable
employment but a Board of Referees ruled that it was. The
Commission appealed the Board of Referees' decision to an
Umpire and, as well, requested and received a ruling under
section 90 of the Employment Insurance Act from the
CCRA. The ruling received from the CCRA was that the
$12,000 paid was not from insurable employment. The
Appellant appealed that ruling of the CCRA to the Minister under
section 91 of the Employment Insurance Act and the
Minister confirmed the ruling. The Umpire in the meantime
rescinded the Board of Referees' decision, which had
overruled the Commission's finding. The Umpire
confirmed that the jurisdiction to determine the question of
insurable employment was with the Tax Court as per section 103 of
the Employment Insurance Act.
[6]
I note that the Board of Referees is the only prior body with or
without jurisdiction that indicated that there was insurable
employment in respect of the period in question. The basis for
the Board of Referee's decision, as referred to by the
Umpire, was that the Appellant, Mr. Lussier, was still employed
after April 19th, 2000 and was paid for over 600 hours of
employment and that the settlement of $12,000 was payment for 600
hours of work according to the collective agreement. The
Appellant argues that this is the right approach. He was employed
to work and was paid as an employee for the hours he was to have
worked under his employment contract. The Appellant argues that
this is the normal approach taken by the Commission and that the
ruling of the CCRA is inconsistent with such approach.
[7]
The Board of Referees' acceptance of this approach does lend
some support to the likelihood of inconsistencies in the
application of the provisions of the Act as administered
by the Commission. I will refer to those inconsistencies
later in these Reasons. While I make note at this point of
the approach taken by the Board of Referees, I note as well that
I agree with the Umpire in respect of his finding that the Board
had no jurisdiction to determine the question now properly before
me.
[8]
However, I agree with the Board in its finding that Mr. Lussier
was still employed after April 19 up until the date of the
settlement agreement wherein it was agreed that the Appellant
would not return to work. That is, I accept that the
Appellant's employment was only effectively terminated at
that subsequent time.
[9]
The issue then is whether the funds received while
employed during this period, when he did no work, is
insurable employment.
[10]
The Respondent asserts the payment is damages for breach of the
collective agreement and that damages are not earnings from
insurable employment. There is clearly case law supporting
this position and to bolster its argument the Respondent relies
on section 9.1 of the Regulations which reads:
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.
[11]
The collective agreement at paragraph 24.07 provides as
follows:
An employee found to be wrongfully discharged or suspended will
be reinstated without loss of seniority and with back-pay
calculated at an hourly rate . . . times normal hours, less any
monies earned, or by any other arrangement which is just and
equitable in the opinion of the Arbitration Board.
The Appellant argues that the settlement agreement was,
accordingly, "back-pay", not damages.
[12]
The Appellant urges that this section of the collective agreement
was the operative provision of his employment that properly
describes his situation in terms of his union's framing of
the grievance and its seeking enforcement of the agreement.
I have said, and I repeat, I do not think that the circumstances
as described by the Appellant constitute termination or discharge
but it strikes me that the word suspension from his duties would
be applicable. He was effectively suspended from his duties
and replaced with a less qualified worker when he was already on
the job which is something that the employer cannot do. The
remedy is reinstatement and back-pay calculated at the normal
hours of work and that, it seems, is the formula that was
ultimately used in the settlement agreement, although without
prejudice. So the Appellant was employed; he was suspended
but not terminated; and, he received back-pay based on the hours
he would have worked had he not been suspended. Is that
earnings from insurable employment?
[13]
As I said, the Board of Referees found that this was insurable
employment. They found that the Appellant was still employed
after April 19 and was paid for 600 hours in accordance with the
collective agreement. One might restate that position by
saying that the Appellant was paid his employment income in
accordance with his employment contract which specified his
remuneration in the circumstances.
[14]
Still, this particular form of "back-pay" is not for
work actually performed. We do have a breach of the
contract and we do have, in fact, notwithstanding the context or
the language used in the collective agreement or the settlement
agreement, a failure of the employer to perform the terms of the
agreement and there is a rectification of that and that
rectification is the calculation of lost wages based on lost
time. The Respondent asserts then that the payment is
damages for the breach of the collective agreement and that
damages are not, again, earnings from insurable employment.
[15]
While I agree that there was a breach of the employment contract
here and that the settlement award, even if paid pursuant to
paragraph 24.07 of the collective agreement which I accept
that it was, was in the nature of damages, I must still recognize
that the payment to the Appellant was in respect of his
employment and in accordance with the terms of his employment
contract.
[16]
The Regulations to the Employment Insurance Act make
reference to this (see the Respondent's book of authorities,
tab 3, which cites Regulations and under Part 1, Insurable
Earnings, paragraph 2(1)). That regulation provides as
follows:
For the purposes of the definition "insurable earnings"
in subsection 2(1) of the Act and for the purposes of these
Regulations, the total amount of earnings an insured person has
from insurable employment is
(a) the total of all amounts, whether wholly or partly pecuniary,
received or enjoyed by the insured person that are paid to the
person by the person's employer in respect of that
employment;
. . . (emphasis added)
This is very encompassing language and certainly the amounts
paid here were paid in respect of employment, if, as I have
found, the contract of service continued during the period in
question. There is a contract of service, an element of
which was breached, but that does not mean that the contract of
service did not exist.
[17]
During the course of argument I also referred Respondent's
counsel to an annotation in a Carswell edition of the
Employment Insurance Act which said that insurable
employment requires a contract of service and earnings
attributable to that contract. Cited as authority for this
was the case of Sprague v. Canada,
[1989] F.C.J. No. 268 (F.C.A.). Counsel for the
Respondent found that case and provided a copy.
Interestingly, the Federal Court of Appeal in its brief judgment
only found that insurable employment requires a contract of
service. There is nothing in that judgment that goes
further to suggest that the earnings will be covered as long as
they are attributable to that contract. Authority for this
aspect of defining "insurable employment" can still
best be found in the Regulation cited.
[18]
This leads me to say that the Appellant has a sound argument and
a fertile position to pursue. But, on the other hand, I am
faced with precedents of this Court and the Federal Court of
Appeal and somewhat by the inferences of Regulation 9.1 and its
implications on the question.
[19]
For the record, I will refer quickly to the cases to which I have
been referred by the Respondent, which the Appellant does not
believe are on all fours, but nonetheless are, in my view,
sufficiently close to be regarded as valuable. The first
decision is Granger v. Canada, [1999] T.C.J. No. 400
(T.C.C.) a judgment of now Justice Mogan. That was a case
where there was a reinstatement of an employee and compensation
for loss of earnings. There was a question in Justice
Mogan's mind as to whether or not there was a contract of
service still in existence at the time when these earnings were
to have been paid. He concluded that there was not a
contract of service at the time. He found that the
reinstatement was of a former employee, someone whose services
had been terminated. He found that payments were "for
compensation for loss of earnings" and as compensatory
payments were not insurable. He went on to say however:
If I should be wrong, and if a contract of service did exist
during the relevant periods, there were no services performed by
the Appellant during those periods and no wages earned. The
amount received as compensatory payments for loss of earnings is
not earnings from insurable employment.
He referred to Élément v. Canada, [1996]
F.C.J. No. 718 (F.C.A.), Forrestall v. Canada,
[1996] F.C.J. No. 1638 (F.C.A.), Berns v. Canada, [1987]
T.C.J. No. 1010 (T.C.C.) and Falconbridge v.
Canada, [1989] T.C.J. No. 229 (T.C.C.).
[20]
In Forrestall, a decision of the Federal Court of Appeal
in 1996, it was held that, again, as a result of a grievance by
an employee (concerning a purported discharge which on settlement
was agreed to have been a suspension), compensation paid for the
loss of earnings and benefits incurred during the suspension was
"damages" not "wages". The worker was
not taken back but was paid for the amount that he otherwise
would have earned. The Tax Court judge had held that there
was insurable earnings during that period. The Federal
Court of Appeal overruled the Tax Court judge and said, following
the decision in Élément, that a person who
does not perform any work and receives no wages does not hold
insurable employment.
[21]
In the Élément case, the Federal Court of
Appeal upheld the Tax Court judge who found that settlement in a
grievance procedure constituted damages, notwithstanding workers
were paid an amount equal to the wages that would have been
earned in the period if they had been worked on a normal
basis. It was found, again, that a person who does not
perform any work or receive any "wages" does not hold
insurable employment.
[22]
It is very difficult for me to distinguish the case at bar from
the cases considered by the Federal Court of Appeal and I am
thereby not able to apply a law at variance with that applied by
it. Further, as I have said, judges of this Court have come
to similar conclusions. In addition to Granger, I
have been referred to the Moreau case decided by Tardif,
J., [2000] T.C.J. No. 280 (T.C.C.). That case dealt with a
severance, which I think is distinguishable from the case at bar,
but, nonetheless, I note strong reliance was placed by Justice
Tardif on section 9.1 of the Employment Insurance Regulations,
which states that where a person's earnings are paid on an
hourly basis then you only have insurable employment for the
number of hours actually worked.
[23]
I appreciate that in a non-severance case it is arguable (where
there is a formula to compute compensation where no work is
provided) that earnings are not on an hourly basis so that
section 9.1 of the Regulations has no application. The
Appellant argues that the amount he received, the $12,000, was
wages; that the contract subsists; a calculation of an amount due
under the contract was made and was paid as wages. The
argument that the Appellant wants to employ is, in effect, that
there were two types of compensation provided for in his
employment contract: one was an hourly rate for hours
worked and the other was an amount to be paid for a period of
time in respect of which no work was done where work should have
been done and that the latter basis of employment and
compensation is not compensation on an hourly basis even though
one ultimately calculates it as if work had been performed on an
hourly basis. Such a distinction is subtle, but, nonetheless, it
is one that can be argued. Unfortunately, it seems to fly
in the face of the decisions of the Federal Court of Appeal which
recite a contrary view.
[24]
The Appellant has also argued that to require actual work for
each hour of remuneration would disqualify any number of
categories of persons who have insurable employment
notwithstanding that they did not work. I can think of a good
example for the Appellant, namely, employees that are paid for
standby time. They might even be paid for standby time on an
hourly basis although they perform no work. Their
"work" is their availability. In the case at bar it is
not at issue that the Appellant was available to work. He was
waiting to be called. He thought he was going to get a call. He
did not go out and look for other work. The analogy strikes
me as strong and the argument strikes me as strong as well but it
ultimately begs the question in these cases which is what is the
compensation for? If it is compensation to do that which the
employer requires the worker to do the amount is
"wages". If it is compensatory for a breach or for a
loss incurred due to a breach it is not "wages".
[25]
I note that the Appellant is frustrated, indeed angry, that he
has been picked out for scrutiny under a legal microscope when
the general administration of employment insurance, in his
experience at least, is that payments made pursuant to the terms
of an employment contract, which he asserts include back-pay
received in his circumstances, are generally treated as insurable
wages as underlined by the Board of Referees'
determination. It is his view, then, that he is being
inconsistently treated and discriminated against by virtue of the
way his employer filled out the employment record. He might
well be right. If the employer had not filled out the employment
record in the way it did, this matter might never have arisen and
he would not have been put under this legal microscope.
[26]
I cannot, however, make findings on the appropriateness of how
other cases have been treated. I can only do my part in
helping to achieve consistency. If I were to disregard the
Federal Court of Appeal decisions and decisions of this Court, I
would only be adding more confusion to an area where there has
been judicial consistency. It is only through consistency
in the courts that consistency in the administration of the
provision of the Employment Insurance Act can be
achieved.
[27]
The question before me is whether the payments are compensatory
for things which the employer asks of the employee or
compensatory for a breach and a loss incurred due to such
breach. The operative provision of the collective agreement
that gave rise to the subject $12,000 payment is there to remedy
a breach. The Appellant was wrongfully precluded from
earning that which he was entitled to have earned under the
employment agreement and what he was entitled to receive under
the terms of that agreement. What he received under the
settlement agreement was, in my view, nothing less than damages
for a breach by the employer in improperly excluding the
Appellant from the work that the collective agreement required to
be performed by him.
[28]
In that regard I can find no distinction in this case from the
cases that the Federal Court of Appeal considered when finding
that compensatory payments for breaches of employment contracts
are not payments covered by the Employment Insurance
Act.
[29]
While I acknowledge that the Appellant has put forward some
cogent arguments and while I am troubled by the fact that the
payments in question might, but for the binding decisions of the
Federal Court of Appeal, have been found to be insurable under
the definition in paragraph 2(1) of the Regulations, I am
compelled to follow the decisions of the Federal Court of
Appeal. I am bound by them and accordingly I find that the
appeal must be dismissed. The $12,000 in question was not
paid in respect of insurable employment.
Signed at Ottawa, Canada, this 4th day of September 2003.
Hershfield, J.
Email this Content