Citation: 2013
TCC 359
Date: 20131107
Docket: 2012-1641(EI)
BETWEEN:
ROUGUIATOU HANN,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Favreau J.
[1]
This is an
appeal from a decision dated January 18, 2012, in which the Minister of
National Revenue (the Minister) found that Louiza Valmé (the worker) was
engaged in insurable employment within the meaning of paragraph 5(1)(a)
of the Employment Insurance Act (the EI Act) while she was working for
the appellant during the January 18, 2008, to July 20, 2008, and the
September 29, 2008, to July 3, 2010, periods, and that there was no
employer–employee relationship during the July 21, 2008, to
September 28, 2008, period.
[2]
The
facts relied on by the Minister are set out at paragraph 16 of the Reply
to the Notice of Appeal :
[translation]
a.
The appellant has
owned a home daycare since 2000;
b.
Over the period at
issue, the daycare accommodated six to nine children;
c.
The daycare was open
between 7:30 a.m. and 5:00 p.m.;
d.
The worker's duties
entailed supervising and taking care of the children, organizing activities,
providing a brief report of the day's events to parents and cleaning the
daycare;
e.
The worker provided
these services in the presence and under the supervision of the appellant;
f.
The worker was paid
$10.00 an hour;
g.
She was paid by
cheque every two weeks;
h.
The worker started
providing these services at the end of 2007;
i.
The persons who
occupied the worker's position before she arrived and those who replaced here
were employees of the appellant.
[3]
At
issue is whether the worker was engaged in insurable employment while she was
working for the appellant during the January 18, 2008, to July 20,
2008, and the September 29, 2008, to July 3, 2010, periods.
[4]
The
appellant's version of facts differs from that of the worker in several
respects, specifically, with regard to the parties' common intention regarding
the worker's tax status, the worker's freedom to choose her hours of work and
days of leave, the worker's degree of autonomy in organizing educational
activities for the daycare, the level of supervision and control practiced by
the appellant over the worker and the circumstances surrounding the termination
of the contract between the parties.
[5]
On
the basis of the appellant's testimony at the hearing and the report of the
appeals officer, dated December 16, 2011 (Exhibit I-1), which resumes
(a) the reasons provided in the letters sent to Appeals and to Labour Standards
dated February 7, 2011, signed by the appellant; (b) the reasons provided
in the letter of appeal dated September 12, 2011, signed by the appellant's
representative; and (c) the facts obtained from the appellant during a
telephone interview held on December 9, 2011, the appellant's story is the
following:
i.
The appellant has
owned a home daycare since 2000. The daycare was affiliated with the
Coordinating Office, and she was dealing with the worker at arm's length;
ii.
The daycare was
attended by six to nine children. It was closed on holidays and during other
periods depending on the number of children;
iii.
The worker provided
services at the daycare from late 2007 to 2010;
iv.
She had expressed her
interest in working as an assistant for the appellant in response to an
advertisement the appellant had posted on Kijiji. The Coordinating Office had
interviewed the worker before she started at the daycare;
v.
The appellant had
always treated her workers as employees, be it the woman who worked for her in
2007 or the woman who had replaced the worker in 2010;
vi.
She considered the
worker to be self-employed because, when she was hired, the worker wanted to be
treated as such;
vii.
The parties initially
concluded an oral agreement. The written agreement between the parties, dated
June 30, 2010, was signed following a call from an officer of the Canada
Revenue Agency, who asked whether the parties had signed a written contract;
viii.
The worker's duties consisted
exclusively of developing educational programs for the children of the daycare,
be it games or crafts, and taking the children on outings. The worker did not
cook as the appellant took care of this;
ix.
The worker had a free
hand to design educational programs and games. Consequently, she did not
supervise her, even if she was present on occasion and asked the children what
they had been doing;
x.
The daycare was open
from 7 a.m. to 5 p.m., Monday to Friday, and the worker's hours
varied according to her needs; however, the appellant recorded the worker's
hours of work;
xi.
The worker was free
to take time off as and when she wished. On pedagogical professional
development days, the worker often decided to stay with her children;
xii.
If the worker did not
come to work and the daycare had taken in nine children, she would ask her two
daughters, one of whom was 21 years old and not attending school because she
lacked status in Canada, to help out;
xiii.
The worker gave
written or oral reports to the parents of the children, who had journals that
had to be completed;
xiv.
The worker looked
after all the children and she was not exclusively assigned to one or more
children;
xv.
She had set the
worker's wages at $10 an hour, based on her daycare's financial resources;
xvi.
The worker received
her wages by cheque every two weeks. She converted her cheques into cash at a
cheque cashing service;
xvii.
The worker wanted to
be paid in cash, but the appellant had refused;
xviii.
Children's absences
or parents not paying for daycare services for their children did not affect
the worker's wages;
xix.
As the owner of the
daycare, the appellant had provided and maintained all the tools the worker
needed for her work, and the worker did not have to pay to use the material;
xx.
The worker did not
incur any expenses for her work, apart from the purchase of magazines such as
Éducatout for her educational program. She was not reimbursed for these
expenses;
xxi.
The worker could not
choose or pay assistants or replacements as this was the appellant's prerogative;
xxii.
The worker had not
taken out liability insurance, but the daycare had such a policy;
xxiii.
The worker had never
provided services without being paid; the appellant would give the worker an
advance if she requested it;
xxiv.
The daycare owner gave
the parents of the daycare receipts at the end of the year;
xxv.
The parents of the
children of the daycare paid her directly, never the worker. She paid the
worker for overtime when parents arrived late at the end of the day;
xxvi.
The worker did not
have her own clients at the daycare. Her own child attended the daycare, and
she paid the fees for this, namely, $140 for a four-week month and $175 for a
five-week month. These fees were deducted from her wages on a weekly basis;
xxvii.
The worker unilaterally
terminated the agreement between the parties by breaching her duties and by
wrongfully and unreasonably terminating the agreement.
[6]
On
the basis of the worker's testimony at the hearing and the report of the
appeals officer referred to in the previous paragraph, which resumes the facts
obtained from the worker in a telephone interview held on December 15, 2011,
the worker's story is as follows:
i.
The worker considered
herself to be an employee during the period at issue, but she cannot explain
why she reported her income as business income in 2009;
ii.
She did not have
another job during the period at issue and worked full-time for the appellant's
daycare;
iii.
She never asked to be
considered to be self-employed or to be paid in cash when she was hired: she
had been providing her services as a daycare assistant since 1999 and had never
been treated as or considered to be a self-employed worker;
iv.
In addition to the
educational games she created for the daycare, she changed the children's
diapers three times a day, cleaned the daycare carpets every Friday and
disinfected the toys and toilets;
v.
She also went out
with the children and completed their journals and the attendance sheet;
vi.
She was only allowed
to call the parents if there was an emergency or if the appellant authorized
her to do so to ask them to bring diapers or a change of clothes for their
children;
vii.
The appellant supervised her because she asked her to play
educational games or take the children on outings when she failed to do so. The
worker would go out with six children, and the appellant would stay with the
three other children, or, if everyone went out, the appellant came with her;
viii.
The worker did not have the option of changing her work
schedule. When she needed leave or had an appointment, the appellant would
authorize this;
ix.
The appellant sometimes refused to allow her to be away for
half a day, preferring her to take the whole day off and choosing and paying
someone else to replace her;
x.
She only ceased working for about a month and a half in
2008 when she went to Haiti, for two weeks in March 2010 when her husband
arrived and for March break holidays to spend time with her children;
xi.
She was not paid an hourly rate but a fixed amount of $50 a
day, that is, $500 every two weeks. The appellant had determined this amount, as
well as how often and how she was paid;
xii.
The worker did not always receive $500 because the
appellant sometimes paid her an advance or deducted the daycare fees for her
child;
xiii.
She did not incur any expenses from her work, except for
the decorations she had made at the daycare for Easter, worth about $10, for
which she had not been reimbursed;
xiv.
She did not have a company account nor was she in business.
She is currently working at another daycare and is considered to be and treated
as an employee;
xv.
It was after the person auditing the appellant's trust
account called to announce he was visiting the daycare to carry out an audit
that the appellant had her sign the contract dated June 30, 2010;
xvi.
Before the auditor
came to the daycare to perform his audit, the appellant dismissed her by
calling her at the weekend, telling her that she no longer needed her services.
Analysis
[7]
At
issue is whether Ms. Valmé was engaged in insurable employment for the
purposes of the EI Act. The relevant provision here is paragraph 5(1)(a)
of the EI Act, which stipulates as follows:
5. (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;
[8]
This
article defines insurable employment as including employment engaged in under a
contract of service. The EI Act does not say what such a contract consists of.
[9]
Section 8.1
of the Interpretation Act provides the following for such circumstances:
Property
and Civil Rights
8.1
Both the common law
and the civil law are equally authoritative and recognized sources of the law
of property and civil rights in Canada and, unless otherwise provided by law,
if in interpreting an enactment it is necessary to refer to a province's rules,
principles or concepts forming part of the law of property and civil rights,
reference must be made to the rules, principles and concepts in force in the
province at the time the enactment is being applied.
[10]
The
relevant provisions for determining whether there is a contract of
employment in Quebec and for distinguishing such a contract from a contract for
services are found at articles 2085, 2086, 2098 and 2099 of the Civil Code
of Québec (Civil Code).
Contract of employment
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.
2086
A contract of
employment is for a fixed term or an indeterminate term.
Contract of enterprise or for services
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 or the
provider of services is free to choose the means of performing the contract and
no relationship of subordination exists between the contractor or the provider
of services and the client in respect of such performance.
[11]
Under
the Civil Code, the main distinction between a contract of employment and a
contract for services is whether or not a relationship of subordination exists between
the client and the contractor. Article 2099 of the Civil Code provides that "the
provider of services is free to choose the means of performing the contract and
no relationship of subordination exists between . . . the provider of
services and the client in respect of such performance".
[12]
In
the case at bar, I find it very difficult to believe that the worker could have
provided services as an assistant in the premises of the appellant's home
daycare without a relationship of subordination existing between the appellant
and the worker regarding the worker's services.
[13]
The
worker's work consisted of providing services related to the day-to-day
activities of the daycare, namely, following the children's educational
program, organizing games (crafts and drawing), going out with the children,
updating the children's journals and the attendance sheet, changing diapers,
cleaning the daycare's carpets every Friday, and cleaning the toys and the
toilets.
[14]
Contrary
to the appellant's claim that the worker enjoyed complete autonomy in terms of
outings and educational activities, I believe that the worker was supervised in
carrying out her duties, given the appellant's responsibilities with respect to
the requirements of the Coordinating Office and the contracts binding the
appellant to the parents. Moreover, the worker's work was not limited to
outings and educational activities, as indicated in the previous paragraph.
[15]
The
worker was remunerated for the services she provided as part of her work for
the daycare during the periods at issue. The worker actually received her pay
every two weeks by cheque, based on the hours she worked. However, it was the
appellant who determined the hourly rate and the method and frequency of
remitting the worker her pay. In the circumstances, the appellant exercised
total control over the worker's pay.
[16]
The
wages the appellant paid the worker, that is, $500 every two weeks, represented
only $6.50 an hour. As this pay was lower than the minimum wage in effect at
the time, the worker filed a complaint with the Commission des normes du
travail. As a result of her complaint, a settlement was reached, under which
the appellant had to pay the worker a lump sum.
[17]
The
worker's pay was fixed and did not depend on the number of children attending
the daycare or the ages of these children.
[18]
The
worker's schedule was based on the daycare's operating hours, namely, Monday to
Friday from 7:30 a.m. to 5 p.m. The parties clearly indicated that
the worker could not choose a replacement as she had to provide the services
personally. The appellant was responsible for hiring and paying a replacement
as needed.
[19]
The
worker was not able to modify her working hours without the appellant's prior
permission. The appellant kept a record of the worker's working hours.
[20]
All
the material the worker needed to carry out her work was made available to her
free of charge. The worker did not incur any expenses in carrying out her work,
except for the purchase of magazines such as Éducatout, for which she was not
reimbursed.
[21]
The
worker did not invest in her work for the appellant nor did she hold any other
jobs or provide services to anyone else during the periods at issue. She did
not take out liability insurance for her work or register with any government
authorities as someone operating a business. In her income tax returns for the
2007, 2008 and 2010 taxation years, the worker reported her income as income
from employment, but for 2009, she reported it as business income without,
however, claiming any expenses incurred to earn this income.
[22]
According
to her testimony, the worker has been working as a daycare assistant since
1999, and she has always been considered as being employed. Following her
dismissal, the worker continued working in a daycare and she is considered to
be an employee.
[23]
In
her testimony, the appellant confirmed that the assistant who worked at the
daycare before the worker was paid as an employee and that the same applied to
the assistant who replaced the worker after she left. The appellant issued T4
slips to her assistants in 2007 and 2010, but did not issue T4 slips to the
worker for the 2008 and 2009 taxation years. The appellant issued these T4
slips to the worker on March 30, 2011, after the Minister's decision that
the worker's employment was insurable.
[24]
Given
the absence of T4 slips and of source deductions, it seems that the appellant's
intention was indeed to treat the worker's services as a contract of
enterprise. However, the worker denied requesting that she be treated as self‑employed
when she was hired.
[25]
When
the worker started working at the appellant's daycare, no written agreement had
been signed by the parties. It was only when the auditor of the daycare's trust
account called the appellant to carry out an audit that the appellant had her
sign the document dated June 30, 2010, in which the worker recognized that
she was paid as a self-employed worker, as she had requested, that she was paid
in the form of fees and that the daycare fees for her daughter were deducted,
at her request, from the cheques the appellant paid her for her fees. This
agreement can hardly be characterized as a contract of employment. It is merely
recognition of what was done in the previous years.
[26]
The
worker signed the document in question but she was nonetheless dismissed
without notice by the appellant in a telephone call on the weekend preceding
the auditor's visit on the ground that the appellant no longer needed her
services.
[27]
Regardless
of what the parties' intention might have been at the beginning of their
business relationship, it seems quite obvious that their relationship, as
reflected in objective reality, was one of employer–employee rather than of
client–independent contractor.
[28]
The
appellant exercised a high degree of supervision and of control over the worker
(dismissal) and her work given the nature of the work carried out by the
worker; the worker did not provide her own work tools; the worker could not
hire assistants; she did not take any financial risks, and she had no occasion
to make a profit.
[29]
Given
the type of position occupied by the worker and in light of the information
provided by the parties, the worker's version of the facts seems more credible
and plausible than that of the appellant. The conditions of employment referred
to by the worker are more similar to the conditions of employment of other
workers working for other payers carrying out similar tasks.
[30]
During
the July 21 to September 28, 2008, period, the worker did not provide
services to the daycare and received no pay for this period. Consequently, this
employment was not insurable employment as it was not engaged in under a
contract of service.
[31]
For
these reasons, the appeal is dismissed.
Signed at Ottawa, Canada, this 7th
day of November 2013.
"Réal Favreau"
Translation certified true
on this 17th day of December 2013
Johanna Kratz, Translator
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