REASONS FOR JUDGMENT
Jorré J.
Introduction
[1]
The appellant, the payor, is in the business of
providing language training.
[2]
It appeals from determinations by the Minister
that the 12 individuals providing training were in insurable employment
within the meaning of the Employment Insurance Act and that one of those
individuals was also in pensionable employment within the meaning of the Canada
Pension Plan.
[3]
While the distinction between an employee and an
independent contractor is often clear‑cut, there is a grey zone where it
is significantly more difficult to distinguish between the two; not
surprisingly, this is often true for cases which go to trial. This is one such
case with respect to some of the contracts involved.
[4]
The appeals were all heard together on common
evidence, although certain elements of the evidence are applicable only to
certain of the appeals.
[5]
Both co-owners of the appellant, Paule Grenier
and Susan Bell, testified, as well as three of the persons who provided
language training: Janice Walsh-Bonal, Mark Miller and Dalia El Mourad.
Marie-Josée Simard, an appeals officer with the Canada Revenue Agency, also testified.
The hearing lasted three days.
[6]
I would also note that Dalia El Mourad
was the only individual to file an intervention; she was present for one day of
the hearing, the day she testified.
The Canada Pension Plan Appeal
[7]
The one Canada Pension Plan appeal is in respect
of Dalia El Mourad.
[8]
Nothing suggests that there is any material
difference between the employment insurance appeal and the Canada Pension Plan
appeal relating to Dalia El Mourad.
[9]
There is agreement between the appellant and the
respondent that the results in respect of Dalia El Mourad’s employment
insurance appeal should also apply to her Canada Pension Plan appeal. Consequently,
I will not discuss further the Canada Pension Plan appeal relating to Dalia El Mourad
and will apply the result in the employment insurance appeal to the Canada
Pension Plan appeal.
The Periods in Issue
[10]
There is a problem with respect to the periods
in issue. In 11 of the 12 employment insurance cases, the decision
appealed from determined that the individual held insurable employment from
April 30, 2008 to August 18, 2011.
[11]
It is quite clear on the evidence that there are
certain periods within the period from April 30, 2008 to August 18,
2011 during which some of the 11 individuals in question were neither
employees of nor independent contractors for the appellant. This problem is set
out more fully in Annex I.
[12]
As a consequence, in the appeals relating to
Liza Rumjahn, André Beauregard, Michael Dawson, Judith Gostick, Christine
Bisaillon, Mark Miller and Janice Walsh-Bonal, no matter what the outcome in
terms of the status of these individuals, the determinations are wrong with respect
to at least part of the stated time period. To that extent, the appeals
necessarily need to be allowed at least to vary the time period.
The Law
[13]
Paragraph 5(1)(a) of the Employment
Insurance Act says, in part, that insurable employment is “employment in Canada by one or more employers, under any
express or implied contract of service”.
[14]
The paragraph does not define a contract of
service. To determine if there is a contract of service, one must turn to the
general civil law in the relevant province to determine whether there is a
contract of employment; see section 8.1 of the Interpretation Act, which
confirms this approach.
[15]
There is no dispute that the applicable law is
that of Quebec.
[16]
The Civil Code of Québec defines as
follows a contract of employment in article 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.
[17]
Here, the first two elements of the contract are
present: work and remuneration. The issue is whether there is control or
subordination, the third element in the definition.
[18]
The first paragraph of article 2089 of the Civil
Code provides with respect to a contract of employment that:
The parties may stipulate in writing and in
express terms that, even after the termination of the contract, the employee
may neither compete with his employer nor participate in any capacity
whatsoever in an enterprise which would compete with him.
[19]
The Civil Code defines a contract of
enterprise or for services as follows in article 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 another person, the client, to carry out physical or
intellectual work or to supply a service, for a price which the client binds
himself to pay to him.
[20]
The following articles regarding contracts of
enterprise or for services are also relevant:
2099 The contractor
or the provider of services is free to choose the means of performing the
contract and, with respect to such performance, no relationship of
subordination exists between the contractor or the provider of services and the
client.
. . .
2101 Unless a
contract has been entered into specifically in view of his personal qualities
or unless the very nature of the contract prevents it, the contractor or
the provider of services may employ a third person to perform the contract, but
its performance remains under his supervision and responsibility.
. . .
2103 The contractor
or the provider of services supplies the property necessary for the performance
of the contract, unless the parties have stipulated that only his work
is required.
. . .
[Emphasis added.]
[21]
Finally, articles 1425 and 1426 of the Civil
Code provide:
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.
[22]
The main principles of law in this area are
reviewed in the Federal Court of Appeal decisions in Grimard v. Canada and 1392644 Ontario Inc.
(Connor Homes) v. Canada (National Revenue).
The decision of the Quebec Court of Appeal in Bermex International inc. c.
Agence du revenu du Québec
takes essentially the same approach.
[23]
Here, the key question is whether or not, under
the contracts, the individuals in question were in a relationship of
subordination to the appellant, the payor. Put differently, did the individuals
teach a second language in accordance with the instructions and under the
direction or control of the appellant?
[24]
In this respect it is very important to bear in
mind the sometimes difficult distinction between the employer’s right to
control the performance of the work and a customer’s right to control the
quality and result of the work. See Grimard, where the Federal Court of
Appeal says:
According to the Le
Nouveau Petit Robert and the Le Petit Larousse Illustré
dictionaries, subordination of a person involves his or her dependence on
another person or his or her submission to that person's control. Therefore, a
contract for services is characterized by a lack of control over the
performance of the work. This control must not be confused with the control
over quality and result. The Quebec legislator also added as part of the
definition the free choice by the contractor of the means of performing the
contract.
[25]
It is also important to keep in mind that where a
customer contracts with someone, to whom I shall refer as the prime contractor,
who in turn subcontracts part of the work, the prime contractor will have to be
concerned with the quality and result of the work of the subcontractor.
[26]
Intention is an important factor in determining
the nature of the contract. The first step is to determine the intention of the
parties.
[27]
This is done by looking not only at the contract,
but at a number of other factors, such as the circumstances surrounding the
formation of the contract and whether the behaviour of the parties is
consistent with the stated intention. For example, one may consider whether an
individual’s stated intention and the way he filed his income tax return are
consistent.
[28]
However, as the Federal Court of Appeal said in Connor
Homes:
“the subjective intent of the parties cannot trump the
reality of the relationship as ascertained through objective facts” and “[t]he second step is to ascertain whether an objective reality
sustains the subjective intent of the parties”.
[29]
In Connor Homes, the Court also states:
The central
question at issue remains whether the person who has been engaged to perform
the services is, in actual fact, performing them as a person in business on his
own account. As stated in both Wiebe Door and Sagaz, in making
this determination no particular factor is dominant and there is no set
formula. The factors to consider will thus vary with the circumstances.
Nevertheless, the specific factors discussed in Wiebe Door and Sagaz
will usually be relevant, such as the level of control over the worker’s
activities, whether the worker provides his own equipment, hires his helpers,
manages and assumes financial risks, and has an opportunity of profit in the
performance of his tasks.
[30]
While Connor Homes is an Ontario case and the test in article 2085 of the Civil Code is subordination, which
is different from the common law test, Grimard makes it clear that, in determining whether
or not there is subordination, juridical subordination, the common law tests
are useful indicia in determining whether there is subordination.
[31]
These indicia are discussed by the author Robert
Gagnon in his book Le droit du travail du Québec, sixth edition, where he says:
[TRANSLATION]
92 — Concept — 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
or her 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, ownership of tools, chance of profit,
risk of loss and so on. Work in the home does not preclude this sort of
integration into the business.
[32]
In determining whether there is control, no
particular factor will be determinative and one will have to consider any factor
that is relevant in the circumstances, including:
(a)
the level of control over the individual’s
activities by the payor,
(b)
the degree of integration of the individual into
the payor’s enterprise,
(c)
whether the individual:
(i)
provides his own equipment,
(ii)
can hire helpers,
(iii)
manages and assumes financial risks, and
(iv)
has an opportunity for profit in the performance
of his tasks.
[33]
With these principles in mind, let us turn to
the facts of these cases.
History of the Company
[34]
The appellant company provides training in
English as a second language to its clients as well as training in French as a
second language. It may be that it also provides second language training in
other languages.
[35]
The company was originally founded by persons,
including the two current owners of the appellant, who had provided language
training to Bell Canada. In the early 1990s, Bell made certain budget cuts and
language training was among the first cuts.
[36]
Because there was still an interest in language
training on the part of students, four of the teachers formed a partnership
that continued to provide training.
[37]
In 1994 the Government of Quebec took measures to
promote employee training; because of the way these measures were structured,
the members of the partnership concluded that it would be best to be
incorporated. The appellant was incorporated in the mid-1990s.
[38]
Generally the appellant modelled its mode of
operation on what its founders had experienced when providing training for Bell.
[39]
As the business grew, the appellant started to
use teachers other than those who had originally been at Bell. All the teachers
that they contract with are certified second language teachers.
Intention
The Contract
[40]
The contracts in evidence are one page long. There is a separate contract
for every course taught.
[41]
The contracts are entitled “Sub-contract for hiring teachers” and state that the
appellant is hiring the named person as an “independent,
self‑employed teacher” for a set number of hours at a given monetary rate per
hour, starting on a particular date.
[42]
The agreement also states the total amount to be
paid, and specifies that payment will be made monthly and be based on the
submission of time sheets and that the amount paid will depend on the number of
hours taught.
[43]
The agreement provides that the teacher will
receive the final payment after returning all of the appellant’s materials, the
course evaluations filled in by the students and progress reports for the
students.
[44]
The appellant may terminate the contract
immediately if the students cancel the course. Either party may terminate the
agreement in writing on 14 days’ notice. If a teacher terminates the
agreement at the last minute, there will be a $50 penalty, which will be
deducted from the next invoice.
[45]
The contracts provide that the teachers shall
pay their own expenses and related taxes. There is, however, one variation
among the contracts in respect of this provision. While the contracts in Exhibits
R-2 and R-3 only provide that the teachers shall pay their own expenses and
related taxes, the contracts in Exhibit R-5 also provide that the teachers may
make photocopies at the appellant’s office.
[46]
The contracts filed as Exhibits R-2 and R-3 are
in English. They were entered into by Janice Walsh-Bonal and Mark Miller. The
contracts in Exhibit R‑5 are in French and were entered into by Dalia El Mourad.
[47]
The contracts do not have a general non‑competition
clause but they do have a provision whereby the teacher agrees not to directly
enter into a teaching contract with any of the appellant’s clients for three
years. Again, there is a variation in the contracts in Exhibit R-5, which have
an additional provision whereby the individual agrees not to use the appellant’s
materials with any other client for a period of three years.
Intention of the Different Persons Involved
[48]
It is clear from the testimony of Paule Grenier
and Susan Bell that the company considered the teachers to be self‑employed.
[49]
Janice Walsh-Bonal and Mark Miller testified
that they considered themselves self‑employed. They filed their income
tax returns on the basis that they were self‑employed, and they claimed
expenses.
[50]
According to the assumptions of the Minister,
six other teachers considered themselves self‑employed while one,
Christine Bisaillon, was not sure of her status.
[51]
Again, according to the Minister’s assumptions,
André Beauregard and Marika Andrassi considered themselves to be employees.
[52]
Finally, in the case of Dalia El Mourad,
she testified that she did not understand the contract.
[53]
She also testified that she considered herself
to be an employee. She did not see the difference between what she did for the
appellant and what she did for the Alliance française
in Toronto. The Alliance française treated her as a
part‑time employee.
[54]
When asked about the absence of withholdings on
payments from the appellant as opposed to payments from the Alliance française, her response was that she assumed that this stemmed
from the fact that the appellant was in Quebec whereas she lived and worked in Ontario.
[55]
She did not claim any expenses in her income tax
return.
Assessment of Intention
[56]
Many of the terms of the contracts are
consistent with either a contract of employment or a contract for services. For
example, payment based on an hourly rate dependent on the time actually worked
can be consistent with either; similarly, a contract for services is not
inherently inconsistent with materials being supplied by the customer; conversely, employees sometimes
have to pay certain of their own expenses.
[57]
I am satisfied that, on balance, the contracts in
themselves are somewhat more consistent with a contract for services than a
contract of employment for these three reasons considered together:
(a)
First, the choice of the terms “sub-contract”
and “independent, self‑employed teacher” in no way suggests employment.
(b)
Second, the fact that there was a separate
contract for each course.
(c)
Third, the general provision that the teachers
were to bear their own expenses is more consistent with self-employment.
[58]
Clearly, this was also the appellant company’s
understanding and that of eight of the 12 teachers.
[59]
Accordingly, I am also satisfied that in the
case of the eight individuals other than Christine Bisaillon, André Beauregard,
Marika Andrassi and Dalia El Mourad, the common intention of both parties
was that the individuals were to be independent contractors.
[60]
It is necessary to test this common intention
against “the reality of the relationship”.
[61]
In respect of the other four teachers, the appellant’s
intention was the same, but it is not clear the intention of the four teachers
was the same.
[62]
There is no suggestion in the evidence that any
of them raised any issue regarding the terminology of the contract or the
absence of withholdings.
[63]
We do not know on what basis the three
individuals other than Dalia El Mourad filed their tax returns.
[64]
With respect to Christine Bisaillon, given that
she was not sure of her status and that we know little else, it is clear that
in signing the contract she did not address her mind to the question whether
she was an independent contractor or an employee and, as a result, she did not
have a particular intent.
[65]
Finally, with respect to André Beauregard, Marika
Andrassi and Dalia El Mourad, the fact that they considered themselves
employees suggests that their intention was to be employees.
[66]
For all four teachers, given that a common
intent is not established, it will be necessary to examine the objective reality
of the relationship. In the absence of a common intention, the objective
reality will be determinative of the nature of the relationship.
[67]
I will now examine the actual relationship.
Two Notable Features
[68]
First, the appellant’s name, Les Enseignants de
langue anglaise de Montréal ltée, is in itself informative.
[69]
The word “school” is not used in the name and,
indeed, the appellant has no classrooms; it only has a small office.
[70]
The clients were businesses. Training was done
at the clients’ premises and, in one case, where the client operated the
business from his car, classes were held at a coffee shop.
[71]
Second, all the teachers in question were hired
on a course‑by‑course basis. For example, they might be hired to
teach an individual for, say, two hours a week for a total of 30 hours, or
a company group of four persons for, say, three hours a week for a total 42 hours.
[72]
There was no commitment by either the appellant
or the teachers to keep contracting with each other.
Ownership of the Tools/Investment
[73]
There was no investment in classrooms given that
the classes were held on the premises of the appellant’s clients.
[74]
While the evidence on this was unclear, I
concluded that the students’ employers paid the appellant for textbooks sold by
the appellant and, frequently, delivered by the teacher. In some cases, the
students already had a textbook prior to the start of the course and the
decision was made to continue with that book.
[75]
Teachers would often download supplemental
material from the Web and make copies. They would use their home computers to
do this, but there is no suggestion that anyone went out and specifically
bought a computer for this purpose.
[76]
The teachers prepared their classes at home.
[77]
Similarly, the teachers often drove to where their
students were; again, there is no suggestion that anyone bought an automobile
specifically for this purpose rather than simply using an automobile they
already owned. In the appeal relating to Dalia El Mourad, she stated that
she took the commuter train from Mississauga to downtown Toronto where she
taught her classes.
[78]
In this model, where a teacher goes to the
students, it is hard to see how there could be any significant investment by
anyone, whether or not the appellant was an employer. As a result, in these
particular factual circumstances, investment or ownership of the tools has
little weight.
Chance of Profit/Risk of Loss
[79]
Again these factors are not very helpful in the circumstances.
With little or no investment required, there is very little chance of loss for
a self‑employed teacher and, whether the status is that of an employee or
of a self-employed person, the teacher’s income will vary with the number of teaching
hours.
Other Factors
[80]
There was some evidence as to whether the
teachers could hire others to perform their contract. The contracts, however,
are silent on the point.
[81]
It is quite clear that none of the teachers
contemplated hiring someone to teach in their place at a rate of pay less than
what they themselves were being paid. It would not have been financially worthwhile
to do so since they would have lost income unless they were able to do other
work at the same time.
[82]
However, there were occasions where teachers
were forced to miss a class due to illness or otherwise. Teachers would first try
to reschedule classes to the extent that they could agree with the students and
to the extent that a room was available.
[83]
Rescheduling happened more frequently with
individual students, where the rescheduling requests often came from the
student.
[84]
Where rescheduling could not be done, teachers
sometimes found replacements and advised the appellant. In other cases, the teacher
asked the appellant to find the replacement.
[85]
The appellant paid the replacement teachers
directly.
[86]
Generally, given that for a service such as teaching
the individual selected to do the work matters, the absence of subcontracting
by the teacher does not point strongly in either direction. However, the appellant’s
paying the replacement directly is an indicia pointing towards a contract of employment.
[87]
Among the teachers who testified, the only
negotiation that took place was in relation to the hourly rate. The first time
Janice Walsh‑Bonal entered into a contract with the appellant, she
negotiated a somewhat higher rate than that initially offered.
[88]
Dalia El Mourad also negotiated a somewhat
higher rate at the time of her first contract.
[89]
Mark Miller once negotiated a higher rate as
well.
[90]
Given the nature of the service or work, the
limited negotiation does not really point in one direction or the other in
terms of employee versus independent contractor status.
[91]
Based on some of the documents filed, Mark
Miller was paid for 79 hours over a seven‑month period in 2010‑2011. This averages 11 hours
per month.
[92]
Mark Miller also had his own personal teaching
contracts with UQAM and with individuals. He advertised his teaching services
by posting notices on supermarket notice boards and elsewhere.
[93]
Janice Walsh‑Bonal was paid for 70.5 hours
over a period of about four months in 2011.
This averages about 17.625 hours per month.
[94]
She also taught at the Montreal Language School, where they considered her to be an employee.
[95]
Between the very end of October 2009 and some
time in August 2010, Dalia El Mourad taught 328.25 hours or roughly 35 hours
per month.
[96]
She also taught at the Alliance française in Toronto. She received about
$100 in reimbursement of photocopy expenses from the appellant.
[97]
The clause prohibiting the teachers from
contracting directly with the appellant’s clients for three years is a limited
restriction. The teachers are not restricted from obtaining their own teaching contracts
with any students other than the appellant’s students; they are also not
restricted from teaching at another language school. This limited clause does
not support a conclusion of employment status.
Control
[98]
The crux of the matter thus turns on the issue
of control. It is worth remembering, as professor Gagnon explains, that control
or subordination means legal subordination in the broadest sense.
[99]
It is simplest to begin with the appellant’s
contracts with businesses other than the CBC and one particular factory
belonging to Agropur which I shall refer to as the Agropur factory. I shall come back to the CBC
and Agropur factory contracts later.
Contracts Other Than the CBC and the Agropur Factory
[100] In respect of these contracts, all the evidence was quite clear that
the arrangements were arrangements involving very limited control.
[101] Basically, what happened is the following. The appellant would find
an interested client and, after some discussion with the client, would find a
teacher who was willing to teach the class at the time agreed between the
appellant and the client company.
[102] Once the class started, the teacher and the students were free to
change the class time if they were in agreement. This happened more frequently
and was easier to do where there was only one student. Where there was only one
student, the course was often taught at the student’s office.
[103] When there were several students, time changes could still be made, although
it was more complicated and less frequent; sometimes there was also an issue
with respect to the availability of a room.
[104] Before a class started, the appellant would have done a preliminary
evaluation of the level of the students. However, it was expected that the
teachers would make their own evaluation during the first session.
[105] During that first session, the teachers and students would also
discuss the students’ needs and interests and, after that, the teachers were
free to decide what textbook to use and what the course program would be.
[106] The teachers would inform the appellant of their decision and the
appellant would provide the book for the students. The textbook was paid for by
the client company.
[107] Teachers also used in class various materials that they would find
online and elsewhere.
[108] In some cases, one of the co-owners of the appellant went to a
teacher’s class to observe, and would make comments afterwards. In the case of
other teachers, this never occurred.
[109] The teachers submitted time sheets in order to be paid. These time sheets
were normally prepared using a template provided by the appellant and had to be
in by a certain date in order for the teachers to get paid by the end of the
month. Occasionally teachers sent in a time sheet in a different format; they
would still get paid if the necessary information was there.
[110] The teachers also provided progress reports on each student at the
end of the course.
[111] There were evaluations by the students; although the contract
required the teachers to send the evaluations to the appellant, the evaluations
were, in most cases, sent electronically by the students to the appellant.
[112] In the evidence, I heard no mention of staff meetings for the
teachers.
Assessment (Contracts Other Than With the CBC and the Agropur
Factory)
[113] I want to assess these contracts before turning to the other two.
[114] The teachers, in conjunction with the students, are quite free in
determining the content of the course and the means used. This is strongly
indicative of an absence of control.
[115] The teachers are hired course by course and teach on the premises of
the students’ employer.
[116] As previously described, investment is negligible and therefore not
much of a factor either way.
[117] Also, as previously described, there is no risk of loss; this factor
points away from the teachers being self‑employed. As to profit, both an
employee and an independent contractor would make more by working more; this
last factor is neutral.
[118] Given that payment is by the hour, it is normal that the teachers
provide a record of the hours worked, the time sheets. Use of the payor’s form
is a factor of modest significance.
[119] As for the student progress report at the end of the course, I
cannot see how this points one way or the other. Whatever the status of the
teacher, it is normal that there be some sort of report or evaluation at the
end of the course. Students would expect such a report, their employers would
expect it and it could be of use to future teachers of the students.
[120] The fact that the appellant observed some teachers once, but not all
teachers, is as consistent with supervising an employee as it is with quality
control of a supplier’s work.
[121] When one weighs this up, there is little indication of juridical
subordination, particularly given the freedom of the teachers, in consultation
with their students, to determine the content of the course. The reality of
these contracts is that they are contracts for services pursuant to article
2098 of the Civil Code. They are not contracts of employment.
[122] Thus, for the contracts other than the CBC and the particular
Agropur factory, the reality of the contracts is consistent with the intention
of the teachers working on these contracts, specifically Liza Rumjahn, Mark
Miller, Michael Dawson, Judith Gostick, Janice Walsh-Bonal, Marco Sisti, Tanya
Linkletter and Andrea Rancourt.
The Agropur Factory Contract
[123] The appellant had a number of contracts with Agropur. Apart from one
of them, the other Agropur contracts were similar to what I have described
above.
[124] One contract at a particular factory producing cheese was, however,
significantly different. That particular contract ran from September 28 to
December 2, 2010.
[125] That factory had previously contracted with someone else and had
already put into place a very specific program. The program involved the
students having 10 hours of English exposure every week consisting of, for
example, a certain amount of conversation, some telephone conversation lessons,
listening to certain podcasts before class, reading from certain Web sites and
watching episodes of a particular television program.
[126] When the particular factory contracted with the appellant, they
already had this highly prescriptive program in place and each student had
agreed to do everything required. The client wanted the appellant to continue
this program.
[127] The appellant agreed to this and asked the teacher, Marika Andrassi,
to follow the program.
[128] The appellant did not create this program.
[129] Does the fact that this was highly prescriptive program change the
nature of the contract between the appellant and Marika Andrassi?
[130] The appellant argues, and I agree, that the situation is no
different from that of the general contractor who agrees to certain specifications
and who, in turn, requires that a subcontractor fulfill all the specific requirements
applicable to the subcontractor’s portion of the work.
[131] Here we have a service rather than the production of a thing.
However, the situation is in principle the same in that the ultimate consumer
of the service wishes certain specific content. If an employer wants second
language instruction for employees in the sales department and wishes that the
teacher use certain materials which include text and a vocabulary suited to
sales, a general contractor who requires the same of the subcontractor is
simply ensuring that the subcontractor fulfill the general contractor’s own
obligation to the client.
[132] While this does limit the teachers’ freedom of action, it does not
limit that freedom of action any more than it does that of the appellant.
Another way of looking at it is that, if the teacher had directly contracted to
provide the particular course to the factory, the teacher would not have become
an employee simply because he had agreed to use the teaching materials that the
client wanted.
[133] In this regard, it is worth considering the following two paragraphs
from the decision of Justice Létourneau of the Federal Court of Appeal in Le
Livreur Plus Inc. v. Canada (M.N.R.),
where he says:
24 Counsel for the respondent mentioned a number
of facts in support of her argument that the applicant exercised such control
over its two workers that the only conclusion could be that a relationship of
subordination existed between the parties. To begin with, she strongly
emphasized the fact that the delivery persons were subject to obligatory hours
of availability, each worked in a defined territory and they could not alter
the work schedule without the applicant’s authorization.
25 With respect, I do not think that these
three first points are conclusive in determining the nature of the overall
relationship between the parties or suffice to change the nature of what they
stated in the contract. The reason is quite simple. Under its contract of
enterprise, the applicant assumed specific obligations of time and space toward
its customers, the pharmacies. As appears from the contract governing their
relations, specific times and places for collecting and delivering medication
were agreed on between the applicant and the pharmacies. These obligations are
contained in part in the subcontract with the delivery persons. The specific
nature of the duties and availability to carry them out are not the
characteristic features of a contract of employment. A contractor who hires the
services of subcontractors to perform all or part of the duties it has
undertaken to perform for its customers in accordance with a schedule will
identify and define what they have to do and ensure that they are available to
do it: Charbonneau v. Canada (Minister of National Revenue - M.N.R.),
supra; Vulcain Alarme Inc. v. The Minister of National Revenue, supra, at
paragraph 4. Otherwise, on this basis, one would have to conclude that the
applicant itself was an employee of the pharmacies, since it had to be
available to serve them at the agreed times and on the agreed schedule.
[134] The reality of this contract is also consistent with its being a
contract for services. Although there was not a common intention between the
appellant and the teacher, given the reality of the contract it is a contract for
services.
The CBC Contract
[135] The appellant was incorporated in the mid-1990s.
[136] The CBC contract was the first government contract ever obtained by
the appellant. It began in September 2009.
[137] In respect of the teachers who worked on the CBC contract, the
evidence of intention reviewed above showed that the appellant always intended to
have independent contractor relationships. Liza Rumjahn, Michael Dawson, Judith
Gostick and Janice Walsh‑Bonal all considered that they were independent
contractors. André Beauregard and Dalia El Mourad considered themselves
employees, while Christine Bisaillon was unsure.
[138] The appellant had previously bid on one other government contract
but had not been successful. In the course of preparing that other bid, it had
prepared the teachers’ guide which was filed as Exhibit A-1 and which it
subsequently used for the purposes of the CBC bid.
[139] That teachers’ guide was only given to persons working on the CBC
contract.
[140] The CBC tender documents were lengthy and had many requirements.
[141] The CBC contract was the biggest contract the appellant had ever
obtained and involved providing training not only in the Montreal area but also
in other cities, including Toronto. It was a three‑year contract that
could be renewed for a further two years.
[142] Apparently, the CBC had concerns with the previous language training
that had been provided by other suppliers. As a result, it wanted to specify a
good deal of what was to be provided and to ensure a certain uniformity.
[143] It also wanted detailed reporting: time and place of classes,
detailed attendance reports, reports on the students’ abilities at the
beginning and end of the course.
[144] The CBC insisted on using a particular textbook for each level.
[145] There is a great deal of detail in terms of some of the program
contained in Exhibit A-1, notably on pages 9 to 15 setting out what is to be
covered by students at the different levels. This was sought by the CBC and not
by the appellant that had always operated in the much less structured way described
above.
[146] Consequently, there was much more structure under the CBC contract
than all the other contracts, apart from the one at the Agropur factory. As a
result, the appellant sought to make sure that the teachers were doing what had
been promised to its client and it was more involved with the teachers in the
carrying out of the CBC contract.
[147] Thus, for example, in one attachment to an e‑mail, we see the appellant
urging the teachers to use the designated book at least once at every class.
[148] There are two interesting aspects to this example. First, at the top
of the first page of the e‑mail, the appellant apologizes for sending out
these instructions: “Sorry to have to be such be such a
stickler with this contract but we made some promises to HR”. Second, there
is the mere fact of asking people to use the designated textbook at least once
at every class. These two features suggest that the appellant did not normally
send such instructions and, in the overall context of the evidence, this is somewhat
more consistent with an independent contractor relationship than an employment
relationship. Indeed, at beginner language instruction levels, it would be
surprising for an employer that was a school to have to tell employee teachers to
“use the textbook” in every class.
[149] Not every request made by the appellant stemmed from the CBC
contract directly. For example, at one point the appellant learned that a
number of students who were studying French as a second language had expressed
a desire to learn expressions used in Quebec so as to better communicate with
their colleagues and the appellant supplied some material with Quebec
expressions to the teachers of French as a second language and asked them to
use it.
[150] This last example was a decision resulting from a request by students
rather than by the CBC, which was paying for the service, but it was still an
externally driven instruction rather than an internally driven one originating
with the appellant.
[151] Another consideration regarding control is the fact that the appellant
has no office or permanent staff outside Montreal, but some of the teachers for
the CBC contract, such as Dalia El Mourad who taught in Toronto, were
outside of the Montreal region. While the test is juridical subordination as
opposed to actual day‑to‑day subordination or exercise of control,
and while there is no question that there can be juridical subordination of
someone at a distance, everything else being equal, working remotely is
somewhat indicative of a lack of subordination.
[152] After a year or a year and a half, there was a change in CBC
management and they became more flexible, allowing the appellant more freedom,
as a consequence of which the appellant was able to move back in the direction
of its traditional way of operating and as a result did not send out as many
instructions.
[153] The one area where there was some divergence in the testimony was between
that of Dalia El Mourad and that of Janice Walsh‑Bonal. The former
taught French as a second language to CBC employees in Toronto; the latter
taught English as a second language to CBC employees in Montreal.
[154] Janice Walsh-Bonal read over the teachers’ guide quickly, and she
treated it as no more than a general guide. In contrast, it was clear that Dalia
El Mourad felt that she had to follow the contents of the guide much more
closely.
[155] Each of them had experienced someone coming and observing their
class. No changes were suggested to Janice Walsh‑Bonal. Changes were
suggested to Dalia El Mourad;
one of them was that she visit another teacher’s class. Dalia El Mourad
chose not to visit the other teacher’s class. She obviously felt that she could
choose whether or not to follow the suggestions.
[156] In contrast to the other contracts in issue, in terms of the
objective reality of the contract, the contracts whereby teachers were hired to
teach CBC employees are closer to the line. The factors other than control are
not decisive. With respect to control, there are elements that are suggestive
of control, but on balance the evidence is more consistent with ensuring that
the result promised to the client is achieved. It follows that reality of the
contracts is that they are contracts for services, not contracts of employment.
Conclusion
[157] As a consequence, the appeals are allowed and the decisions of the
Minister will be varied and replaced by the following decisions:
1.
Christine Bisaillon, Liza Rumjahn, Mark Miller,
André Beauregard, Michael Dawson, Judith Gostick, Janice Walsh-Bonal, Marco
Sisti, Tanya Linkletter, Andrea Rancourt and Marika Andrassi were not engaged
in insurable employment with Les Enseignants de langue anglaise de
Montréal ltée within the meaning of the Employment
Insurance Act for the period from April 30, 2008 to August 18, 2011.
2.
Dalia El Mourad was not engaged in insurable
employment or pensionable employment with Les Enseignants de langue
anglaise de Montréal ltée within the meaning of the Employment
Insurance Act and the Canada Pension Plan, respectively, for the
period from October 26, 2009 to July 31, 2010.
Signed at Montreal, Quebec, this 26th day
of September 2014.
“Gaston
Jorré”
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