REASONS FOR JUDGMENT
Hogan J.
I. Overview
[1]
Diane Barbeau (the appellant) has brought before
the Tax Court of Canada (the TCC) two related appeals from two decisions of the
Minister of National Revenue (the Minister) made under section 91 and
subsection 93(3) of the Employment Insurance Act (the Act).
[2]
Said decisions concern the insurability of work
performed by the workers Marc Martineau and Mélanie Hamel (collectively the
workers) during 2010 and 2011. The Minister is of the view that the work
performed was insurable, whereas the appellant claims the opposite.
[3]
The appeals were heard on common evidence on
January 23 in Ottawa. The parties subsequently filed written submissions
setting out their respective positions.
II. Facts
A. Factual
background
[4]
The appellant had been operating a sole proprietorship
providing cleaning services under the name Service d’entretien ménager de
l’Outaouais (SEMO) since 2002. During the period at issue, the business was
largely run by the appellant’s spouse, Yves Grenier. She had at least a dozen
workers and approximately 20 clients.
[5]
Before starting the business, the appellant worked
as a self-employed worker in the cleaning services field. When her contracts became
too numerous, she decided to create SEMO in order to assign some contracts to
other workers on a commission basis.
[6]
The workers whose services were retained by SEMO
did not have to find clients. That task belonged solely to the appellant. The
evidence shows that she found clients through word of mouth and her Web site. No
written contract was signed between SEMO and the clients to whom cleaning services
were provided.
[7]
When a client requested a service, the appellant
paired a worker with that client. The worker could accept or reject the client assigned
to him or her. In the case of rejection, and where possible, the appellant tried
to provide the worker with another client.
[8]
SEMO had a written contract with each of its workers,
including the two workers involved in this case. However, according to Mr. Grenier’s
testimony, most of the clauses included in the contract were not applied and were
not representative of the true relationships between the parties. This fact was
corroborated by a number of workers who testified at the hearing.
[9]
Prior to entering into a contract, the appellant
made sure the workers had the proper skills. To that end, she asked the new workers
to clean, for example, a bathroom. According to Mr. Grenier, the appellant
did not tell the workers how to do their job, but they would sometimes ask the
appellant for advice.
[10]
In the beginning, the workers were paid directly
by the clients, by cheque. However, around 2008, SEMO created a pre-authorized
payment system by which the business collected the money from the clients and
then remitted it to the workers using a trust account. That system was
established at the request of the clients and the workers so as to facilitate
payment for services.
[11]
In order to ensure that the change in method of
payment did not affect the self-employed status of workers, SEMO consulted an accountant.
He advised SEMO to deposit all amounts collected from the clients in a trust
account.
[12]
Before the workers undertook the cleaning work, the
appellant visited the premises to provide a price estimate. The client then authorized
payment by direct deposit, based on the estimate provided.
[13]
Unless a worker spent more time than expected at
a client’s home, the amount taken by SEMO corresponded to the original estimate.
However, the workers could, where necessary, modify the hours for which they
were to be paid on the SEMO Web site. Permission by SEMO was not required to do
so.
[14]
SEMO took the pre-authorized amounts and placed
them in the trust account the same day on which the service was provided. Exceptions
aside, the workers received the amounts owing weekly. According to Mr. Grenier,
the payments were made once per week to save on bank transfer fees.
[15]
SEMO collected a $3 or $4 per hour commission on the amounts
charged and provided the workers with an invoice for that amount.
[16]
Throughout the periods at issue, the workers
were married. They had been performing cleaning services for SEMO since September
2010 until July (in the case of Mr. Martineau) and September (in the case
of Ms. Hamel) 2011.
[17]
The workers began their relationships with SEMO
after they answered an ad on the Emploi Québec Web site. There was a first
meeting, and then a second meeting at the appellant’s residence, where she
asked the workers to clean a room to confirm their skills.
[18]
The workers each signed a contract with SEMO. The
agreement provided, inter alia, that the workers could only provide
their services to SEMO, that they had to work a minimum of 30 hours per
week, and that they had to comply with the company’s code of ethics. The contract
referred to the workers as self‑employed workers. In the cases of Mr.
Martineau, Mr. Grenier stated that he had asked him to sign a contract just so
that his clients would not be stolen from him.
[19]
The workers worked together, save exceptions. According
to Ms. Hamel, they operated as a [Translation] “partnership.” Mr. Grenier also saw the workers that way. He explained
in his testimony that the maintenance contracts were only granted to Ms. Hamel and
that she decided whether she wanted to undertake the cleaning duties on her own
or with the help of her spouse.
[20]
The amounts paid by SEMO to the workers were deposited
in their joint account. On her tax returns for the 2010 and 2011 taxation years,
Ms. Hamel reported all the amounts received from SEMO as business income
and claimed the deduction of an expense for the portion paid to Mr. Martineau.
[21]
SEMO ceased operations in September 2013. The
workers who performed services for SEMO continued to serve the same clients. The
only difference was the manner in which they were paid. Indeed, the workers were
now paid by cheque directly from the client, as had been the case before the
pre-authorized payment system was put in place.
B. The
Minister’s decision
[22]
Following the termination of their employment, the
workers applied to the Department of Human Resources and Skills Development
Canada (HRSDC) for employment insurance benefits. Before accepting their
application, HRSDC asked the Minister to rule on the insurability of the work
performed by the workers during the duration of their contracts.
[23]
On review, the Minister determined that the
workers were not employees, but that they were nonetheless engaged in insurable
employment pursuant to paragraph 5(1)(d) of the Act and paragraph 6(g)
of the Employment Insurance Regulations
(the Regulations):
[Translation]
[2012-4560(EI)]
Based on our analysis, we have ruled that during
the period at issue, Marc Martineau was not an employee. Furthermore, we
have established that as a placement or employment agency, you placed him in
that employment and paid him to perform services for and under the direction
and control of your clients.
Accordingly, his employment was insurable under
paragraph 5(1)(d) of the Employment Insurance Act as the conditions
of paragraph 6(g) of the Employment Insurance Regulations were
all met.
[2013-2811(EI)]
Based on our analysis, we have ruled that
during the period at issue, MÉLANIE HAMEL was not an employee. Furthermore, we
have established that as a placement or employment agency, you placed her in
that employment and paid her to perform services for and under the direction
and control of your clients.
Accordingly, her employment was insurable under paragraph 5(1)(d)
of the Employment Insurance Act as the conditions of paragraph 6(g)
of the Employment Insurance Regulations were all met.
[Emphasis added.]
[24]
The Canada Revenue Agency (the CRA) subsequently
issued a T4 Slip solely in Ms. Hamel’s name for the 2010 and 2011 taxation
years.
[25]
The appellant appealed that decision to no avail.
Upon reconsideration, the decision was confirmed by the Minister:
[Translation]
[2012-4560(EI)]
Based on an impartial
review of all the information relating to this appeal, it was found that this
employment was insurable. [Marc Martineau] was placed in employment by Diane
Barbeau to perform services for and under the direction and control of a
client of Diane Barbeau and that worker was remunerated by Diane Barbeau for
the performance of those services. Accordingly, this employment was included in
insurable employment.
[2013-2811(EI)]
Based on an impartial review of all the information relating to this
appeal, it was found that this employment was insurable. Although [Mélanie
Hamel] was not engaged in insurable employment under a contract of service
with you, said worker was placed in employment by you to perform services for
and under the direction and control of your client, and said worker was
remunerated by you for the performance of those services. Accordingly, this
employment was included in insurable employment.
[Emphasis added.]
[26]
Following this setback, the appellant appealed
to this Court.
III. Issues
[27]
The issues raised at the hearing, and under
consideration in these Reasons, are as follows:
1. Can paragraph 6(g) of the Regulations apply if it is determined
that the workers were self-employed workers?
2. If the answer is no, can the Minister advance an alternative
argument that was not set out in the decision he made pursuant to subsection
93(3) of the Act? If the answer is yes, who has the burden of proof?
3. If the Minister can advance such an argument, were the workers engaged
in insurable employment with the appellant during the relevant periods under paragraph 5(1)(a)
of the Act?
IV. Application of paragraph 6(g) to self-employed
workers
A. Is
paragraph 6(g) of the Regulations applicable to self-employed workers?
Applicable law
The meaning of “employment”
[28]
Paragraph 6(g) of the Regulations provides
that the work performed by a person who performs services through a placement
or employment agency is insurable where that person is paid by the agency and
performs services under the control of the client:
6 Employment in any of the following
employments, unless it is excluded from insurable employment by any provision
of these Regulations, is included in insurable employment:
. . .
(g) 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.
[Emphasis added.]
[29]
Under the circumstances provided for in paragraph
6(g), the placement or employment agency shall be deemed to be the
employer of the worker for the purposes of deducting and remitting the employment
insurance premiums, pursuant to section 7 of the Insurable Earnings and
Collection of Premiums Regulations:
7 Where a person is placed in insurable
employment by a placement or employment agency under an arrangement whereby the
earnings of the person are paid by the agency, the agency shall, for the
purposes of maintaining records, calculating the person’s insurable earnings
and paying, deducting and remitting the premiums payable on those insurable
earnings under the Act and these Regulations, be deemed to be the employer of
the person.
[30]
Paragraph 6(g) of the Regulations is a provision
enacted under paragraphs 5(1)(d) and 5(4)(c) of the Act:
5(1) Subject to subsection (2), insurable
employment is
. . .
(d) employment
included by regulations made under subsection (4) or (5);
. . .
(4) The Commission may, with the approval of
the Governor in Council, make regulations for including in insurable employment
. . .
(c) employment
that is not employment under a contract of service if it appears to the
Commission that the terms and conditions of service of, and the nature of the
work performed by, persons employed in that employment are similar to the terms
and conditions of service of, and the nature of the work performed by, persons
employed under a contract of service;
[Emphasis added.]
[31]
The insurable employment described in subsection
5(1) is, broadly speaking, employment held by persons bound by a contract of
employment. Subsection 5(4), however, is an exception to this rule. Indeed, it
broadens the scope of subsection 5(1) by extending the Employment
Insurance program to include activities governed otherwise than by “contract of
service.” Accordingly, regulations made under subsection 5(4) may include
activities performed by persons other than employees, including self-employed workers.
[32]
The Federal Court of Appeal (the FCA) accepted
this view in Sheridan v. Canada,
in which the applicant was found liable for unemployment insurance premiums under
the authority of the predecessor to paragraph 6(g) of the Regulations (paragraph
12(g)
of the Unemployment Insurance Regulations).
[33]
In that case, the applicant carried on the
business of a placement agency for nurses that provided nursing services to various
hospitals and nursing facilities in the Toronto area. The nurses were subject to the control of the particular
hospital when they reported to that hospital, but there
was no employment contract between the nurses and the hospitals or the
placement agency. The nurses were self-employed workers.
[34]
The applicant claimed that paragraph 12(g)
of the Unemployment Insurance Regulations could not be applied in the
circumstances because its enabling provision, paragraph 4(1)(c) of the Unemployment
Insurance Act, 1971 (the predecessor of paragraph 5(4)(c) of
the Act), was not directed at self-employed workers.
[35]
Justice Heald dismissed that argument, being of
the opinion that paragraph 4(1)(c) of the Unemployment Insurance Act,
1971 could be directed at self‑employed workers:
. . . Subsection
4(1)(c) applies only to those persons employed in employment not under a
contract of service (including self-employed persons) in circumstances
where they perform a similar type of work and under similar terms and
conditions to those persons who are employed under a contract of service. In
contrast, subsection 4(2) covers the wider category of persons who, while being
employed, not under a contract of service (including self-employed persons) are
employed where the nature of the work and the terms and conditions of that work
need not be similar to the terms and conditions and nature of work of
employment under a contract of service. . . .
[Emphasis added.]
[36]
Thus, he determined that paragraph 12(g)
applied to this group of workers.
[37]
Justice Heald based his conclusion, inter alia,
to the decisions of the Supreme Court of Canada in The Queen v. Scheer Ltd. and Martin Service Station
Ltd. v. M.N.R.,
in which it was found that the word “employment” in paragraph 26(1)(d) of the Unemployment Insurance
Act (predecessor of paragraph 5(4)(c) of the Act) should be
interpreted to include “a business, trade or occupation
and not solely to designate a master and servant relationship.”
[38]
Since Sheridan, it has been decided that
the word “employment” in section 6 of the Regulations must be interpreted
to include a business, trade or
occupation, as noted by Deputy Judge Weisman in Carver
PA Corporation v. M.N.R.:
11 It is trite law that the term
“employment” in Regulation 6(g) under the Act
includes a business, trade or occupation and does not solely designate a master
and servant relationship. It does not matter whether the worker involved is an
employee or an independent contractor. Both are included in insurable
employment by this Regulation. . . .
[Emphasis added.]
B. Is
the appellant liable for employment insurance premiums?
Applicable law
[39]
For paragraph 6(g) of the Regulations to apply,
the following criteria must be met: (i) there must be a placement or
employment agency; (ii) a person must be placed in employment by a placement or
employment agency to perform services for a client; (iii) the person must
be under the direction and control of a client of the agency; and (iv) the
person must be remunerated by the agency:
6 Employment in any of the following
employments, unless it is excluded from insurable employment by any provision
of these Regulations, is included in insurable employment
. . .
(g) 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.
[40]
There is no definition of “placement or
employment agency” in the Act or the Regulations. However, the Canada
Pension Plan Regulations
provides a definition in subsection 34(2):
34(1) 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
employment or services are performed and the remuneration thereof is paid
constitute a contract of service or are analogous to a contract of service, the
employment or performance of services is included in pensionable employment and
the agency or the client, whichever pays the remuneration to the individual,
shall, for the purposes of maintaining records and filing returns and paying,
deducting and remitting contributions payable by and in respect of the
individual under the Act and these Regulations, be deemed to be the employer of
the individual.
(2) For the purposes of subsection (1), “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.
[Emphasis added.]
[41]
Considering the similarity between subsection 34(1)
and paragraph 6(g) of the Regulations, some judges of the TCC saw fit
to apply the definition reproduced above for the purposes of paragraph 6(g):
15 I prefer to
apply the definition found in the Plan to
appeals under the Act because the cases
cited above disregard the definition contained in subsection 34.(2) of the Plan. This provision must surely be applicable to
cases decided under subsection 34.(1) of the Plan. If that is so, it follows that the same definition
should be applied equally in proceedings under the Act to achieve as much consistency as possible
between two provisions intended to address the same situation.
[Emphasis added.]
[42]
Other judges, however, opted for a more flexible
solution. In the absence of a definition, they claim that the expression “placement
or employment agency” must be given its ordinary meaning read in context. Thus,
a placement or employment agency, for the purposes of paragraph 6(g), must be considered “an organization engaged in matching requests for work with
requests for workers.”
[43]
According to that definition, it is not necessary
that a placement or employment agency have a particular type of arrangement for
remuneration, contrary to subsection 34(2) of the Canada Pension Plan
Regulations:
14 . . . It was
argued as well that the appellant differed from a normal employment or
placement agency in respect of the arrangement as to fees. In my view, nothing
in the language of regulation 12(g) ties the meaning of the term
"placement agency" to the presence or absence of any particular type
of arrangement for the remuneration of the agency as suggested at one point by
counsel for the Appellant.
[44]
I note that, thus far, the definition to be
given to the expression “placement or employment agency” in paragraph 6(g)
of the Regulations has not been definitively addressed by the FCA.
[45]
However, in OLTCPI Inc. v. Canada, the FCA agreed to analyze the
appellant’s status based on the definition provided in subsection 34(2) of the Canada
Pension Plan Regulations, in part because this was the approach that the
Tax Court judge took, and because the appellant never took issue with his approach:
27 Turning to the first issue, the
relevant provisions of the EI Regulations and the CPP Regulations, which are
relevant to the disposition of the appeals, are similar but not identical. For
one thing, the term “placement agency” is defined in the CPP Regulations
(subsection 34(2)) but not in the EI Regulations. The Tax Court Judge
nevertheless applied this definition for EI purposes as well, an approach with
which the appellant does not take issue.
[Emphasis added.]
[46]
Justice Noël stated that, in order to determine
whether a person is a placement agency within the meaning of subsection 34(2),
the question is whether the person concerned is merely supplying workers or is
doing so in the course of providing a distinct service:
30 In so saying, Porter D.J. was
addressing the difficulty in insuring that the placement agency provisions not
apply to persons, such as a subcontractor, providing services which require
that workers attend to the premises of the client and perform functions, sometimes
at the direction of the client. The question in this regard is whether the
person concerned is merely supplying workers or is doing so in the course of
providing a distinct service.
[Emphasis added.]
[47]
The test formulated by Justice Noël is a restatement
of the words of Deputy Judge Porter of the TCC in Supreme Tractor Services
Ltd. v. Canada,
in which he explained in more detail the distinction between merely supplying
workers and providing a distinct service:
12 Thus, the
first question to be asked is whether the worker is performing services for
entity A as part of the business of the latter, albeit part of that business
may be a contract for entity A to provide a service for entity B, or whether
entity A is simply acquiring personnel as its very business with no contract to
undertake anything further than to pass the worker on to entity B to undertake
whatever the business of entity B might be. The simple question to ask is
whether entity A is under any obligation to provide a service to entity B other
than simply provide personnel. Is it
obligated to perform in some other way than simply to make people available? If
the answer is yes, it clearly has business of its own as does any general
contractor on a building site and the worker is not covered by the Regulations
under either statute. If however, the answer is no, that is, it is not
obligated to carry out any service other than to provide personnel, then
clearly the worker in such a situation is covered by the Regulations under both
statutes.
13 The
question as I see it is not so much about who is the ultimate recipient of
the work or services provided as this will cover every single possible
subcontract situation, but rather who is under obligation to provide the
service. If the entity alleged to be the placement agency is under an
obligation to provide a service over and above the provision of personnel, it
is not placing people, but rather performing that service and is not covered by
the Regulations.
14 I refer to the
Federal Court of Appeal case of Vulcain Alarme Inc. v. The Minister of
National Revenue, (1999) 249 N.R. 1 for an analogy, where the same
principle is clearly set out in relation to whether a subcontractor becomes an
employee in certain situations. Létourneau, J.A. said this:
A contractor who,
for example, works on site on a subcontract does not serve his customers but
those of the payer, that is the general contractor who has retained his
services. The fact that Mr. Blouin had to report to the plaintiff's premises
once a month to get his service sheets and so to learn the list of customers
requiring service, and consequently the places where his services would be
provided, does not make him an employee. A contractor performing work for a
business has to know the places where services are required and their frequency
just as an employee does under a contract of employment. Priority in
performance of the work required of a worker is not the apanage of a contract
of employment. Contractors or subcontractors are also often approached by various
influential customers who force them to set priorities in providing their
services or to comply with the customers' requirements.
15 The simple facts that sub-contractors
contracting with entity A are required to comply with the requirements of
entity B does not per se place those persons under the direction and control of
entity B any more than it makes entity B a customer of those persons.
[Emphasis added.]
[48]
According to the principles established by
Deputy Judge Porter—and by extension the FCA—in order for SEMO to be considered
a placement or employment agency, it is not necessary for the workers to have
performed services for SEMO as part of the business of the latter, but rather it
is necessary that the workers performed services by working on their own
account and that the appellant’s only obligation was to place personnel.
[49]
In my opinion, the appellant meets this
requirement.
[50]
The evidence shows that the only service provided
by the appellant was that of finding contracts for the workers and paying the
remuneration paid by the clients in trust for the workers.
[51]
The second criterion in paragraph 6(g) is
not contentious as the parties agree that the clients served by the workers were
those of SEMO. This conclusion is also supported by the evidence.
[52]
In his written submissions, the Minister, without
further explanation, stated that the workers were under the direction and
control of the clients as it [Translation] ‟is clear from the evidence that the clients could tell the [w]orkers what to do even if they did
not necessarily tell them how to do it.ˮ
[53]
In my opinion, the evidence did not support this
conclusion.
[54]
The workers often cleaned the clients’ houses
jointly, but the clients did not decide what task would be done by Mr.
Martineau or Ms. Hamel or how to do it.
[55]
The workers each testified that the clients were
rarely present when they performed their work.
Ms. Hamel stated that the clients did not give her orders because they trusted
her and because she knew what to do.
[56]
In 2010 and 2011, the workers provided cleaning
services for Geneviève Horlings, a client of SEMO. Ms. Horlings was not present
when the workers came to do the cleaning.
Before the Court, she stated that she initially met with Ms. Hamel to show
her the house, but she did not tell her how to do her job. According to
Ms. Horlings, she did not have to give orders because [Translation] ‟they are the professionals.ˮ Ms. Horlings knew that Ms. Hamel worked with Mr. Martineau, but
admitted that she never met or spoke with him.
[57]
The relationship between the workers and Ms.
Horlings was not unique. According to the testimonies heard at the hearing, there
was generally a lack of control by the clients over the SEMO workers.
[58]
For example, Bryan Goulet, a worker, testified
that he never received orders from a client on his work methods. He also stated that he could
refuse if clients asked him to perform additional tasks. In my opinion, this type of refusal
is a strong indication of the lack of control by the clients over the workers.
[59]
Jean-Marc Aubry, a client, testified that he did
not tell the workers how to do their work.
[60]
In his written submissions, the Minister restated
the comments by Deputy Judge Weisman in Care Nursing Agency Ltd. v. M.N.R. to say that, in the case of
highly skilled workers, direction and control can be established when a client
explains to the worker what to do, but without telling him or her how to do it.
[61]
The Minister is right in saying that control
over a qualified worker can be exercised by the person
giving out work, even though that control is less strict than in the
case of a layperson. Deputy Judge Weisman, however, did not address the issue
of control by relying on this ground alone. On the contrary, the facts of the case
showed, for example, that the nurses “were bound to comply with the hospital’s safety procedures and rules.” In my
opinion, that obligation is a strong indication of control.
[62]
There is no indication that a similar situation
existed in the case at bar. The clients had, of course, a say about the rooms in
the house that had to be cleaned
and the quality of work to be performed, but that should not be interpreted as
an indication of control. In Le Livreur Plus Inc. v. Canada, the FCA clearly stated its
approval of such a viewpoint:
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.
[Emphasis added.]
[63]
Thus, based on the facts presented, I cannot
conclude that the workers were under the direction and control of the clients they
served.
[64] According to the Minister, the payments issued to the workers by
SEMO shows that the works were in fact remunerated by SEMO. The appellant insists, however,
that the remuneration paid to the workers came from the clients, and that SEMO merely
acted as a conduit.
[65] In my opinion, the Minister is correct on that point.
[66] In examination-in-chief, Mr. Grenier explained that during the first
years of SEMO the clients paid the workers directly by cheque or in cash.
[67] Around 2008, however, the clients and the workers expressed an
interest in the implementation of a pre-authorized payment system. Realizing that such an arrangement
could have an impact on the status of the workers, the appellant consulted an accountant
for advice. To ensure that the workers were not considered employees, the
accountant advised opening a trust account for the collection of payments from
the clients’ bank accounts and their issuance to workers. This was how SEMO would
operate from now on.
[68] This way of doing things was very well received by the workers. Worker
Jocelyne Dinel, for instance, testified that the pre-authorized payment system
facilitated the recovery of her income and saved her from chasing after clients
to get paid, as was the case before she joined SEMO.
[69] The workers recorded their hours worked on the SEMO Web site at the
end of each day. SEMO took the amounts to be paid from the clients’ banks
accounts and deposited them in the trust account. Those amounts, less the
commission required by SEMO, were then paid to the workers, once per week, by
bank transfer in their joint account.
Ms. Hamel acknowledged that two or three clients paid by cheque, but contrary
to what went on in the case of certain other workers, the cheques were not remitted
to her directly.
[70] By putting in place the pre-authorized payment system, Mr. Grenier wanted
to ensure that the appellant preserved the features of the old method of payment
by which the clients remunerated the workers.
[71] In support of his contention in this regard, he pointed out that SEMO
had the clients sign a document which confirmed that the payments accepted by SEMO
were for the workers and that SEMO merely acted as a conduit.
[72] However, the payment acceptance forms were signed after the CRA began
its tax audit of the appellant’s company in 2012. The workers were no longer
providing their services to SEMO at the time. The evidence presented by the
appellant is self-serving, established after the fact. Accordingly, I find that
it is not probative.
[73] Nor is the case law is in the appellant’s favour.
[74] In Sheridan, supra, the placement or employment agency received the pay earned by the nurses from the hospitals and remitted
to the nurses the pay, less the agency’s fee. Counsel for the applicant in that
case argued that the agency acted as a conduit, and therefore, did not remunerate
the nurses. Justice Heald dismissed that argument. According to him, a mere
conduit would have transmitted the remuneration in
toto, without deducting the fee, and would not have fixed the quantum of the remuneration:
The only other
submission of the applicant which should be addressed is to the effect that
Regulation 12(g) does not apply here because the nurses placed by the applicant
were not “remunerated” by the agency as the regulation requires. Counsel
submitted that, on these facts, the applicant was merely a conduit of the remuneration
paid by the hospitals. I do not agree with this view of the matter. As stated supra,
the applicant here received all of the pay earned by the nurses from the
hospitals. Thereafter she remitted to the individual nurses the proper amount
earned by each after deducting from that amount, her fee of 10% in most cases.
The Shorter Oxford Dictionary (3rd Ed.) defines “remunerate” and
“remuneration” as follows:
1. trans.
to repay, requite, make some return for (services etc.)
2. to
reward (a person); to pay (a person) for services rendered or work done...
Hence remuneration, reward, recompense,
repayment, payment, pay.
Volume 4 of Stroud's Judicial Dictionary
(4th Ed.) states inter alia, that “remuneration” a quid pro quo [Page
2324 - the authority for this definition is said to be the judgment of
Blackburn J. in R. v. Postmaster General 1 Q.B.D. 663, 664.].
Based on the above definitions and ascribing to
“remunerate” its plain ordinary meaning, I conclude that this applicant
“remunerated” the nurses. She was not a mere conduit. She remitted to the
nurses the amount they earned for their services which amount was dependent on
their rate of pay which was determined, not by the hospitals but by the
applicant. However, in 90% of the cases the remittal was not for the total
amount earned since the applicant's 10% fee was deducted therefrom. In the
remaining 10% of the cases, the full amount earned was remitted to the
individual nurses but subject to a verbal promise by those nurses to pay the
applicant's 10% fee. In any event, the applicant could not be said to be a
mere conduit, whether her 10% fee was deducted before remittance or became the
subject of a debt owing to her by the nurses in question. If her role was that
of a mere conduit, she would simply have transmitted the remuneration in toto.
I think also that a mere conduit would not have been involved in fixing the
quantum of the remuneration. I therefore reject this submission by counsel for
the applicant.
[Emphasis added.]
[75]
Thus, I must conclude that the appellant in this
case remunerated the workers within the meaning of paragraph 6(g) of the
Regulations.
[76]
Since the third criterion was not met, paragraph 6(g)
of the Regulations cannot apply in this case.
V. The Minister’s alternative argument
[77]
The Minister submits as an alternative argument
that the employment of the workers is insurable under paragraph 5(1)(a)
of the Act. This provision provides that insurable employment is employment by
an employer under an express or implied contract of employment, written or
oral.
[78]
The appellant’s appeals are based on an
insurability decision by the Minister. They are not based on an assessment.
Thus, the question that arises is whether the Minister can make an alternative
argument in these appeals.
A. Can
the Minister make an alternative argument?
[79]
When a person is the subject of a decision by
the Minister concerning the insurability of his or her employment, he or she
may, if he or she wishes, to appeal to the TCC under subsection 103(1) of the
Act.
[80]
The TCC may then vacate, confirm or vary that
decision, pursuant to subsection 103(3) of the Act:
103(3) On an appeal, the Tax Court of Canada
(a)
may vacate, confirm or vary a decision on an appeal under section 91
or an assessment that is the subject of an appeal under section 92;
(b) in
the case of an appeal under section 92, may refer the matter back to the
Minister for reconsideration and reassessment;
(c) shall
notify in writing the parties to the appeal of its decision; and
(d) give
reasons for its decision but, except where the Court deems it advisable in a
particular case to give reasons in writing, the reasons given by it need not be
in writing.
[Emphasis added.]
[81]
Section 104 of the Act grants the TCC broad
power to decide a case. Indeed, subsection 104(1) provides that the Court may
decide any question of fact or law necessary to be decided in the course of an
appeal:
104(1) The Tax Court of Canada and the Minister have authority to
decide any question of fact or law necessary to be decided in the course of an
appeal under section 91 or 103 or to reconsider an assessment under section
92 and to decide whether a person may be or is affected by the decision or
assessment.
[Emphasis added.]
[82]
The FCA has, on numerous occasions, interpreted
sections 103 and 104 of the Act as saying that the TCC not only can but must
consider the alternative arguments put forward by the Minister to defend his
insurability decisions.
[83]
For instance, in Canada v. Doucet, the Minister rendered a
decision according to which the employment held by respondent Jacques Doucet
was excepted under paragraph 14(a) of the former Regulations, as he
owned more than 40% of the voting shares in the company by which he was
employed.
[84]
At trial, the Minister amended his reply to the
notice of appeal to add an alternative argument. In the event that the judge
would have dismissed the main argument, the Minister argued that the
respondent’s (the appellant at trial) employment could not be insurable under
paragraph 3(1)(a) of the former Act because the respondent was not
employed under a contract of employment.
[85]
The trial judge refused to consider the
Minister’s alternative argument on the grounds that the decision sent to the
respondent was not based on that argument:
It remains for me to
determine whether, notwithstanding its wording, the respondent’s [the Minister] decision is not tantamount
to telling the appellant that his employment is not insurable and that the
Minister of National Revenue could thus plead any fact or ground that could
support the non-insurability of an employment in the context of the Unemployment
Insurance Act. I do not believe this is the case. . . .
. . .
Since, in the instant
case, the respondent indicated in the determination which he communicated to
the appellant that the employment concerned was excepted, it follows that the
Court is limited to determining the validity of that decision. As subsection
70(2) of the Act states, the Court may reverse, affirm or vary the
determination. This last expression, “vary the determination” does not
authorize this Court to substitute to a decision that the Minister of National
Revenue has actually taken a determination of an entirely different nature
which he might have made but that he did not make. . .
.
[86]
The FCA, however, overturned that decision.
According to Justice Marceau, it was the Minister’s determination that is in
issue before the Court, rather than the grounds in support of the
determination. The trial judge should have therefore considered the alternative
argument put forward by the Minister:
10 I would add, although it is not necessary to dispose of the
action, that the second ground of objection raised by the applicant, one of
law, also appears to me to be valid. The applicant is right to say that the
judge could not, based solely on the conclusion that the employment was not
excepted, at once over that the employment was insurable. In his written
pleadings the Minister had indicated that in any case, excepted or not, the
employment on the basis of which the respondent was claiming benefits was not one
which corresponded to the definition of s. 3(1)(a) of the Act, in short
that it was not an employment resulting from a contract of service. The
judge could not refuse to consider this allegation on the ground that it was
not mentioned by the Minister in his initial reply to the respondent telling
him that his employment with Exolab Inc. was not insurable. It is the
Minister’s determination which was at issue before the judge, and that
determination was strictly that the employment was not insurable. The judge had
the power and duty to consider any point of fact or law that had to be decided
in order for him to rule on the validity of that determination. This is
assumed by s. 70(2) of the Act and s. 71(1) of the Act: so provides
immediately afterwards, and this is also the effect of the rules of
judicial review and appeal, which require that the gist of a judgment, which is
all that is directly at issue, should not be confused with the reasons given in
support of it.
[Emphasis added.]
The burden of
proof
[87]
According to counsel for the Minister, when the
alternative argument is based on the same facts as those that served as the
basis for the Minister’s decision, there is no need to reverse the burden of
proof.
She submits that a reversal of the burden of proof may only take place when the
alternative argument is based on new facts.
[88]
I do not agree with the respondent’s opinion on
this issue. As noted above, first Ms. Lacoste, CRA rulings officer,
decided that the work of the workers was insurable owing to the fact that they
were self-employed workers serving the appellant’s clients and that the
appellant acted as a placement or
employment agency. Ms. Lacoste concluded that the
workers were subject to the direction and control of the appellant’s clients as
a result of a delegation of the power of control. This allegation of fact was
essential for the Minister to conclude that the workers’ employment was
insurable under paragraph 6(g) of the Regulations.
[89]
Ms. Lacoste’s decision was upheld by the
Minister, who reached the same conclusion by reiterating in his decision that
the workers were subject to the direction and control of the appellant’s
clients. Therefore, the respondent’s alternative position is partly based on
facts that contradict those assumed by the Minister when he upheld Ms.
Lacoste’s decision. Accordingly, the Reply to the Notice of Appeal is
inaccurate and incomplete when it states, at paragraph 14 in docket
2012-4560(EI) and at paragraph 15 in docket 2013-2811(EI), that the Minister
determined that the workers held insurable employment based on the assumptions
of fact set out at paragraphs 14(a) to (r) in docket 2012-4560(EI) and at
paragraphs 15(a) to (u) in docket 2013-2811(EI).
[90]
Indeed, based on my reading of the foregoing
decisions, I find that the Reply failed to mention that the Minister assumed
that the workers were under the appellant’s direction and control rather than
under the direction and control of the appellant’s clients. Accordingly, I find
that the burden of proof is on the respondent to establish, based on a balance
of probabilities, that the workers were subject to the appellant’s direction
and control.
[91]
In Continental Bank Leasing Corporation v.
Canada,
the appellant objected to a proposed amendment by the respondent to the Reply
to the Notice of Appeal to add alternative assumptions of fact that clearly
contradicted those already pleaded in the Reply. Judge Bowman permitted the
amendment, but noted that the burden of proof was on the Minister when new
facts are inconsistent with those assumed before. He wrote as follows on that
point:
It is true that there are inconsistencies
between the assumptions pleaded and the allegations in the paragraphs that the
Minister now wishes to add. Had these paragraphs been included in the original
reply those inconsistencies would not have justified striking the paragraphs.
The respondent is not bound by the assumptions made on assessing. She is
entitled, in support of the assessment, to allege new facts or facts that are
inconsistent with those assumed on assessing, provided that she bears the
onus of proving those facts. An assumption, in the sense in which the word
has come to be used in income tax appeals, is not a binding admission.
[Emphasis added.]
[92]
In Schultz v. Canada, the FCA reached the same conclusion
as Justice Bowman, writing as follows:
21 I do not understand that the law as developed in these cases
prevented the Minister from pleading the alternative defence before the Tax
Court of Canada. It is true that in pleading he is subject to certain
constraints. For example, he cannot plead an alternative assumption when to do
so would fundamentally alter the basis on which his assessment was based as to
render it an entirely new assessment. In my view, in the present cases the
Minister has not so changed the basis of the assessments. What he did was
merely to assert a different legal result flowing from the self-same set of
facts by alleging that those facts show the existence of a joint venture or
partnership if they do not show an agency relationship. Even if it could be
said that the Minister has alleged new “facts” by adopting the alternative
posture, the law as developed allowed him to do so but imposed upon him the
onus of proving those facts: Pillsbury, supra, at page 5188; Continental
Bank Leasing Corporation et al. v. The Queen, 93 DTC 298 (TCC), at page
302. The same opinion is implicit in Wise et al. v. The Queen, 86 DTC
6023 (F.C.A.) where Pratte J.A. stated at page 6024:
It is common ground that the
Minister had, in this case, the burden of establishing the correctness of the
assessments since he was trying to support them on grounds that were different
from those on which they were based.
B. Is the appellant the workers’ employer?
[93]
Paragraph 5(1)(a) of the Act provides
that insurable employment is employment by an employer under any contract of
service:
5(1) (1) 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.
[94]
The expression “contract of service” is not
defined in the Act. Thus, it must be analyzed in light of the applicable
private law, under sections 8.1 and 8.2 of the Interpretation Act
(Canada).
[95]
In the case at bar, the applicable private law
system is that of Quebec as the facts of this case took place in that province.
[96]
The following provisions of the Civil Code
of Québec
are therefore relevant:
1378. A contract
is an agreement of wills by which one or several persons obligate themselves to
one or several other persons to perform a prestation.
Contracts may be divided into contracts of
adhesion and contracts by mutual agreement, synallagmatic and unilateral
contracts, onerous and gratuitious contracts, commutative and aleatory
contracts, and contracts of instantaneous performance or of successive
performance; they may also be consumer contracts.
. . .
1425. The common
intention of the parties rather than adherence to the literal meaning of the
words shall be sought in interpreting a contract.
1426. In
interpreting a contract, the nature of the contract, the circumstances in which
it was formed, the interpretation which has already been given to it by the
parties or which it may have received, and usage, are all taken into account.
. . .
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.
. . .
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.
2099. The contractor and 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.
[Emphasis added.]
[97]
Notwithstanding the fact that a worker and the person giving out the work sign a contract to frame,
or even define their relationship, the Minister is not bound by the terms of
that contract:
9 The contract on which the Minister relies, or which a party
seeks to set up against the Minister, is indeed a juridical fact that the
Minister may not ignore, even if the contract does not affect the Minister
(art. 1440 C.C.Q.; Baudouin and Jobin, Les Obligations, Éditions Yvon Blais 1998, 5th edition, p. 377). However,
this does not mean that the Minister may not argue that, on the facts, the
contract is not what it seems to be, was not performed as provided by its terms
or does not reflect the true relationship created between the parties. The
Minister, and the Tax Court of Canada in turn, may, as provided by articles
1425 and 1426 of the Civil Code of Québec, look for that true relationship in the nature of the
contract, the circumstances in which it was formed, the interpretation which
has already been given to it by the parties or which it may have received, and
usage. The circumstances in which the contract was formed include the
legitimate stated intention of the parties, an important factor that has been
cited by this Court in numerous decisions (see Wolf v. Canada (C.A.), [2002] 4 FC 396, paras. 119 and 122; A.G. Canada v. Les
Productions Bibi et Zoé Inc.,
2004 FCA 54; Le
Livreur Plus Inc. v. M.N.R.,
2004 FCA 68; Poulin
v. Canada (M.N.R.), 2003 FCA
50; Tremblay v.
Canada (M.N.R.), 2004 FCA
175).
[98]
The role
of the Tax Court of Canada judge is to examine ‟whether the true nature of the contractual
arrangement between the parties can be characterized, in law, as employment.”
[99]
As for the contract of service, three characteristic constituent elements must be met in
Quebec law, namely: (i) the performance
of work; (ii) remuneration; and
(iii) a relationship of subordination.
[100] In contrast to common law, the notion of control (or relationship of subordination) is not a mere criterion. It is an
essential characteristic of a contract of employment:
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.
[101]
However, in order to determine whether there was a relationship of subordination, the Court may take into consideration the indicators of
supervision 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:
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.
[Emphasis added.]
[102] These criteria were developed in Wiebe Door Services Ltd. v.
M.N.R.,
wherein Justice MacGuigan stated that any analysis involving the relationship
between a worker and the person giving out the work must subject to a single
test composed, partly, of the four above-mentioned elements.
[103] The criteria derived from the common law however include more than
these elements. Indeed, in 671122 Ontario Ltd. v. Sagaz Industries Canada
Inc.,
the Supreme Court of Canada stated that there could be other testing criteria
beyond those set out by the FCA in Wiebe Door:
47 Although there is no universal test to
determine whether a person is an employee or an independent contractor, I agree
with MacGuigan J.A. that a persuasive approach to the issue is that taken by
Cooke J. in Market Investigations, supra. The central question is
whether the person who has been engaged to perform the services is performing
them as a person in business on his own account. In making this determination,
the level of control the employer has over the worker’s activities will always
be a factor. However, other factors to consider include whether the worker
provides his or her own equipment, whether the worker hires his or her own
helpers, the degree of financial risk taken by the worker, the degree of
responsibility for investment and management held by the worker, and the
worker's opportunity for profit in the performance of his or her tasks.
[Emphasis added.]
[104] Before beginning my analysis, I would like to make two observations
about the proximity of the relationship
of subordination required in this case.
[105] First, it is generally accepted that a skilled worker has broader
autonomy in performing his or her duties compared to an unskilled worker:
[Translation]
Owing to the diversification and
specialization of work methods, it appears unrealistic for an employer to
always direct and supervise an employee. The relationship of subordination is
now much more subtle: it is the ability of the employer to determine the work
to be performed, and to control and monitor the performance.
The power to dismiss, the control over the
work performed and the degree of supervision are elements that make it possible
to define an employment relationship. Of course, the degree of subordination
of an employee in a strictly supervised work environment differs significantly
from that of a professional or a skilled employee who has broader discretion or
professional autonomy.
The Tax Court of Canada found that an
applicant was not a salaried employee and, therefore, did not hold insurable
employment within the meaning of the Unemployment Insurance Act, 1971.
The Federal Court of Appeal allowed the appeal, in Gallant v. M.N.R.,
and per Justice Pratte, stated:
In the Court’s view, the first ground is based
on the mistaken idea that there cannot be a contract of service unless the
employer actually exercises close control over the way the employee does his
work. 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. If this rule is
applied to the circumstances of the case at bar, it is quite clear that the
applicant was an employee and not a contractor.
[Emphasis added.]
[106] In the case at bar, the evidence reveals that the workers each
worked for a considerable length of time in the cleaning services field prior
to joining SEMO:
[Translation]
Mr. Martineau
Q: What kind of work did you do before
meeting Ms. Barbeau, prior to 2010?
A: I worked as a cleaner.
Q: You worked as a cleaner. What experience
did you have in the cleaning field?
A: I had a lot of experience in cleaning. I
did residential cleaning. I did commercial cleaning. I did cleaning in high
schools.
Ms. Hamel
Q: What kind
of work did you do before meeting Ms. Barbeau?
A: I did a bit of cleaning. I did, however,
do it for a long time, and then I worked odd jobs here and there as I was at
home with my five children for quite some time.
Q: What experience did you have in the
residential and commercial cleaning field?
A: I had done cleaning for myself and for
companies. I had quite a bit of experience in this area.
[107]
Thus, a certain freedom among the workers in
their work methods should not necessarily tip the scales in favour of a
self-employed work status, although cleaning services do not require a high
degree of skill. Therefore, although the workers were engaged in an occupation
that was not as skilled as others, I must nonetheless take into account some
measure of freedom with respect to how they performed their work.
[108] The contract signed between the appellant and the workers is of
little use in determining their status. The agreement was a standard contract
that did not reflect the true relationship between
the parties.
[109] Although the agreement provides that the workers are self-employed
workers and that the vacation and statutory holidays they take are at their own
cost, it still contains provisions that would normally be found in a contract
of employment.
[110] For instance, it provides that [Translation] ‟[t]he specialist shall obtain prior authorization from SEMO before
changing his or her schedule” and that “[t]he specialist agrees not to provide
cleaning or home support services outside this agreement.” These clauses are
clearly the antithesis of the contract of enterprise.
[111] Apart from the inherent contradiction, the agreement did not reflect
the factual relationship between the parties.
For instance, the contract provides that [Translation] ‟SEMO agrees to credit the specialist’s account for the amount of
$50 per month to cover a portion of the costs of insurance, products and
equipment incurred by the specialist for fulfilling he contracts.” The evidence
shows, however, that no reimbursement was provided.
[112] To establish that the parties had no common intention with respect
to the workers’ status, the Minister cites an excerpt from Wolf v. Canada that states that the terms of
a written contract will only be “given
weight if they properly reflect the relationship between the parties.” I agree entirely with this statement.
[113] However, when the Minister tries to establish a relationship of
subordination, he does not hesitate to rely on the terms of the agreement to
support his position. The Minister’s approach me puzzles me.
[114] As stated above, the Court is not bound by the terms of the
contract. When the terms do not reflect the true
relationship between the parties, it is for the Court to look for that true relationship by taking into account, inter
alia, the factual background.
(1) Intention
[115] The evidence shows that the parties did not have a common intention
as to the workers’ tax status.
[116] Mr. Grenier indicated that he wanted the workers to be self-employed
workers. Despite the contradictory contractual clauses I referred to earlier,
the contract, which was drafted by SEMO, indicated that the [Translation] ‟specialists” were self-employed workers. Furthermore, SEMO had the
clients pay the GST and the QST for registered workers, but not for the others.
[117] Mr. Martineau however testified that, at the time the contract was
signed, he had intended to be an employee.
This seems odd to me because he indicated that his intention was consistent
with the terms of the contract. Also, there was no provision in the contract
that required Mr. Martineau to be considered an employee.
[118] As for Ms. Hamel, she stated that she had no specific intention at
the time the contract was entered into, although she knew SEMO was seeking self‑employed
workers.
Her priority, at the time, was to find a job. Whether she was employed or a
self-employed worker did not weigh heavily.
She nevertheless acknowledged that she needed liability insurance because she
was a self-employed worker.
Moreover, she stated that she did not apply for employment insurance benefits
after her association with SEMO ended because she was a self-employed worker. She
filed an application only at the request of the agency responsible for social
assistance in Quebec.
(2)
Direction and control
[119] As mentioned above, the respondent has the burden to show that the
workers were subject to the appellant’s direction and control, owing to the
reversal of the burden of proof on this question of fact. For the reasons that
follow, I am of the view that the respondent failed to prove this fact on a
balance of probabilities.
[120] Mr. Grenier and the workers agreed that the workers could refuse
clients without any penalty.
Other workers also testified that this was indeed the case.
[121] Notwithstanding what was set out in the agreement, the workers could
provide their services to anyone; they were not bound exclusively to SEMO.
[122] The facts reveal that the workers only worked for the clients of
SEMO.
This finding does not weigh against the status of self-employed worker as, on
the one hand, the workers worked [Translation] ‟full-time” for clients who were provided to them and therefore probably did
not need to solicit their own clients. On the other hand, Mr. Martineau
acknowledged that he could have provided his services to his own clients. What
is important, in my opinion, is that the workers retained their ability to
contract with other clients as they saw fit.
[123] Although the appellant negotiated directly with the clients the
number of hours the workers were required to work, Ms. Hamel acknowledged that
she was free to change, without notice to the appellant, the hours billed to
the clients, to account for the time she actually spent at the clients’ home. The figure established by the
appellant is therefore approximate. The workers were not bound by it.
[124] Ms. Hamel testified that it was not the appellant who set her
schedule, but rather it was her.
[125] Finally, in my view, the fact that SEMO terminated Mr. Martineau’s
contract
is not determinative with respect to the status of the workers. Indeed, a
person giving work out can terminate a self-employed worker’s contract just as
an employer can terminate an employee’s contract. Therefore, the termination of
a contract is not, in and of itself, conclusive.
(3) Chance of
profit and risk of loss
[126] The evidence presented at trial shows that the chance of profit and
risk of loss test tips the scale slightly in favour of the status of
self-employed worker.
[127] When a client wanted to change the worker assigned to him or her,
that worker was usually given another client.
Thus, the worker did not lose the possibility of earning income.
[128] Ms. Hamel testified that her paycheques varied from week to week, as
she sometimes had fewer clients to serve or decided, on her own, not to work.
[129] Ms. Hamel took out a liability insurance policy, but her policy was cancelled
when she defaulted on a payment.
Mr. Martineau never purchased liability insurance.
[130] Ms. Hamel designated Mr. Martineau as an employee. She is the one
who received a T4 Slip from the Minister for the full amount paid by the
appellant.
(4)
Tools and equipment
[131] The tools and equipment factor weighs in favour of the status of
self‑employed worker.
[132] Mr. Grenier and the workers each testified that SEMO did not provide
the workers with equipment.
[133] Ms. Hamel recalled that she received payment to cover a portion of
his costs once, but stated that she never received said allowance after that. Mr. Martineau testified that
he used the clients’ cleaning products, but that, if they did not have any, he
purchased them himself.
According to him, SEMO never paid him the $50 per month as reimbursement
for his costs.
[134] Although Mr. Grenier and the workers acknowledged that SEMO lent a vacuum
cleaner to the workers when theirs was not working, Ms. Hamel confirmed that this
only happened once.
Mr. Grenier stated that SEMO agreed to lend his vacuum cleaner to help the
workers temporarily. However, he noted that, if SEMO provided equipment, it was
usually subject to payment of a rental fee.
VI. Overall assessment
[135] In my view, an analysis of the factual relationship between the
appellant and the workers shows that they performed their work under a contract
of enterprise.
[136] The indicators of supervision considered above are inconclusive and
contradictory.
[137] Thus, it is the application of the control test that will make it
possible to settle the dispute. The burden of proof was on the Minister in that
regard, and since the Minister failed to establish that the workers were under
the appellant’s direction and control, I must allow the appeals.
VII. Conclusion
[138] For all these reasons, I am of the view that the workers’ employment
was not insurable.
Signed at Ottawa, Canada, this 22nd day of May 2015.
“Robert J. Hogan”
Translation certified true
on this 31st day of August 2015
Daniela Guglietta, Translator
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