[OFFICIAL ENGLISH TRANSLATION]
Date: 20010619
Docket: 2000-1788(EI)
BETWEEN:
BREUVAGES KIRI LTÉE,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Charron, D.J.T.C.C.
[1] This appeal was heard at
Montréal, Quebec, on February 14, 2001, in order to
determine whether Donat Di Patria, the worker, occupied insurable
employment within the meaning of the Employment Insurance
Act (''the Act'') while employed by
Breuvages Kiri Ltée, the appellant, from September 28,
1998 to April 30, 1999.
[2] In a letter dated February 17,
2000, the Minister of National Revenue (''the
Minister'') informed the appellant that this employment
was insurable because, during the period at issue, there was an
employer-employee relationship between the appellant and the
worker.
Statement of facts
[3] The assumptions on which the
Minister relied in making his decision are set out in paragraph 5
of the Reply to the Notice of Appeal, as follows:
(a) The appellant
company was incorporated. (denied)
(b) The appellant
company operated a soft drink and spring water bottling business.
(admitted)
(c) The worker was
an employee-a sales representative-for the appellant company
until September 25, 1998. (admitted)
(d) The worker was
laid off on Friday, September 25, 1998, and allegedly
hired as a self-employed worker on Monday,
September 28, 1998. (denied as written)
(e) After September
28, 1998, the worker was still a sales representative for the
appellant company. (denied as written)
(f) The worker
had an assigned territory and visited convenience stores. (denied
as written)
(g) The worker was
responsible for promoting the appellant company's products to
existing customers and for recruiting new customers. (denied as
written)
(h) At the end of
the day, the worker was required to travel to the appellant
company's distribution centre to relay orders and report
sales. (denied)
(i) The worker
had an office at the appellant company's distribution centre.
(denied as written)
(j) Deliveries
were made by delivery personnel. (admitted)
(k) The worker had a
quota of 1,200 cases of soft drinks. (denied as written)
(l) The worker
used his car to travel. (admitted)
(m) The appellant company
reimbursed car travel expenditures at the rate of $0.25 per
kilometre. (denied)
(n) Irrespective of
whether the appellant company considered the worker an employee
or a self-employed worker, all the working conditions except the
remuneration were the same. (denied)
(o) When the worker
was considered an employee, the appellant company paid the worker
$480 per week. (admitted)
(p) During the
period at issue, the appellant company paid the worker in the
form of a 5% commission on sales. (admitted)
[4] The appellant company admitted
that all the subparagraphs of paragraph 5 of the Reply to the
Notice of Appeal were true except those that it denied, as
indicated in parentheses at the end of each subparagraph.
Testimony of Jean-Claude Pelletier
[5] Jean-Claude Pelletier is
vice-president of sales and marketing for the appellant company.
In particular, he is responsible for the sales network, including
stores such as Couche-Tard, Provigo, Métro, IGA,
Costco, and drugstores. The appellant company is a limited
partnership with a variety of sales representative systems,
depending on the sales territory. The Boisbriand,
Lanaudière, Laurentides, Repentigny, Lachenaie, Terrebonne
and Saint-Lin regions are served by unionized sales
representatives. The Île-de-Montréal, Rive-Sud,
Laval, and Saint-Jérôme regions are served by
manufacturer's agents, as are the
Trois-Rivières, Mauricie, Shawinigan, Grand-Mère,
Lac-à-la-Tortue, Saint-Maurice,
Sainte-Anne-de-la-Pérade,
Cap-de-la-Madeleine, and
Sainte-Angèle-de-Laval regions. Jean-Claude
Pelletier produced a Record of Employment indicating that Donat
Di Patria was employed by the appellant company from
September 29, 1997, to September 26, 1998 (Exhibit
A-1), when Pierre Brazeau, Donat Di Patria and
André Charlebois became manufacturer's agents.
Pierre Brazeau turned down this arrangement because it was
not what he wanted. André Charlebois and Donat
Di Patria agreed to this arrangement since each already
owned a store. They shared Pierre Brazeau's territory. Bruno
Figliuzzi had signed the contract before they did. Since 1996,
Donat Di Patria had already been doing business as Les
Liquidations M. D., which was why there was a contract between
Breuvages Kiri and Les Liquidations M. D. André
Charlebois signed his contract as an individual. During the
period at issue, Donat Di Patria received a commission of
$485 per week plus $100 per week for the use of his
car.
[6] Counsel Stéphanie
Côté objected to Jean-Claude Pelletier's
testimony concerning Bruno Figliuzzi, Pierre Brazeau and
André Charlebois because of irrelevance. The objection was
taken under advisement and allowed.
[7] The appellant company provided the
worker with an office in Anjou. The goods sold were delivered by
delivery personnel. The worker used his car to travel and was
entitled to a 5% commission to cover his expenditures. He was
allowed to work at home, at convenience stores, or in
restaurants. He was not allowed to enter the sales warehouse. He
had to pay $0.10 for each photocopy he made. The appellant
company moved to the Anjou office on September 28, 1998, when the
worker's position was eliminated following a restructuring.
Another group arrived in February 1999. Although the appellant
company allowed the worker to set his work schedule, he was
required to report to the office to pick up his log books. In the
evening, he met with Bruno Figliuzzi, his supervisor, to give him
a detailed report of the day's sales and discuss what had
occurred with the development representative. During that period,
some reports were eliminated because they served no purpose.
After testing the system for six-to-eight weeks, the appellant
company introduced the manufacturer's agent system and
stopped using reports. Some sales representatives continued to
send reports to Bruno Figliuzzi as they had previously done. They
were free to operate as they wished within their respective
territories. Specifically, the worker was required to produce
reports when he was a sales representative but stopped doing so
when he became a manufacturer's agent because
Jean-Claude Pelletier no longer looked at the reports in any
case. The appellant company held sporadic meetings to which the
delivery personnel, sales representatives, distributors, and
manufacturer's agents were invited. These meetings
were optional. Manufacturer's agents were allowed to
sell anything the appellant company did not sell itself.
Testimony of Donat Di Patria
[8] Donat Di Patria has been a
sales representative for Breuvages Kiri since September 28, 1998.
Every day, using a sales log, he travels to customers'
premises, takes their orders, and relays the orders to Breuvages
Kiri (Exhibit I-2). He is required to complete daily reports on
sales and orders. Once orders are filled, delivery personnel
deliver them to recipients within 48 hours. The worker earns $480
per week plus $0.25 per kilometre. Breuvages Kiri's head
office is located in
Saint-Félix-de-Valois. The worker works
from 7:00 a.m. to 3:00 p.m. five days a week. In August 1998,
Bruno Figliuzzi told the worker that management had a long-term
arrangement to propose to him and showed him Exhibit A-2. From
that moment, he no longer received a salary or reimbursement for
car travel expenditures but received a 5% commission on
sales as a manufacturer's agent. The proposed
arrangement was optional and at the worker's discretion.
While the worker was a sales representative during the pilot
project period, he was required to complete reports and submit
them to Jean-Claude Pelletier or Bruno Figliuzzi.
Analysis of the facts in relation to the law
[9] We must now determine whether the
worker's activity is included in the concept of insurable
employment, that is, whether there is a contract of
employment.
[10] The case law has laid down four
essential tests for identifying a contract of employment. The
leading case is City of Montreal v. Montreal Locomotive Works
Ltd., [1947] 1 D.L.R. 161. These tests are: (1) control;
(2) ownership of the tools; (3) chance of profit; and
(4) risk of loss. In its decision in Wiebe Door Services Ltd.
v. Minister of National Revenue (M.N.R.), [1986] 3 F.C. 553,
the Federal Court of Appeal added the ''degree of
integration'' to this list. However, this list is not
exhaustive.
[11] In another relevant case, in its
decision in Raymond-Guy Gallant v. M.N.R., A-1421-84
(F.C.A.) the Federal Court of Appeal wrote: ''... The
distinguishing feature of a contract of service is not the
control actually exercised by the employer over his employee but
the power the employer has to control the way the employee
performs his duties.'' Our consideration must not
be limited simply to the power of control but must extend to the
way that power is exercised. In his decision in Thomas
Alexander McPherson v. M.N.R., [1976] N.R. 91, Cattanach
J stated: ''... the test of the employer requiring
an employee to order the manner in which the work is to be done
assumes lesser importance in the case of highly qualified
professional employees. These employees are hired by reason of
their qualifications. In practice therefore such persons are
rarely given instructions how to do the work but that does not
preclude a finding that the person is employed under a contract
of service. Detailed control over a professional employee as to
the manner in which work is done is necessarily minimal but the
material consideration is that the right of control exists even
though it is sometimes impossible to exercise and is rarely
needed to be exercised.'' The appellant company,
therefore, had adequate control over the worker.
[12] From September 29, 1997, until his
dismissal on September 25, 1998, the worker was paid a salary set
by the company: $485 for a 40-hour week. He was immediately
re-hired as an independent manufacturer's agent, at a
5% commission. He was no longer entitled to sick leave,
annual vacation, group insurance, a pension plan, tools and an
office provided by the employer, or liability insurance.
[13] That said, it is difficult to argue
that the worker was laid off. A number of conditions overlap the
period during which the worker admits having been a salaried
employee and the period during which he claims to be a
manufacturer's agent. What is the meaning of the
expression ''laid off''? In its decision in
Air-Care Ltd. v. Limited Steel Workers of America et al.,
[1976] 1 S.C.R. 2, the Supreme Court of Canada defines this
expression as follows (page 6):
The Union's case rests in large measure on the submission
that there is no difference between a reduction in the hours of
work and a lay-off and the moment one reduces the hours of work
of an individual that individual is laid off (mise à
pied). "Lay-Off" is not defined in the Quebec Labour
Code, R.S.Q. 1964, c. 141. However, the Shorter Oxford English
Dictionary defines "lay-off" as follows: "Lay-off,
a period during which a workman is temporarily discharged."
and Nouveau Larousse Universel, Tome 2 "Mise à
pied": "retrait temporaire d'emploi". In my
opinion none of the employees of Air-Care Ltd. was laid off on
the occasions in respect of which the grievance was
raised....
[14] Although, on the basis of Exhibit A-1,
the worker states that his employment was terminated, the same
sales representative is still working and still being paid. We
consider this situation to be continuous.
[15] The appellant company owns the tools of
work. The appellant company alone can make profits or incur
losses in operating its business, not the worker who only
receives a fixed salary. Finally, the worker performs his work on
the premises of the appellant company and is well integrated into
its business. I therefore find that, during the period at issue,
the appellant company was operating a business and the worker was
employed by it.
[16] The burden of proof was on the
appellant company, which has not discharged this burden on a
balance of probabilities.
[17] The appeal is therefore dismissed, and
the Minister's decision is confirmed.
Signed at Ottawa, Canada, this 19th day of June,
2001.
D.J.T.C.C.
Translation certified true
on this 9th day of June 2003.
Sophie Debbané, Revisor
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