REASONS
FOR JUDGMENT
Boyle J.
Introduction
[1]
In these two appeals, the Appellant is appealing
from rulings made under the Employment Insurance Act (the “EI Act”)
and the Canada Pension Plan (“CPP”) legislation that it was a “placement or employment agency” and that one of the workers it paid was engaged in “insurable employment” and “pensionable employment”.
[2]
The Vice‑President of the Appellant,
Ms. Farahnaz “Nina” Dehghani, and the worker, Ms. Hyacinth Dunkley, were called
by the Appellant to give evidence. The hearing lasted a day. The parties were
permitted to complete and supplement their argument with written submissions
filed later with the Court.
[3]
The Appellant is in the business of providing college
or university qualified Child and Youth Workers, Personal Support Workers, Social
Service Workers and Direct Support Workers to group homes, schools and families
to work with developmentally delayed individuals. The particular worker in
these appeals was a Child and Youth Worker. In its first-level appeal to the Canada
Revenue Agency (“CRA”) of these rulings, completed by the founder and President of the
Appellant, Mr. Ramin Mohammadi, in consultation with its accountant, its
business is described as a “placement
office”. In her testimony, its Vice‑President,
who is responsible for its day-to-day operations, described its business as
supplying relief staff on a temporary basis to their clients. She explained
that Wholistic Child and Family Services Inc. (“Wholistic”) was a “staffing agency” which she viewed as different from a placement agency or
employment agency because it put workers with clients temporarily to fill their
staffing needs. On its website, Wholistic describes itself as a provider of “staffing support” to families and the social services sector.
[4]
The agent representative of the Appellant,
Mr. Mohsen Ameli, essentially put forward two reasons why the rulings were not
correct.
[5]
The first is a question of law. He maintains
that the Appellant cannot be considered a “placement or employment agency” for
either EI or CPP purposes because the Appellant’s workers do not pay the
Appellant a fee for its services; they are instead paid a set hourly amount by
the Appellant without regard to what the Appellant is paid by its clients.
[6]
The second argument advanced for the Appellant
is a mixed question of fact and law. The Appellant maintains that the worker is
not under its control when she is providing the services for which she is paid,
and hence the “terms or
conditions” on which her services are performed
are not “analogous to a
contract of service” as required for purposes of
the CPP, and is not under the Appellant’s “direction and control”, as required
by the EI Act. The Appellant took the position that its worker was also not under
the direction or control of its clients.
[7]
There is only the placement or employment agency
basis for insurability and pensionability before the Court. That was the basis
of the rulings. The Respondent withdrew its alternate position set out in its
reply that the relationship between Wholistic and its worker was itself employment.
The Law
[8]
Unfortunately, the relevant EI and CPP
provisions are drafted somewhat differently in approach notwithstanding that
the EI and CPP are similarly valued Canadian social programs, the concepts of
insurable employment and pensionable employment are largely trying to capture
the same things, and the use of the term “placement or employment agency” in
each is trying to capture essentially the same work arrangement.
Canada Pension Plan (CPP)
[9]
Subsection 34(1) of the CPP regulations is a
deeming provision that expressly broadens the definition of pensionable employment.
Regulation 34(1) provides that:
Where any individual is placed by a
placement or employment agency in employment with or for performance of
services for a client of the agency and the terms or conditions on which the . . .
services are performed and the remuneration thereof is paid . . . are
analogous to a contract of service, the . . . performance of services
is included in pensionable employment and the agency or the client, whichever
pays the remuneration to the individual, shall . . . be deemed to be
the employer of the individual.
[10]
Regulation 34(2) provides that a “placement or employment agency” includes:
. . .
any person or organization that is engaged in the business of placing
individuals in employment or for performance of services or of securing
employment for individuals for a fee, reward or other remuneration.
[11]
The absence of a comma before at least one of the
phrases “or for performance of
services or . . .” and “for a fee, reward or other remuneration” does leave the reader wondering whether there is, or is intended
to be, a requirement for remuneration to the placement entity applicable in the
case of one engaged in the business of “placing individuals in employment or for performance of services”. The same lack of clarity and precision exists in the French
version.
[12]
However, on the facts of this case, the
significance of there not being a comma does not affect the consideration of
the argument of the Appellant’s representative that a placement or employment
agency only describes a business that is paid a fee by the worker. That
argument is clearly untenable and must fail on either interpretation. If the
fee, reward or other remuneration requirement does apply, the language of the
regulation clearly does not specify that it matters whether the remuneration is
received from its worker or from its client and there would be no reason for me
to read in any such restriction to this inclusive definition. If the fee,
reward or other remuneration does not apply, then the Appellant’s argument
cannot be advanced on the wording of the provision and, again, there would be
no reason for me to read in any such language requiring a fee and requiring it
to be from the worker.
[13]
For this reason, the Appellant’s first argument
must fail with respect to the CPP. The only remaining issue under the CPP is to
decide whether, on the facts of this particular case, the terms or conditions
on which the worker’s services are performed and on which the remuneration is
paid are analogous to a contract of service. It is not entirely clear whether
the remuneration, the terms and conditions of which are to be considered are
those applicable to the worker’s remuneration from the placement or employment
agency or those applicable to the agency’s remuneration from its client. The French
version is similarly unclear.
Employment Insurance (EI)
[14]
Paragraph 6(g) of the EI Regulations
provides that insurable employment includes:
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.
[15]
Notwithstanding that Regulation 6(g)
refers to a worker who is placed in “employment” by the agency, it has
been long and consistently held by the courts that the work relationship need
not be one of employment to be deemed to be employment under this language. The
word employment when used in the provision to describe a worker’s particular
work relationship instead means work in its fullest sense, and includes a
business, trade or occupation as well as the so‑called self-employed and
independent contractors. It was clearly decided by a unanimous Supreme Court of
Canada in The Queen v. Scheer Ltd., [1974] S.C.R. 1046,
that contextually the word employment in this provision has a broader meaning
than a contractual service relationship as the deeming rule would otherwise be
effectively meaningless.
That decision of the Supreme Court of Canada is binding on this Court and is
followed by it. See for example Alberta Defensive Driving School Inc. v.
Canada, [2002] T.C.J. No. 490 (QL), and Carver PA Corporation v. M.N.R.,
2013 TCC 125.
[16]
There is no definition of “placement or employment agency” in the EI Act or Regulations. In Carver PA, Justice Weisman
considered this and chose to apply the CPP definition of the term “placement or employment agency” to the EI appeal as well as the CPP appeal in that case. He was of
the view that the same definition should apply “to achieve as much consistency as possible between two provisions
intended to address the same situation”. I am in
full agreement with him. His approach also finds support in section 15 of the Interpretation
Act (Canada) which provides that an interpretation section or provision in
one act shall apply to all other enactments relating to the same subject matter
unless a contrary intention appears.
[17]
Giving the term “placement or employment agency” the
same meaning for EI purposes as it is given in the CPP means that the argument
of the Appellant’s agent representative that Wholistic was not a placement or
employment agency because it was not paid a fee by its workers must also fail
for EI purposes. It does not matter how the business receives its fee, reward
or other remuneration.
[18]
Since it is not disputed that Wholistic placed
the worker with its clients and that Wholistic paid the worker for her services
to its client, the remaining issue under Wholistic’s EI appeal is to decide
whether, on the particular facts of this case, the worker was under the
direction and control of Wholistic’s client when she performed her services for
them. It must be noted that it is the direction and control of Wholistic’s
client that must be considered under the EI Act, not the direction and control
of Wholistic.
CPP: Were the Terms and Conditions Analogous to a Contract
of Service?
[19]
The terms and conditions relating to the
performance of services and financial remuneration that are relevant in determining
whether the particular work arrangement constitutes an employment relationship
are well known and arise out of 671122 Ontario Ltd. v. Sagaz Industries
Canada Inc., 2001 SCC 59, and Wiebe Door Services Ltd. v. M.N.R., 87
DTC 5025. These considerations relate to considering factors of control over
the work and the worker (including the extent of subordination of the worker),
the provision of tools, materials, credentialing and equipment needed for the
worker to do the work, and the extent of the worker’s financial upside and
downside risks regarding the services provided by her.
[20]
These are the terms and conditions that need to
be considered in a CPP placement or employment agency case. In determining if a
work arrangement constitutes employment other than in a placement or employment
agency case, these are to be considered in the context of determining whether
the worker is truly in business for herself or is in an employment
relationship. These were most recently considered by the Federal Court of
Appeal in 1392644 Ontario Inc. (Connor Homes) v. Canada (National Revenue),
2013 FCA 85. Connor Homes also clarified the role of intention in an
employment relationship determination. However, intention does not appear to be
directly relevant in a CPP placement or employment agency case where the Court
is required not to determine if the legal relationship is one of employment
under a contract of service, but is specifically to consider whether the terms
or conditions for providing services and for remuneration are analogous to
those in employment under a contract of service. It can be noted that the
contract between Wholistic and Ms. Dunkley, and their respective
questionnaires completed for CRA in connection with its review of Wholistic’s
administrative appeal of the rulings, confirm that it was the intention and the
understanding of both that the relationship was to be one of independent
contractor and not of employment.
Control
[21]
Paragraph 2 of the worker’s agreement with
Wholistic, headed “Services”, provides that the worker will “provide health care support to [Wholistic]
and any or all of its clients as directed by [Wholistic]”. It continues that the worker “shall take direction(s) from [Wholistic] or from others as directed
by [Wholistic]”.
[22]
The agreement provides that the worker could not
provide her services to others unless the other company did not compete with
Wholistic and the work would not interfere with her obligations to Wholistic.
The agreement provided that any services to be provided by the worker to others
had to be brought to Wholistic’s attention well in advance and required
Wholistic’s prior written approval. Ms. Dunkley did not work for others
while she worked for Wholistic.
[23]
While there is language in the agreement that
says subcontracting by the worker is permitted in limited circumstances, which
include obtaining the prior written permission of Wholistic, it is clear from
the evidence of both witnesses that this was not in fact the case. Rather, the
worker only had the right to make a Wholistic colleague aware of a shift
availability that had been offered to her and which she declined or needed to
rearrange, after which the colleague would have to deal directly with
Wholistic. In addition, the worker could only recommend to Wholistic a qualified
person not already under contract with Wholistic. Wholistic would then complete
the credential and qualification review and interview process, and any shifts
to be offered to the person would be offered and arranged directly by Wholistic
in the ordinary course.
[24]
This contractual language gives Wholistic the
right to direct how the worker provides her services, and allows Wholistic to
have those directions provided by its clients. This is similar to the situation
in Loving Home Care Services Ltd. v. M.N.R., 2014 TCC 71, affirmed by
the Federal Court of Appeal, 2015 FCA 68, and in Dean (Ana’s Care & Home
Support) v. M.N.R., 2012 TCC 370. In those cases, the direction and control
of the appellants’ workers by their clients constituted direction and control
by the appellants. Wholistic has contracts in place with its clients which
provide for the degree of control of the client over the performance of
services by the Appellant’s workers, which is contemplated in the Appellant’s
contracts with its workers. In essence, the clients’ direction and control of
the work in such circumstances also constitute direction and control by the
Appellant since it is the Appellant who has a contractual relationship with the
workers.
[25]
Wholistic also had a written contract with its
clients. Neither side chose to put a Wholistic client contract into evidence.
However, the Vice‑President of Wholistic testified that Wholistic’s
client contracts specify the levels of control that Wholistic and its clients
have over the worker.
[26]
It is clear from the evidence that Wholistic
could not control the worker’s hours. Wholistic’s worker was clearly free to
accept or decline any offered shift. No reason was required to be provided. Ms. Dunkley
accepted virtually all (98%) of the shifts offered to her by Wholistic. Once
she accepted a shift she was committed to take it and the agreement provided for
notice of any need to cancel an accepted shift and a financial penalty
potentially applicable thereto. The worker could not send somebody else and pay
that person directly, nor could she send someone else to be paid directly by
Wholistic. I have described how the evidence negates any suggestion in the
worker’s contract that she could.
[27]
There are no set full‑time or part‑time
hours, nor an expectation of a regular schedule assigning hours for upcoming
periods. This absence of fixed or assigned hours is the greatest departure from
any of the terms or conditions of work which one commonly expects in an
employment relationship. This would be consistent with what is effectively
often referred to as casual employment, where there are no obligations on the
business providing the work to offer work, nor is there an obligation on the
worker to accept work. Instead, work hours, shifts or the work periods would be
set by agreement with varying degrees of notice. There would be no obligations
in either direction to offer or accept work.
[28]
When shifts were offered with a client,
Wholistic would give the worker a brief description of the client’s setting and
the nature of the needs and limitations of the individuals to be cared for so
workers could make informed decisions. Once an offered shift was accepted by
the worker, Wholistic did not directly exercise any control over the
performance of the worker’s services during her work period.
[29]
At the Wholistic client’s premises, which was
almost always a group home, occasionally a school board and, according to the
worker, was occasionally a private residence setting, the worker was told by
the client what specifically she was responsible to do that day.
[30]
At the group home, most of the workers were
working for the group home operator and were not outside relief workers. The
workers would always receive instructions at the start of any shift. There was
always a Shift Coordinator at the home who, in consultation with the shift’s
workers, instructed and decided what each worker was to do throughout the shift.
In addition to caring for a particular individual, tasks would include meal
preparation for a pre‑planned menu, counting and recording of petty cash,
individual clients’ cash, bus tickets, and sharps and cutlery, house cleaning, medication
administration,
shopping, etc. These other tasks take up about a third of the worker’s time
during a shift.
[31]
Each individual in care had their own set daily
schedule for the week that had been prepared professionally without input from
Wholistic or its workers which set out what the individual was to do and the
order of doing it. The worker’s responsibility was to assist that individual
understand, follow and perform those tasks. These schedules for the cared for
individuals were set out on a daily basis as part of a one-week or two-week
largely recurring schedule. There was also a Supervisor responsible for each
shift, though that Supervisor was not necessarily present throughout each shift.
The Supervisor appointed the Shift Coordinator. There was a logbook or movement
log for each individual in care which the worker was required to complete for
each shift she worked. There was also an overall logbook or communication book for
the group home in which the worker was required to record her arrival and
departure times and in which the Shift Coordinator wrote a summary at the end
of each shift which was sent to the Supervisor.
[32]
At the start of her shift, the worker would
speak with the worker whom she was relieving at the start of her shift about
the individual in care.
[33]
If there was any problem on the shift, the group
home or other client would notify Wholistic — there were never any such
incidents with Ms. Dunkley.
[34]
Ms. Dunkley could not complete her assigned
tasks and leave early, she was required to remain until the end of a shift, and
she always did.
[35]
The terms applicable to a Wholistic worker’s
performance of services were otherwise the same as those applicable to the
group home’s regular workers. It is not known if the group home’s workers were
employees, but Ms. Dunkley referred to them as employees.
[36]
In the case of a school, the worker said she
would take her direction from the teacher. If a home, she said it would be from
the parents.
[37]
Generally, how she completed supporting, guiding
and assisting an individual in each task was largely left to her professional
training and experience, provided she followed the client’s policies.
[38]
The workers’ hours were tracked by Wholistic,
its clients and its workers.
[39]
With the exception of the lack of fixed
full-time or part-time hours, and of the right of a company to assign work
hours or shifts to the worker, Wholistic’s control over its workers, which
includes the direction and control of the worker by its clients, is all
entirely consistent with, and analogous to, the terms and conditions of
employment under a contract of service.
[40]
Further, the existence of fixed full-time or
part-time hours or the right to assign work hours or shifts is not always
present in employment relationships. That is often the case for casual workers —
they only work the shifts offered that they agree to.
[41]
Upon review, the terms and conditions governing the
control of the worker’s performance of the services to Wholistic’s clients were
overwhelmingly analogous to those under a contract of service.
Tools
[42]
The worker did not need to bring any tools to
work. Wholistic did not provide her with any tools either. All needed materials,
supplies, tools, etc. were provided by the group home, school or family.
[43]
Wholistic’s workers were responsible for
obtaining and maintaining their own qualifications and credentialing. In
addition to their college or university certification or degree as Child and Youth
Worker, Personal Support Worker, Direct Care Worker or Social Service Worker, a
client’s setting might also require police and vulnerable persons’ checks,
crisis prevention and intervention, and safe conflict, anger and aggression management
type training courses and certification which also were the worker’s
responsibility to obtain and maintain. Wholistic did take responsibility in its
contract with its clients to ensure their workers were trained and qualified.
This is also highlighted a number of times on its website material.
[44]
The worker was required by Wholistic to have a
telephone to communicate offers and acceptance of shifts. Wholistic’s workers
were not required to take their phones to work as Wholistic presumed each
workplace would have a landline to be used for work-related calls including
emergencies. Ms. Dunkley did take her phone with her and would have used
it if an emergency presented itself.
[45]
There was no uniform required to do the work.
Ms. Dunkley wore sensible work clothes and sensible shoes. At least one
group home operator mandated closed-toe shoes.
[46]
The worker was responsible for getting herself
to and from the client’s premises for each shift. On occasion, when there were
timing constraints with respect to an offered shift, Wholistic would offer to
pay for a taxi to work. This happened very rarely.
[47]
The worker was required to have access to a
computer or fax to deliver an invoice of her hours to Wholistic on a twice‑monthly
basis.
[48]
On balance, these sorts of tool‑related
considerations are often not very helpful in determining whether or not a
worker is an employee. They are however commonly present in this manner in
relationships that are recognized as employment.
Profit and Loss/Financial Considerations
[49]
The worker’s hourly rate of pay was set at $16 in
the agreement, an amount that was acceptable to Wholistic and her. It increased
in June in one of the years reviewed to $17 per hour. The worker could only
make money by working for Wholistic. She could not lose money since she had
virtually no extra work-related expenses beyond showing up at the work site
qualified and dressed to work. She could only make more money by working more
shifts.
[50]
She was paid on a twice‑monthly basis by
direct deposit from Wholistic. While the contract suggests she would only be
paid as Wholistic’s clients paid Wholistic for her services, the evidence is
that this was not the case in practice. There was no evidence whatsoever of the
financial or payment terms between Wholistic and any of its clients.
[51]
These terms and conditions of remuneration are
also overwhelmingly analogous to remuneration under a contract of service.
[52]
With respect to the CPP appeal, I conclude that
it must be dismissed as the CPP provisions which deem workers to be in
pensionable employment with a placement or employment agency are met by Wholistic
and its work relationship with its worker.
EI: Was the Worker Under the Direction and Control of
Wholistic’s Client?
[53]
The evidence of control by Wholistic’s client
over the performance of services by the worker for the client is summarized
above under the CPP subheading “Control”.
[54]
Wholistic’s contract with the worker provides
that she will provide health care support to Wholistic and its clients as
directed by Wholistic and will take direction from Wholistic or others as
directed by Wholistic. The direction from Wholistic to the worker was to do
what its clients directed and Wholistic exercised no direct control over the
performance of the services at the clients’ premises. According to Wholistic’s
Vice‑President, its contracts with its clients specify the level of
control that Wholistic and the client has over the work. She said Wholistic had
zero control. Neither party put a client contract in evidence. Since she said
Wholistic has zero control over the performance of the services, I can infer
that the contract with the client specifies that the client exercises that
control. That is consistent with the evidence from both witnesses regarding the
worker’s on‑site performance of services at the clients’ premises.
[55]
Clearly the existence of the group home’s Supervisor,
the coordination of all shifts including the assignment of individuals to be
cared for and tasks to be performed by the Shift Coordinator, and the existence
of a pre-determined schedule of tasks and activities for each individual cared
for with guidelines on how tasks are to be done, the required reporting and
communication through the log, shift, activity and communication books relating
to the shift and relating to the individual cared for, clearly collectively place
Wholistic’s workers under the direction and control of its clients’ group
homes.
[56]
The worker said that in a school setting she
would take overall direction from the teacher in providing her support to an
individual at school. Similarly she said that parents provided this in a private
home setting.
[57]
With respect to the EI appeal, I conclude that
the evidence clearly establishes it must also be dismissed as Wholistic placed
its worker with its clients to provide services to them, Wholistic paid the
worker for her services, and the worker performed those services under the
clients’ direction and control.
[58]
Both appeals are dismissed.
Signed at Ottawa, Canada, this 9th day of February 2016.
“Patrick Boyle”
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