Citation: 2014TCC23
Date: 20140120
Docket: 2012-1075(EI)
BETWEEN:
ROBERTSON HUMAN ASSET MANAGEMENT INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
DEBORAH KOSTIALIK,
Intervenor,
Docket: 2012-1076(CPP)
AND BETWEEN:
ROBERTSON HUMAN ASSET MANAGEMENT INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
DEBORAH KOSTIALIK,
Intervenor,
Docket: 2012-1294(EI)
AND BETWEEN:
ROBERTSON HUMAN ASSET MANAGEMENT INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
Docket: 2012-1295(CPP)
AND BETWEEN:
ROBERTSON HUMAN ASSET MANAGEMENT INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
Docket: 2012-1296(EI)
AND BETWEEN:
ROBERTSON HUMAN ASSET MANAGEMENT INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
Docket: 2012-1297(CPP)
AND BETWEEN:
ROBERTSON HUMAN ASSET MANAGEMENT INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
V.A. Miller J.
[1]
The question to be
determined in these appeals is whether Instructors who worked for the Appellant
were independent contractors or employees. In each appeal, the Minister of
National Revenue (the “Minister”) found that the Instructors were employees.
Appeals 2012-1075(EI) and 2012-1076(CPP) relate to assessments dated May 1,
2011 in which the Minister found that the Appellant’s Instructors were engaged
with the Appellant in insurable and pensionable employment in 2007, 2008 and
2009. The assessments related to 32 Instructors. Appeals 2012-1294(EI) and
2012-1295(CPP) relate to rulings in which the Minister found that Jackie Harris
was engaged by the Appellant in insurable and pensionable employment for the
period January 1, 2010 to September 3, 2010. Appeals 2012-1296(EI) and
2012-1297(CPP) relate to rulings in which the Minister found that Jennifer
Paton was engaged by the Appellant in insurable and pensionable employment for
the period from May 12, 2010 to March 18, 2011.The appeals were heard on common
evidence.
[2]
The witnesses for the
Appellant were Linda Robertson, Jurgen Schoenefeld and Tommy Wong. Renee Lowe,
Jacqueline Harris, Jennifer Paton, Sarah Gamm and Debbie Gwilt testified on
behalf of the Respondent. The Intervenor, Deborah Kostialik also testified.
[3]
The Appellant was
incorporated in 2000 and Linda Robertson and her spouse each own fifty per cent
of its shares.
[4]
During the period, the
Appellant consisted of two divisions, a Human Resources and Recruitment
Division and a Career Assets Division. These appeals relate to the Career
Assets Division of the Appellant which operated seven private career colleges
(the “Colleges”) in Southern Ontario. They were located in Hamilton, Mississauga, Oshawa, Scarborough, St. Catharines, Toronto and Woodbridge.
[5]
The Appellant’s
students were adults who had been injured on the job and required retraining.
Prior to late 2010, students were referred to the Appellant by disability
management companies (the “Clients”) such as Cascade Disability Management,
Sibley and Associates and RCS Disability Management which had contracts with
the Workplace Safety & Insurance Board (“WSIB”). The disability management
companies assigned a Vocational Rehabilitation Consultant (“VRC”) to each student
to determine his/her vocational goals. The VRCs then referred the student to
the Appellant and requested a proposal for an educational program that would
allow the student to attain his/her vocational goals.
[6]
After the referral, the
Appellant assessed the student’s academic standing by using the Canadian Adult
Achievement Test (“CAAT”). It then sent a written proposal to its Client with
the student’s CAAT score and the recommended programs for the student. The
proposal was very detailed. It contained the student/teacher ratio for each
class; the length of each class per day; the number of days per week and the
number of weeks that the student had to attend at the Appellant’s College. It
included the required hours of homework and finally it included the total cost
of the proposed programs. Once the Client accepted the proposal, it forwarded a
sponsorship letter to the Appellant which confirmed the training to be provided
to the student and the College which the student would attend. The sponsorship
letter also required the Appellant to send monthly attendance records and
progress reports; and, to give immediate notification of any barriers that
might affect the student’s timely completion of the program.
[7]
Between 2007 and 2010,
the number of students enrolled with the Appellant fluctuated; but, at its
height, it had 70 to 120 students enrolled at a time. In late 2010, WSIB phased
out the use of the disability management companies and the Appellant contracted
with WSIB directly.
[8]
The Appellant offered
both academic and vocational programs. The student/teacher ratio was 3:1 for
the academic courses and 5:1 for the vocational courses.
[9]
All programs offered by
the Appellant were accelerated learning and involved self-directed learning.
There was continuous enrolment so that each class could potentially have
students at different levels and at different places within the curriculum. The
students were usually taught individually for 45 minutes and they then worked
alone for the rest of the class.
[10]
The Appellant hired individuals
in one of four positions, namely, Program Manager, Centre Managers, Senior
Instructors and Instructors.
[11]
The Program Manager was
an employee who was responsible for managing the Centre Managers; overseeing
the Colleges; and, fulfilling the duties of a Centre Manager when no Centre
Manager was available to manage a College.
[12]
The Centre Managers
were employees. They were responsible for overseeing the operations and
administration of a specific College. They managed the programs within their
College and were also responsible for business development. They had to meet
with the Clients and students. They supervised the Senior Instructors and it is
my view that they were responsible for supervising the Instructors as well. I
will discuss this further in my analysis.
[13]
The Senior Instructors
were employees who performed some of the same duties performed by the
Instructors. However, they were in training to learn the Appellant’s business
so that they could become Centre Managers. During the period in issue, there
were three Senior Instructors.
[14]
The Instructors, who
are the workers at issue in these appeals, were hired to teach the students.
They signed a contract with the Appellant called “Independent Contractor
Agreement – Training Instructor”. One of its terms was that the Instructor
acknowledged and agreed that he/she was an independent contractor.
[15]
All individuals engaged
as Instructors had either studied to be a teacher or, as in the case of Deborah
Kostialik, had expertise teaching in a particular field.
[16]
A brief description of
each witness’ role with the Appellant follows:
(a) Linda Robertson is the President
and CEO of the Appellant; and, during the years in issue, she was its directing
mind.
(b) Jurgen Schoenefeld is a
semi-retired teacher who worked as an Instructor with the Appellant at its
College in Oshawa from November 2008 until December 2011. During this period,
he also operated a business called Canadian Scholastic Achievement League which
offered online academic contests to schools. He taught mathematics, English,
computer literacy, customer service and job search training with the Appellant.
(c) Tommy Wong is a retired high school
teacher having taught in the public school system for 31 years where he taught
mathematics, science and alternative education. He was hired by the Appellant
in September 2008 and he taught at its Scarborough and Oshawa Colleges. With the Appellant, he taught mathematics, computers and customer service.
(d) Deborah Kostialik intervened in
these appeals. She described herself as a teacher, facilitator and trainer. She
worked as an Instructor with the Appellant from July 2006 until June 2011 at
its College in St. Catharines and she taught computer applications, customer
service, accounting and office administration. Prior to working with the
Appellant, she had started a consulting business and while she taught with the
Appellant, she continued to operate her consulting business. At the same time,
she was also on the faculty of the Niagara College of Applied Arts & Technology
as a part-time professor.
(e) Renee Lowe was hired by the
Appellant in January 2007 as an Instructor at its Oshawa College. She had
graduated from a private college and was licensed to teach Kindergarten to
grade 8. With the Appellant, she taught ESL, math and English. In January 2008,
she became the Centre Manager at the Appellant’s Mississauga College and in 2010 she became the Program Manager for the Appellant.
(f) Jacqueline Harris has her Bachelor
of Education. She was hired as an Instructor in October 2009 to teach
computers, medical administration and job search training at its Oshawa College. Sometime in 2010, Ms. Harris became a Senior Instructor with the Appellant.
She stopped working with the Appellant in September 2010.
(g) Jennifer Paton has her Bachelor of
Education. She worked as an Instructor with the Appellant from April 2010 until
January 2011 at its Oshawa College. She taught academic upgrading, customer
service, job search training program and computers.
(h) Sarah Gamm has her Bachelor of
Education and she was an Instructor with the Appellant from July 2009 to
December 2011. At various times during this period, she taught at the St. Catha rines College and then at the Hamilton College. She taught math, English, ESL,
computers, customer service, office administration and Dragon Speaking.
(i) Debbie Gwilt was
hired by the Appellant as the Centre Manager for its Oshawa College. In August 2010, she assumed responsibility for the Appellant’s Scarborough College as well. She was paid an annual salary of $45,000 plus commission. Her employment with
the Appellant was from January 2010 until November 2010.
[17]
To determine whether
the Instructors were employees or independent contractors while employed by the
Appellant, it is necessary to determine
if the Instructors were performing their services as persons in business on
their own account: 671122 Ontario Ltd v Sagaz Industries Canada Inc,
[2001] 2 S.C.R. 983. The intention of the parties is important and I will use the
factors from Wiebe Door Services Ltd v MNR, [1986] 3 FC 553(FCA) to
analyze the work relationship between the Instructors and the Appellant with a
view to ascertaining whether their working relationship was consistent with
their intention. The factors from Wiebe Door are control, ownership of
tools, chance of profit and risk of loss.
Intention
[18]
Jurgen Schoenefeld, Tommy Wong and
Deborah Kostialik testified that they intended to work with the Appellant as
independent contractors. However, Jacqueline Harris, Jennifer Paton and Sarah
Gamm stated that they did not understand the meaning of the term independent
contractor. Although they may not have understood the full meaning of the term
“independent contractor”, they were made aware that no deductions for taxes
would be taken from their wages and they could deduct the expenses incurred in
providing their services.
[19]
All of the Instructors signed a
contract with the Appellant in which they acknowledged that they would be
engaged as independent contractors and not employees of the Appellant. It is my
view that all of the Instructors intended to be independent contractors.
Control
[20]
When the Instructors were hired,
they were given an orientation session in which they were shown the facility
where they would teach; they read the Appellant’s Policies and Procedures
Manual and signed an acknowledgement that they agreed to its terms and
conditions; they signed a New Instructor Check List which they were required to
follow; and, they were trained on fire safety procedures and the various
processes they had to follow. These processes included the reports the
Instructors had to complete on a daily, weekly and monthly basis.
[21]
With respect to the Policies and
Procedures Manual, the Instructors agreed that all issues concerning the
students, their programs and the Colleges were to be directed to the Program
Coordinator. Renee Lowe, Debbie Gwilt and Sarah Gamm confirmed that the
Appellant was in charge of the students’ programs. When Renee Lowe was Program
Manager she told the Instructors when there would be changes in a student’s
program and what those changes would be. As an example, when a student was not
achieving at the required level, it was Renee Lowe and not the Instructor who
decided the changes to be made to the student’s program.
[22]
The Instructors’ teaching
schedules and class size were set by the Centre Manager based on the number of
students referred to the Appellant. The Instructors were not consulted when
additional students were placed in their class.
[23]
The Appellant required the
Instructors to submit a daily attendance sheet for the students; weekly updates
with respect to each student’s progress; and, monthly progress reports which
recorded the class hours, assignments, quiz and test results, topics covered,
and students’ strengths and challenges. According to Jacqueline Harris, she was
sometimes told what to write in the monthly reports (See exhibit R-2, tab 2A).
[24]
The Instructors were given a
binder which contained the curriculum and guidelines for each course they
taught. Although they were expected to prepare their own lesson plans for the
courses, the Instructors were required to follow the guidelines. If they wanted
to deviate from the course guidelines, they had to get approval from the
Program Manager. The guidelines for the vocational courses were detailed to the
point that they allowed the Instructor very little flexibility in how to teach
the courses. However, all witnesses, except Jacqueline Harris, stated that the
Appellant did not tell them how to teach. They testified that they relied on their
training and experience to prepare lesson plans to teach their students.
[25]
It is my view that it is normal
when one is engaged for his expertise that he is allowed to use this expertise
in performing his duties. The fact that the Instructors prepared lesson plans
to teach their students does not influence the decision whether they were
employees or independent contractors.
[26]
The Instructors were required to
give homework to the students unless the Program Manager or Linda Robertson
told them otherwise.
[27]
The Instructors had weekly
progress meetings with the Centre Managers. Debbie Gwilt stated that she had a
meeting each Monday morning with each of the Instructors. Although, Debbie
Kostialik stated that she objected to weekly meetings when she was asked to attend,
I note that she stated that she attended the meetings because Linda Robertson
asked her to attend.
[28]
No Instructor testified that
he/she received a written performance review. However, I have concluded that
the Appellant did review the Instructors’ performance and did supervise the
Instructors. My conclusion is based on the following evidence:
(a)
Linda Robertson testified that the
Instructors were the service providers of the Appellant’s services and the
Appellant evaluated them on how they conducted the services and how the
students progressed.
(b) Debbie Gwilt testified that one of her duties
as Centre Manager was to sit in the Instructors’ classes to audit the
Instructors on their use of the whiteboard and their interaction with their
students but she was given so many tasks to complete that she did not have time
to audit them.
(c) Renee Lowe testified that when she was a new
Instructor she was audited by the Centre Manager. Also, when she was a Centre
Manager she was required to audit the new Instructors during their first month
of teaching. Thereafter, she was required to audit the Instructors every
quarter.
(d) According to Renee Lowe, the audit consisted
of a checklist which had been prepared by the Appellant. It included such
things as effective use of whiteboard, strengths, challenges and general
comments. She stated that she reviewed the checklist and her comments with the
Instructor after the audit.
(e) The Job Description for the
Centre Manager listed “management of site teachers” as one of the Centre
Manager’s responsibilities (See exhibit A-1, page 393).
[29]
If an Instructor was going to be
absent, he/she could not hire a replacement teacher. He/she notified the
Appellant and the other Instructors who taught with them. It was ultimately the
Appellant who determined who would replace the absent Instructor.
[30]
When an Instructor wanted to take
vacation, he/she had to give the Appellant two weeks notice so that a
replacement could be arranged.
[31]
The Instructors were not required
to work a minimum number of hours on a weekly basis. When they were interviewed
they stated their preferred hours of work; that is, whether they were available
in the morning or the afternoon or the entire day. After they were hired, the
Instructors were expected to be available at the time they had chosen. I
realize that both Jurgen Schoenfeld and Debbie Kostialik stated that they could
have refused to take a student if they were not available. However, this did
not answer the question whether they could refuse work with the Appellant at a
time that they said they would be available. Renee Lowe stated that if an
Instructor refused to take students during the hours they said they would be
available, the Appellant would not give any further work to that Instructor.
[32]
However, the evidence was that the
Appellant would consult with the Instructor when a teaching assignment became
available outside of the hours that they initially agreed to be available. The
Appellant usually accommodated the Instructors requests.
[33]
Some of the Instructors were asked
to perform a number of non-teaching duties for the Appellant. If a College did
not have a Centre Manager, one of the Instructors was given a key to the
College and was asked to open and close the College. The Instructor also had to
turn off the coffee maker, check the water cooler, turn off the portable
heaters, restart the computers, turn off the computer monitors, turn off all
the lights and lock the exterior door. The Instructor was paid at her regular
rate for performing these duties.
[34]
According to the contract between
the Appellant and the Instructors, the Instructors were permitted to work with
third parties provided those third parties did not compete with the Appellant.
[35]
It is the Appellant’s position
that its Clients dictated the subjects to be taught to the students; how many
hours of instruction were to be given to the students and the total duration of
the instruction. As a result, both the Appellant and the Instructors were
controlled by the Appellant’s Clients. In support of its position, counsel for
the Appellant relied on the decision in R.B. Cormier Management Consultants
Ltd v Canada (Minister of National Revenue), [1989] TCJ
No.419.
[36]
R B Cormier Management
Consultants Ltd is factually distinguishable
from the present appeals. In that case, the workers used a manual which was
prepared by the government and Judge Baryluk found that it really was a list of
specifications imposed on Cormier. In the present appeal, the Clients
did not dictate the subjects to be taught to the students; how many hours of
instruction were to be given to the students and the total duration of the
instruction. Rather, the Appellant proposed these terms based on its assessment
of the students’ academic standing and their vocational goals. When the Clients
accepted the proposal made by the Appellant, it included these terms in the
sponsorship letter. The Appellant was required to adhere to the sponsorship
letter in order to receive the funding agreed to for each student. I agree that
a student’s program could only be extended with the approval of the Appellant’s
Client because this would involve a cost that had to be paid by the Client.
However, based on the evidence presented in these appeals, it is my view that
the Clients did not control the Instructors in their duties.
[37]
It is my view that the control
factor points to the Instructors being employees of the Appellant.
Ownership of Tools
[38]
The Appellant supplied the
Instructors with the students, the classrooms, the desks, the chairs, the
instructors’ binder, and all supplies which the Instructors required to teach
their classes. Although Linda Robertson and Deborah Kostialik stated that the
paper and pens in the classrooms were supposed to be used only by the students,
all other witnesses gave contrary evidence.
[39]
Some Instructors used their own
teaching aids and equipment. However, this was not a requirement of their
contract.
[40]
The ownership of tools factor is
more indicative of an employee/employer relationship.
Chance of Profit
[41]
During the period under
appeal, the Instructors were paid between $15 and $20 per hour. To receive
their pay, they had to complete timesheets and then invoice the Appellant on a
biweekly basis. The form for both the timesheets and the invoices were provided
by the Appellant. Their pay was deposited into their bank accounts.
[42]
According to the witnesses, the
hourly rate of pay was not negotiated; it was offered by the Appellant and
accepted by the Instructors.
[43]
The Instructors had no chance of
profit from their relationship with the Appellant. This factor favours a
finding that the Instructors were employees.
Risk of Loss
[44]
No witness gave evidence which
would indicate that the Instructors had a risk of financial loss. They did not
have to invest in anything related to the fulfillment of their contract with
the Appellant.
Replacements
[45]
If an Instructor was going to be
absent, he/she could not hire his/her own replacement. It was the Appellant who
determined who would replace the absent Instructor.
Conclusion
[46]
When I consider all of the
factors, I conclude that the Instructors were not in business on their own
account. Although the parties may have intended that the Instructors be engaged
by the Appellant as independent contractors, the terms of their relationship,
when analyzed against the Wiebe Door factors, do not support their
intention.
[47]
The appeals are dismissed.
Signed at Ottawa, Canada, this 20th
day of January 2014.
“V.A. Miller”
Email this Content