REASONS
FOR JUDGMENT
Boyle J.
[1]
The issue to be decided in this appeal is
whether Liliane Riendeau was
engaged in insurable employment for several months in 2012 with Romanza Soins Capillaires et Corporels Inc. (“Romanza”) for the purposes of the Employment
Insurance Act (the “Act”).
[2]
This appeal was originally heard by Justice
Jorré of this Court. With the consent of the parties, the appeal is being
decided by me on the basis of the transcript and the record.
I. The
facts
[3]
Romanza operated a beauty salon under the name
Romanza Salon and Spa in Laval, Quebec. She has since sold the salon and is now
a lawyer. It was owned and operated by Mme Andria D’Elia at the time in
question. The salon offers hairdressing, beauty care, tanning, make-up, nails, laser
treatment services and massage therapy. Mme D’Elia testified for the Appellant.
[4]
Liliane Riendeau is an esthetician who provided
esthetic and electrolysis services at the salon. This included facials,
manicures, pedicures and depilatory treatments.
[5]
Mme Riendeau had worked as an esthetician in a
number of other salons for forty years. Before interviewing and beginning to
work at Romanza, she was interested in leaving her then current position at a
salon in Rosemère because her
work terms were to change to percentage commission remuneration.
[6]
At that time, Mme Riendeau saw an online Kijiji advertisement
for a position at Romanza Salon and Spa which was described as a salaried plus
commission position for a qualified esthetician who could also do laser
treatments. She attended an interview with Mme D’Elia. They discussed the terms
of work and her compensation.
[7]
At or about the time Mme Riendeau began to work
at the salon, she entered into a written agreement entitled Contrat de Travail with Romanza which provides
among other things that their contract was month-to-month, that clients
remained the clients of Romanza, that the worker was responsible for any damage
to the tools or equipment of Romanza, and that the worker would respect the
salon’s opening and closing hours. The agreement also specified that the worker
was a distinct person from Romanza and that Romanza would not be responsible
for the debts or fiscal obligations of the worker. It also provided “le travailleur
doit respecter le règlement de l’entreprise ainsi les tâches a accomplir”.
[8]
The terms of their arrangement provided that Mme
Riendeau would be paid a $15 hourly rate for esthetician work and would receive
a 10% commission for products sold from the lines Romanza carried and offered
for sale. This differed from the other estheticians at the salon who all
received 40% to 60% of the customer fees for their services plus product sale
commissions. No one else was paid an hourly rate.
[9]
Their agreement also provided that Mme Riendeau
would have the opportunity to exclusively offer her naturopath, herbal remedy
and nutritionist services and products at Romanza Salon and Spa. According to
Mme D’Elia Mme Riendeau was to pay a fixed percentage of her fees for these
services to Romanza together with a 10% commission on sales of her line of
related products. According to Mme Riendeau, she was to be paid her normal
hourly rate for these services. She agrees she was to keep the product sales
revenues less a 10% commission. She acknowledged she set the $60 fee to be
charged to clients for these consultations.
[10]
Mme Riendeau began to work at the Romanza Salon
and Spa in August 2012.
[11]
The salon’s hours were from 10 a.m. to 8 p.m. on
weekdays and 9 a.m. to 3 p.m. on Saturdays. Mme Riendeau agreed to work
Wednesday through Saturday. She was not provided with a key or the alarm code
so that she was only able to work during the posted hours of the business. She
could end her day early if she did not have a client.
[12]
There were a number of other workers at the
salon and there were regulatory and business restrictions on which salon
services each could provide.
[13]
Mme D’Elia was not often present at Romanza
working, supervising or managing. Her younger sister provided laser treatments at
the salon and would sometimes open and close the business in Mme D’Elia’s
absence, however most of the Romanza’s workers had keys and could and did open
and close the salon.
[14]
The services offered by Mme Riendeau were
offered and provided in private rooms and no one else from Romanza was present
with Mme Riendeau and the client.
[15]
Mme Riendeau earned an hourly rate for her work
that was agreed to at the start. She was paid weekly by cheque an amount equal
to her hourly rate times the number of hours worked. A particular cheque would
be slightly greater if she had earned commissions on product sales during the
period.
[16]
Mme Riendeau ceased to work at Romanza in
mid-October after a period of approximately 9 weeks. According to Mme D’Elia, the
reason for their new work arrangement being so short-lived was she had received
client complaints about hygiene and health concerns with Mme Riendeau’s
services. Virtually all of Mme Riendeau’s work during the period was comprised
of esthetic and electrolysis services. While she offered and promoted her
naturopath and herbal remedy services, she only had a single customer for those
services while working at the Romanza Salon during this brief period.
[17]
Mme Riendeau filed a complaint with the
Provincial Commission des Normes du Travail after her contract was terminated. She withdrew that
complaint once she received her cheque for her final week worked. She had found
other work by that time.
II. The
relevant legislation
[18]
Insurable employment under the EI Act is
defined in paragraph 5(1)(a) of that Act to be as follows:
INSURABLE EMPLOYMENT
5. (1) Type of
insurance employment — Subject to subsection (2),
insurable employment is
(a) employment in
Canada by one or more employers, under any express or implied contract of
service or apprenticeship, written or oral, whether the earnings of the
employed person are received from the employer or some other person and whether
the earnings are calculated by time or by the piece, or partly by time and
partly by the piece, or otherwise;
[19]
Article 2085 of the Civil Code of Québec (the
“Civil Code”) defines contract of employment as
follows:
CHAPTER
VII
CONTRACT
OF EMPLOYMENT
Art. 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.tract of employment as follows:
[20]
In contrast, article 2098 defines a contract of
enterprise or for services as follows:
CHAPTER
VIII
CONTRACT
OF ENTERPRISE OR FOR SERVICES
SECTION I
NATURE AND SCOPE OF THE CONTRACT
Art. 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.
[21]
Article 2099 provides as follows:
Art. 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.
[22]
Article 1425 is relevant to the interpretation
to the contract and it provides as follows:
Art. 1425. The common intention of the parties rather than adherence to the literal
meaning of the words shall be sought in interpreting a contract.
[23]
It is apparent from several decisions of the
Federal Court of Appeal, including Le Livreur Plus Inc. v. Canada (Minister
of National Revenue), 2004 FCA 68, that the traditionally common law
criteria or guidelines mentioned in Wiebe Door Services Ltd. v. M.N.R.,
[1986] 3 F.C. 553, 87 DTC 5025, are points of reference in deciding whether
there is between the parties a relationship of subordination which is
characteristic of a contract of employment or whether there is instead a degree
of independence which indicates a contract of enterprise under the Civil
Code. It is also the case that the parties’ mutual intention or stipulation
as to the nature of their contractual relations should be considered and may
prove to be a helpful tool in interpreting the nature of the contract for
purposes of characterizing it under the Civil Code. See for example the
decisions of the Federal Court of Appeal in D & J Driveway Inc. v.
Canada (Minister of National Revenue), 2003 FCA 453, and in Grimard v.
Canada, 2009 FCA 47, 2009 DTC 5056, wherein the intention of the parties is
described as an important factor to be considered in characterizing a contract
for purposes of the Civil Code. The comments of the Federal Court of
Appeal regarding the intention of the parties in these Quebec cases is
consistent with its more recent comments regarding the significance of
intention at common law in 1392644 Ontario Inc. (Connor Homes) v. Canada
(M.N.R.), 2013 FCA 85 below.
[24]
The traditional common law tests or guidelines
for a contract of service/employment versus a contract for services/independent
contractor are well‑settled. Insurable employment is to be resolved by
determining whether the individual is truly operating a business on his or her
own account. See the decisions in Market Investigations, Ltd. v. Minister of
Social Security, [1968] 3 All E.R. 732 (Q.B.D.), in 671122 Ontario Ltd.
v. Sagaz Industries Canada Inc., 2001 SCC 59, [2001] 2 S.C.R. 983, and in Wiebe
Door Services Ltd. v. M.N.R., [1986] 3 F.C. 553, 87 DTC 5025.
[25]
This question is to be decided having regard to
all of the relevant circumstances and having regard to a number of criteria or
useful guidelines including: 1) the intent of the parties; 2) control over the
activities; 3) ownership of tools; 4) chance of profit or risk of loss. There
is no predetermined way of applying the relevant factors and their relative
importance and their relevance will depend upon the particular facts and
circumstances of each case.
[26]
The antinomy between civil law and common law
analyses of insurable employment for EI purposes is detailed by the Federal
Court of Appeal in Grimard, at paragraphs 27 through 46. I would refer
in particular to paragraph 43:
33 As
important as it may be, the intention of the parties is not the only
determining factor in characterizing a contract: see D&J Driveway Inc.
v. Canada (M.R.N.), 2003 FCA 453; Dynamex Canada Inc. v. Canada,
2003 FCA 248. In fact, the behaviour of the parties in performing the contract
must concretely reflect this mutual intention or else the contract will be
characterized on the basis of actual facts and not on what the parties claim.
…
36 In Wolf
v. The Queen, [2002] 4 F.C. 396, our colleague Mr. Justice Décary cited the
following excerpt written by the late Robert P. Gagnon in his book entitled Le
droit du travail au Québec, 5th ed.(Cowansville: Les Éditions Yvon Blais,
2003), page 67, and clarifying the content of the notion of subordination in
Quebec civil law:
[TRANSLATION]
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 (art. 1054 C.C.L.C.; art. 1463 C.C.Q.). 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
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.
37 This
excerpt mentions the notion of control over the performance of work, which is
also part of the common law criteria. The difference is that, in Quebec civil
law, the notion of control is more than a mere criterion as it is in common
law. It is an essential characteristic of a contract of employment: see D&J
Driveway, supra, at paragraph 16; and 9041-6868 Québec Inc. v.
Canada (Minister of National Revenue), 2005 FCA 334.
38 However,
we may also note in the excerpt from Mr. Gagnon that, in order to reach the
conclusion that the legal concept of subordination or control is present in any
work relationship, there must be what the author calls [translation] "indicia of supervision", which have
been called "points of reference" by our Court in Le Livreur Plus
Inc. v. MNR, 2004 FCA 68 at paragraph 18; and Charbonneau v. Canada
(Minister of National Revenue – M.N.R.) (1996), 207 N.R. 299, at paragraph
3.
39 For example, under Quebec civil law, integration of a worker
within a business is an indicator of supervision that is important or useful to
find in order to determine whether legal subordination exists. Is that not also
a criterion or a factor that is used in common law to define the legal nature
of an existing employment contract?
40 Likewise, as a general rule, it is the employer and not the
employee who makes the profits and incurs the losses of the business. In
addition, the employer is liable for the employee's actions. Are these not
practical indicators of supervision, indicating the existence of legal
subordination in Quebec civil law as well as in common law?
41 Finally,
is the criterion of the ownership of work tools that is used by the common law
not also an indicator of supervision that would be useful to examine? Depending
on the circumstances, it may reveal the degree of an employee’s integration
into the business or his or her subordination to or dependence on it. It may
help to establish the existence of legal subordination. In a contract of
employment, more often than not, the employer supplies the employee with the
tools required to perform the work. However, it seems to me to be much more
difficult to conclude that there is integration into a business when the person
performing the work owns his or her own truck with his or her name advertised
on the side and containing some $200,000 worth of tools to perform the tasks
that he or she does and markets.
42 It goes
without saying, in both Quebec civil law and common law, that, when examined in
isolation, these indicia of supervision (criteria or points of reference) are
not necessarily determinative. For example, in Vulcain Alarme Inc. v. Canada
(Minister of National Revenue – M.N.R.), [1999] F.C.J. No. 749, (1999), 249
N.R. 1, the fact that the contractor had to use expensive special detection
equipment supplied by the client to check and gauge toxic substance detectors
was not considered to be sufficient in itself to transform what was a contract
for services into a contract of employment.
43 In
short, in my opinion there is no antinomy between the principles of Quebec
civil law and the so-called common law criteria used to characterize the legal
nature of a work relationship between two parties. In determining legal
subordination, that is to say, the control over work that is required under
Quebec civil law for a contract of employment to exist, a court does not err in
taking into consideration as indicators of supervision the other criteria used
under the common law, that is to say, the ownership of the tools, the chance of
profit, the risk of loss, and integration into the business.
[27]
Similarly, this has been addressed by the
Federal Court of Appeal in Livreur Plus Inc., at paragraphs 18 through
20 as follows:
18 In
these circumstances, the tests mentioned in Wiebe Door Services Ltd. v.
M.N.R., 87 D.T.C. 5025, namely the degree of control, ownership of the work
tools, the chance of profit and risk of loss, and finally integration, are only
points of reference: Charbonneau v. Canada (Minister of National Revenue -
M.N.R.) (1996), 207 N.R. 299, paragraph 3. Where a real contract exists,
the Court must determine whether there is between the parties a relationship of
subordination which is characteristic of a contract of employment, or whether
there is instead a degree of independence which indicates a contract of
enterprise: ibid.
19 Having
said that, in terms of control the Court should not confuse control over the
result or quality of the work with control over its performance by the worker
responsible for doing it: Vulcain Alarme Inc. v. The Minister of National
Revenue, A-376-98, May 11, 1999, paragraph 10, (F.C.A.); D & J
Driveway Inc. v. The Minister of National Revenue, supra, at paragraph 9.
As our colleague Décary J.A. said in Charbonneau v. Canada (Minister of
National Revenue - M.N.R.), supra, followed in Jaillet v. Canada
(Minister of National Revenue - M.N.R.), 2002 FCA 394, "It is indeed
rare for a person to give out work and not to ensure that the work is performed
in accordance with his or her requirements and at the locations agreed upon.
Monitoring the result must not be confused with controlling the worker".
20 I agree
with the applicant's arguments. A subcontractor is not a person who is free
from all restraint, working as he likes, doing as he pleases, without the
slightest concern for his fellow contractors and third parties. He is not a
dilettante with a cavalier, or even disrespectful, whimsical or irresponsible,
attitude. He works within a defined framework but does so independently and
outside of the business of the general contractor. The subcontract often
assumes a rigid stance dictated by the general contractor's obligations: a
person has to take it or leave it. However, its nature is not thereby altered,
and the general contractor does not lose his right of monitoring the results
and the quality of the work, since he is wholly and solely responsible to his
customers.
[28]
The Federal Court of Appeal similarly wrote in D
& J Driveway Inc. as follows:
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.
[29]
The Court in D & J Driveway Inc.
went on to acknowledge at paragraph 4 that the criteria developed in Wiebe
Door Services can be referred to in assessing whether a relationship of
subordination exists under the Civil Code.
III. Analysis
A. Intention
[30]
The written agreement between Mme Riendeau and
Romanza is written in plain language and does not refer to Mme Riendeau as an
employee, the relationship as employment, nor to any form of withholdings or
deductions of source, nor to vacation pay.
[31]
The new work arrangement at Romanza provided Mme
Riendeau with the opportunity to develop her new venture as naturopath,
nutritionist and herbal remedy consultant, as well as the opportunity to sell
her own chosen line of products relating to those services in a salon where no
one else was to provide those services.
[32]
Mme Riendeau did not say in evidence that she
did not understand that she would be paid gross amounts without withholdings.
[33]
It appears from Mme Riendeau’s testimony
describing her version of events and from her ability to answer questions asked
of her, that she is a capable and articulate person. I conclude that Mme
Riendeau knew and understood from the outset that she would be paid without any
employee withholdings or vacation pay. She also understood and valued of the
opportunity to develop her new health services and products venture. It is only
reasonable to conclude that Mme Riendeau also understood that she would be an
independent contractor and not an employee of Romanza.
[34]
Mme D’Elia on behalf of Romanza had drafted the
written work agreement and clearly intended this to not be an employment
relationship, while it does not specify that clearly or expressly.
[35]
Regardless of what was set out summarily in the
salon’s online advertisement on Kijiji about a salaried position, after an
interview and some discussion and negotiation, the parties appeared to have
agreed otherwise in their written agreement.
[36]
In testing whether the arrangement actually
worked and respected was consistent with the parties’ intentions, understanding
and expectations at the outset, the Court is somewhat restricted by the very
short work period involved with this particular worker at Romanza Salon and
Spa.
[37]
Nothing the parties specifically did would have
been inconsistent with the characterization of a contract for services. That
does not mean that taken as a whole, having considered all of the relevant
considerations and indicia, there may not be an overall degree of direction and
control and subordination sufficient to make it employment.
B. Subordination, Control and
Indicia of Supervision
[38]
It is clear that considerations of the extent of
control of the payor over the worker are significant in deciding whether there
is an employment relationship by virtue of subordination. The language of the Civil
Code contemplates an obligation or an undertaking of the worker to do work
according to the instructions and under the direction or the control of the
other person.
[39]
Mme D’Elia was not at the salon all of the time,
nor was she present when Mme Riendeau was with a customer for any of her
services. The evidence does not establish that Mme D’Elia’s younger sister who also
worked with clients at the salon was in charge, or even always present, when
Mme D’Elia was not there.
[40]
There is little to no evidence of Romanza’s
control over its other workers at the salon. All of the other estheticians were
independent contractors. In any event, it appears that Mme Riendeau’s
circumstances were sufficiently different and distinct given her health
services and product activities in addition to her other esthetician services
offered by the salon.
[41]
The services provided by Mme Riendeau to
customers were provided individually and, given their nature, in a private
room. No one else from Romanza including Mme D’Elia was qualified to provide
some of these services.
[42]
I am not satisfied that this degree of control
is sufficient when considered alone to be the type of direction and control to
which article 2085 of the Civil Code is referring. Considering this
aspect alone, it appears to be better described in article 2098 as the
contractor undertaking to carry out physical work for, or provide a service to,
another person for a price without any relationship of subordination per
article 2099.
C. Ownership of Tools
[43]
The salon was fully furnished and equipped to provide
the services offered and these were provided to all who worked there. Mme
Riendeau chose to bring a few small hand tools of her own to work because of
her personal preference for specific utensils such as a spatule and pince. In a
case such as this, the ownership of tools will not be a very helpful
consideration as they are customarily provided for all workers, whether
employees or independent contractors.
D. Chance of Profit/Risk of Loss
[44]
Mme Riendeau was paid an hourly rate for her
esthetician services. She therefore had little chance of increasing profit and
virtually no risk of loss with respect to those services. She obviously could
have earned more money had she chosen to work more hours. However, in this case
Mme Riendeau’s new venture of offering her naturopath, herbal remedy and
nutritionist services and products at Romanza Salon and Spa was more
significantly for her own account. She set the fee for those services. She
would keep all of her product sales revenues subject to a 10% commission
payable to Romanza. This is a very important consideration in this case. These
products were not integrated into Romanza’s business as its other product lines
were. Mme Riendeau may also have been entitled to keep most of the fees generated
for these services; the evidence is not clear and the venture was too
short-lived to be successful or significant.
IV. Conclusion
[45]
Having considered all of the relevant facts as
they relate to the parties’ intention and the indicia of subordination above, the
evidence does not establish on a balance of probabilities that Mme Riendeau was
an employee of Romanza during the 9 weeks she worked there.
[46]
The appeal is allowed.
Signed at Ottawa,
Canada, this 15th day of December 2015.
“Patrick Boyle”
Translation certified true
on this 23rd day of February 2016
François Brunet,
Revisor
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