REASONS
FOR JUDGMENT
V.A. Miller J.
[1]
The issue in these appeals is whether in 2010
and 2011 the Appellant engaged its Workers as employees or independent
contractors for the purposes of the Employment Insurance Act (“EI Act”)
and the Canada Pension Plan (“CPP”). The Minister of National Revenue
(the “Minister”) assessed the Appellant for unpaid EI premiums and CPP
contributions, penalties and interest. The EI Act assessments related to
133 Workers and the CPP assessments included 60 Workers.
[2]
The Appellant has operated a catering business
in Mississauga, Ontario for at least 30 years. Its business is operated out of
a leased banquet facility with five banquet halls. The events catered by the
Appellant on weekends usually included weddings, baptismals, stag/doe parties
or prom parties. Whereas, the events catered by the Appellant on weekdays
usually included corporate functions.
[3]
The Workers included bartenders, captains,
dishwashers, kitchen helpers, servers, and set-up crew. The Minister assessed
the Appellant on the basis that the Workers were employees.
[4]
At the beginning of the hearing, the Appellant
conceded that Elizabeth Crowe was an employee for the period she was employed
as an office worker in 2010 and 2011. Since the Appellant did not keep track of
the specific periods she worked in the office, it conceded that she was an
employee for 2010 and 2011. The Appellant also conceded that Giacoma
Tagliaferri, a kitchen helper, was an employee in 2010 and not an independent
contractor. According to the Appellant, Ms. Tagliaferri had become an assistant
to the chef in 2010.
[5]
The sole shareholder of the Appellant is a
numbered company whose shareholders are John Cipressi and Tony Cipressi.
[6]
The Workers who were called as witnesses at the
hearing and the position they held with the Appellant were:
- on behalf of
the Appellant - Irena Zielinska-Olejnik, captain; Raul Peligrin, server; and
Josef Smuxz, bartender;
- on behalf of
the Respondent - Maria Veronica Menguito, server, Nadia Oleniak, server and
captain and Elizabeth Crowe, office worker, server and captain.
[7]
John Cipressi and Jessica Gonalez, an appeals
officer with the Canada Revenue Agency, were also witnesses.
Mr. Cipressi’s Evidence
[8]
During the period, the Appellant catered between
400 and 500 events annually.
[9]
Mr. Cipressi testified concerning the Workers
generally; the positions they held and the Appellant’s policies. He stated that
most of the Workers were immigrants. The majority of the Workers were not
highly educated but they were professional in their duties and were very good
at their jobs. He stated that the Appellant did not offer training to the
Workers and expected that they knew how to do the job when they were hired. The
Appellant gave the Workers an orientation to show them where items were located
within the banquet facilities.
[10]
Many of the Workers were employed elsewhere and
only worked with the Appellant on weekends. Usually, the Workers telephoned the
Appellant at the beginning of the week to ascertain if there was work available
for them on the weekend. However, the Appellant also called Workers to see if
they were available for a particular function. Mr. Cipressi stated that the
Appellant normally telephoned the Workers or a Personnel Agency to engage
Workers for busy times of the year such as New Year’s Eve. A Worker had the right
to refuse a shift and there were no consequences if they refused.
[11]
The captain was the most experienced Worker on
the banquet floor. When she arrived to perform her services, the room was
already set-up for the event. She was given the floor plan and the menu for the
event. The floor plan showed the position and number of tables, the number of
guests, the bar, etc. The captain showed the menu to the servers and told them
which tables they were to serve. The captain oversaw the service of food to the
tables. Although it was not considered to be part of their duties, most
captains also decorated the head table or the dessert table by placing strings
of lights on these tables.
[12]
The servers checked the tables to make sure that
the dishes, glasses and cutlery were appropriate for the menu. Both the
captains and the servers waited on the tables and cleaned up when the function
was finished.
[13]
When they attended for their shift, the
bartenders were given a Bar Report which listed the types of liquors included
in the bar for that event. The content of the Bar Report was determined by the
contract between the Appellant and its client. The bartenders prepared their
bar accordingly and filled out a sheet so that the Appellant would know the
quantity of liquor used at the event.
[14]
The kitchen helpers plated the salads and the
dessert. They were given the menu by the chef and the food items were already
prepared by the chef and his assistants.
[15]
Mr. Cipressi stated that the Workers were
transient and the type of work they performed did not lend itself to a uniform.
The captains, servers and bartenders were required to wear “event appropriate
apparel” which they had to purchase. The “event appropriate apparel” included
black pants, white shirt, black vest, black tie and black shoes.
[16]
The kitchen helpers were not required to wear a
uniform but most wore soft sole shoes and many wore their own apron.
[17]
Most servers, captains and bartenders owned a
lighter so they could light the candles on the tables/bar and a corkscrew to
open the wine and an arm towel. The bartender was also required to have a
martini shaker.
[18]
In Ontario, anyone who serves or handles
alcoholic beverages must have a Smart Serve Certificate. In order to get the
certificate, they must receive training and pass a test. In the circumstances
of this appeal, all servers, captains and bartenders were required to have a
Smart Serve Certificate. According to Mr. Cipressi, at present, one can
take the training and the test for the Smart Serve Certificate on-line. There
was no evidence with respect to the cost for this training or the certificate.
However, prior to 2011, in order to take this training, one had to purchase a
video of the program. The Appellant purchased the video so that its Workers
could get the training and their Smart Serve Certificates. According to Mr.
Cipressi, those Workers who used the Appellant’s video to get their Smart Serve
training paid for the training; the Appellant deducted the cost from the
Workers’ pay.
[19]
However, most Workers already had their Smart
Serve Certificates when they started to work for the Appellant.
[20]
Many captains owned lights, extension cords,
cake knives and other materials which they used to decorate the head table. Mr.
Cipressi estimated that the extra tools which a captain used cost more than
$100 but less than $1,000.
[21]
According to Mr. Cipressi, the Workers were able
to hire a substitute when they were not able to work at a function. However,
they had to notify the Appellant so the correct person would receive the wages.
[22]
Some Workers work at other catering facilities
and many of them have full time employment elsewhere.
[23]
If a Worker was negligent and there was breakage
of dishes or spillage of food, the cost of the damage was deducted from the
Worker’s pay.
[24]
The Workers were able to negotiate their rate of
pay. This was especially true during the busy season when the Workers were
offered jobs with other catering companies.
[25]
Captains and servers were paid an hourly rate
which could increase for busy weekends. Bartenders were paid a flat rate of $85
on Saturdays and $75 for other evenings. The Workers were required to use a
punch card so that the Appellant could keep track of the hours they worked. The
cost of the punch card was deducted from the Workers’ pay.
[26]
Mr. Cipressi also testified concerning prior
assessments against the Appellant under the Canada Pension Plan and the Employment
Insurance Act. Those assessments had been made on July 22, 2003 and were
with respect to the Workers who were engaged for the period 2002 and January 1,
2003 to May 31, 2003. As in the present appeals, the Minister had
determined that the Workers engaged by the Appellant were employees. However,
in December 2003, the Minister reversed its determination and decided that
the Workers were not employed in insurable and pensionable employment.
[27]
Although Mr. Cipressi stated that the catering
business, and particularly the Appellant, operated in the same manner in 2010
and 2011 as it did in 2003, there was no evidence to support Mr. Cipressi’s
testimony. There was also no evidence with respect to the facts assumed by the
Minister when he raised the assessments in 2003 or the facts which he later
relied on to vacate those assessments. As a result, I have given no weight to
the fact that the Minister determined that the Appellant’s Workers in 2002 and
2003 were not employees and were not engaged pursuant to a contract of service.
The Other Witnesses
[28]
Most of the testimony of the other witnesses was
in accord with that of Mr. Cipressi. The exceptions were that some of the
witnesses stated that they had no experience as a Server or Kitchen Help prior
to working with the Appellant.
- Mr.
Smuxz was a professional bartender who received his training when he was a
student in Poland. He started to work for the Appellant more than 12 years ago.
His first event was a party with more than 200 guests and he job shadowed a
friend who was working with the Appellant.
- In
2010, Mr. Smuxz’s son worked with him as a bartender at the Appellant’s
facility and Mr. Smuxz trained him.
- Ms.
Menguito testified that she had no prior experience as a server or as kitchen
helper and her friend trained her during her first day performing each of these
duties with the Appellant.
- Nadia
Oleniak stated that she had no experience as a server and the other servers
showed her what to do.
- Elizabeth
Crowe stated that she had no experience as a server or captain and she job
shadowed for her first few events.
[29]
All of the Respondent’s witnesses thought that
they were supervised in their duties; whereas, all of the Appellant’s witnesses
said that they were not supervised in their duties.
Law
[30]
To determine whether the Workers were employees
or independent contractors while employed by the Appellant, it is necessary to
determine if they were performing their services as persons in business on
their own account: 671122 Ontario Ltd v Sagaz Industries Canada Inc,
[2001] 2 S.C.R. 983. The intention of the parties is important and I will use the
factors from Wiebe Door Services Ltd v MNR, [1986] 3 FC 553(FCA) to
analyze the work relationship between the Workers and the Appellant with a view
to ascertaining whether their working relationship was consistent with their
intention. The factors from Wiebe Door are control, ownership of tools,
chance of profit and risk of loss.
[31]
All of the Workers who testified on behalf of
the Appellant stated that they intended to be independent contractors with the
Appellant. They were all employed on a full time basis elsewhere. Both Ms.
Menguito and Ms. Oleniak who were called as witnesses by the Respondent,
testified that they intended to be employees with the Appellant.
A. Control
[32]
When the Workers were engaged by the Appellant,
they were given an orientation session so that they knew where to find items
which they needed to perform their services. However, it is my view that,
beyond the orientation session, the Appellant did not train the Workers. I
believe Mr. Cipressi when he said that most of the Workers had performed the
same services prior to working with the Appellant. For those Workers like Ms. Menguito,
Ms. Oleniak and Ms. Crowe who had not waitressed before, they learned by
watching others perform the same services. They were not trained by the
Appellant.
[33]
Generally, it was clear that most of the Workers
were sufficiently professional so that they did not need supervision. The
Appellant did instruct the Workers on “what” to do for each event but not how
to do it. I have concluded from the evidence that the Appellant did not
supervise the Workers.
[34]
The Workers were not obliged to take shifts when
the Appellant called them. They could refuse, or if they had accepted and later
realized that they could not work, the Workers could send a substitute as long
as they informed the Appellant.
[35]
According to the control factor, the Workers
were independent contractors.
B. Tools
[36]
The Appellant leased the banquet facility and it
owned the chairs, tables and china which were used at functions. The Appellant
supplied all the necessary tools and equipment to look after its clients. The
Workers supplied their own “event appropriate apparel”, corkscrews, aprons,
shoes, Smart Serve Certificates and in the case of bartenders, their own
martini shaker. In the circumstances of this case, the Workers supplied the
tools of the trade which it was reasonable for them to own as servers,
bartenders and kitchen helpers. I have concluded that the Workers were
independent contractors even though the major tools necessary to perform their
jobs were provided to them: Precision Gutters Ltd v Canada, 2002 FCA 207
at paragraph 25.
C. Chance of Profit/Risk of Loss
[37]
The majority of the witnesses testified that the
Workers could negotiate their rate of pay. Some Workers stated that they
negotiated their pay rate while others stated they were offered an hourly rate
which they thought was fair.
[38]
Although it appeared that breakage of dishes or
spillage of food didn’t happen very often, Workers were responsible for the
cost of the damage when it did occur.
Conclusion
[39]
When I considered all of the Wiebe Door
factors, I concluded that the Workers were independent contractors. The
Appellant has discharged its burden of proof. The appeal is allowed and the
assessments are referred back to the Minister for reconsideration and
reassessment on the basis that:
a)
Elizabeth Crowe was an employee with the
Appellant in 2010 and 2011;
b)
Giacoma Tagliaferri was an employee with the
Appellant in 2010; and,
c)
the other Workers who were engaged by the
Appellant in 2010 and 2011 were independent contractors.
Signed
at Halifax, Nova Scotia, this 12th day of August 2015.
“V.A. Miller”
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