Citation: 2013TCC169
Date: 20130528
Docket: 2010-2461(CPP)
BETWEEN:
627148 ONTARIO LIMITED
O/A DAILY CARE HEALTH SERVICES AND THE RELATED PARTIES,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
GRACE ATADERO,
Intervenor.
REASONS FOR JUDGMENT
V.A. Miller J.
[1]
The Appellant appeals
the assessment dated March 27, 2009 made by the Minister of National Revenue
(the “Minister”) that its Workers were employed in pensionable employment while
working for the Appellant during the period January 1, 2005 to December 31,
2007.
[2]
In making the
assessment, the Minister relied on paragraph 6(1)(c) of the Canada
Pension Plan (“CPP”) and subsection 34(1) of the Canada Pension
Plan Regulations (the “Regulations”). They read as follows:
6(1) Pensionable
employment -- Pensionable employment is
(a) employment
in Canada that is not excepted employment;
(b)
employment in Canada under Her Majesty in right of Canada that is not excepted
employment; or
(c) employment included in pensionable employment by
a regulation made under section 7.
…
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.
Preliminary Matter
[3]
The Minister intended
to assess the Appellant for CPP contributions of $50,075.22 and Employment
Insurance (“EI”) premiums of $32,915.09. However, he mistakenly
included the amount of the EI premiums in the assessment of CPP
contributions. The agent for the Appellant spoke to this matter and counsel for
the Respondent confirmed that the CPP assessment should be reduced by
the amount of $32,915.09. The Minister did not make an assessment for the EI
premiums and therefore the only matter before me is the assessment of CPP
contributions.
[4]
The witnesses at this
hearing were Mr. Levi Frias, the owner of the Appellant, Ms. Verona Roswell, a
registered practical nurse (“RPN”), Emelyn Dela Cruz, a personal support worker
(“PSW”) and Batool (Betty) Khalili, a registered nurse (“RN”). Ms. Roswell, Ms.
Dela Cruz and Ms. Khalili were Workers with the Appellant during the period
under appeal.
[5]
Subsection 34(1) of the
Regulation is satisfied if the following requirements are met:
(a)
The Appellant is a
placement agency;
(b)
The Worker is placed in
her employment by a placement agency;
(c)
The Worker performed
services for the Appellant’s client;
(d)
The Worker is paid by
the Appellant;
(e)
The Worker performed
services for the Appellant’s client under terms or conditions that constitute a
contract of service or are analogous to a contract of service.
[6]
Mr. Frias agreed with
the majority of the assumptions of fact made by the Minister. I will discuss
his evidence under each of the requirements above.
(a) Placement Agency
[7]
The Appellant is a
placement agency in the business of providing RNs, RPNs or PSWs to private
nursing homes. It has been in this business since 1985. During the period
January 1, 2005 to December 31, 2007, the Appellant had only two clients,
Extendicare (York Central) (“York”) and ValleyView Residence (“ValleyView”).
The Appellant entered into a contract with each of its clients to provide
nursing staff who would temporarily replace or augment the client’s regular
staff. It warranted to its clients that the Workers it provided were qualified
RNs, RPNs or PSWs who possessed the necessary licences. The Appellant and its
clients agreed that the client would pay the Appellant directly at the
following hourly rates:
|
Client
|
RNs
|
RPNs
|
PSWs
|
|
ValleyView
|
$38
|
$32
|
$18
|
|
York
|
$38
|
$32
|
$21
|
(b) and (c) Worker is placed in her employment by the
placement agency and the Worker performed services for the Appellant’s client
[8]
When a member of the client’s regular staff
was unavailable, the client would notify the Appellant, usually by telephone,
that it needed a Worker. The client specified the date, time and duration of
the shift and the category of Worker it required. The Appellant would then notify
one of the Workers who was registered with it to ascertain if the Worker was
available to take the shift. The Worker was free to refuse the shift but if she
accepted the shift, she worked at the client’s premises under the terms
specified by the client.
(d) Worker is paid by the Appellant
[9]
The Appellant paid its
Workers by cheque at the following rates:
|
Category
|
Rate of Pay
|
|
RNs
|
$23 to $27 hourly
|
|
RPNs
|
$18 to $24 hourly
|
|
PSWs
|
$10 to $11 hourly
|
[10]
It was Mr. Frias’
evidence that the Workers negotiated their rate of pay with the Appellant. Many
of them worked for other placement agencies and they demanded a comparable rate
of pay. The Workers were supposed to issue an invoice to the Appellant for
their pay; but, in those cases where no invoice was given, the Appellant knew
the Worker’s hours. It kept track of the shifts worked by each Worker. In
addition, it had the log-in sheets which the Worker signed at the clients’
premises.
(e) Contract of Service or Conditions Analogous
to a Contract of Service
Intention
[11]
The Appellant intended
to engage its Workers as independent contractors. I have concluded from the
evidence of both Ms. Roswell and Ms. Dela Cruz that they intended to work with
the Appellant as independent contractors.
[12]
However, it is my view
that in the circumstances of this appeal, the intention of the Appellant and
the Workers is not a relevant factor. The requirement in subsection 34(1) of
the Regulations is satisfied, if the Workers’ services are performed for
the Appellant’s clients under terms or conditions that either constitute a
contract of service or are analogous to a contract of service regardless of
their intention. If the conditions in subsection 34(1) are satisfied, then the
person who pays the Workers’ remuneration is deemed to be the employer.
[13]
The factors from Wiebe
Door Services Ltd. v MNR, [1986] 3 FC 553 (FCA) are used to analyze the
work relationship between the Workers and the Appellant’s clients. Those factors
follow.
Control
[14]
Prior to working with a
client for the first time, the Workers were required to attend an orientation
session at the client’s premises. At the job, the client assigned the duties to
the Workers. All Workers’ were expected to:
a)
sign in upon arrival at
the clients’ location to begin a shift and sign out upon completion of their
shift;
b)
receive assignment of
duties, instructions and priorities from the charge nurse and the outgoing
staff they were replacing;
c)
give verbal reports at
the end of their shift to the oncoming staff;
d)
follow the clients’
routines, schedules, policies, and procedures; and,
e)
attend the clients’
meetings if they occurred during the scheduled work shift.
[15]
The Workers performed
duties similar to those of the clients’ regular staff and they were supervised
by the clients. Their daily duties were determined by the clients. At the end
of each shift, the Workers completed written reports which were reviewed and
approved by the clients.
[16]
If there were problems
with a Worker’s performance, the Appellant was notified.
[17]
The Workers wore a name
tag which identified them as representing the Appellant.
[18]
The Workers were
required to complete their scheduled shift. They could not leave early unless
they had permission from the client. They could not send a replacement Worker.
If a Worker was unable to attend a scheduled shift, the Appellant would arrange
for a replacement.
[19]
It was the Appellant’s
position that the clients could direct the Workers in their duties but the
clients could not direct the Workers how to perform their duties. The Workers
were trained professionals and knew how to perform their tasks.
[20]
It is my view that this
is normal when one is engaged for her expertise. When the worker is a
professional, she may not have to be told how to perform her duties. However,
the crucial question is whether the clients had the right to exercise control
over the Workers: Groupe Desmarais Pinsonneault & Avard Inc v Canada, [2002] FCA 144 at paragraph 5.
[21]
I have concluded that not
only did the clients have the right to exercise control over the Workers; but
they did exercise control over the Workers. See paragraph 14, 15 and 18 above.
Ownership of Tools
[22]
The Workers provided
their own uniform. Most of the RNs and RPNs also provided their own stethoscope
but it was not necessary that they do so. The clients provided stethoscopes
that the RNs and RPNs could use. All other tools, supplies and equipment which
the Workers needed to perform their duties were provided by the clients.
Chance of Profit/Risk of Loss
[23]
The Workers were paid a
set hourly rate for the shifts they worked. If they worked on a statutory
holiday, they received one and one-half times their regular rate. They incurred
no expenses in the performance of their duties except the cost of a uniform and
a stethoscope.
[24]
The Appellant paid for
liability insurance which it was required to show to its clients. The Appellant
also provided its client with a guarantee of the work performed by the Workers.
[25]
The Workers signed a
“Letter of Agreement” with the Appellant that they would not interfere with the
contract between the Appellant and its clients by taking direct employment with
any of the Appellant’s clients.
[26]
The agent for the
Appellant argued that the Workers had a chance of profit if they worked more
shifts and a risk of loss, if they did not work.
[27]
I disagree. This is not
the meaning of the terms “Chance of Profit/Risk of Loss”. These terms are to be
understood in the entrepreneurial sense.
Conclusion
[28]
The agent for the
Appellant argued that the evidence in this case was inconclusive. I disagree.
The admissions made by Mr. Frias were sufficient for me to find that the
requirements of section 34(1) of the Regulations had been met. When I
consider all of the factors, I conclude that the services provided by the
Workers to the Appellant’s clients were under terms and conditions that
constituted or were analogous to a contract of service.
[29]
In the circumstances of
this appeal, the requirements of subsection 34(1) of the Regulations
have been satisfied.
[30]
The agent for the
Appellant also argued that most of the Workers held full time employment and
only worked with the Appellant on a part time basis. He argued that these
Workers had already maximized their CPP contributions from their regular
employment and it is neither logical nor justifiable to enforce Regulation
34.
[31]
There was no evidence
before me that any Worker had maximized her CPP contributions. Even if
that evidence had been presented, it would not be a reason to find that the
Worker was not engaged in pensionable employment with the Appellant.
[32]
In Ruban Insurance
Brokers Inc. v Canada (Minister of National Revenue), [1992] T.C.J. No.356
(TCC), Beaubier T.C.J. was faced with the question whether an employer had to
remit CPP contributions on behalf of an employee who was also employed
by another employer who had made its contributions for the employee for the
year. Beaubier T.C.J. stated:
Pursuant to subsection
11.1(2) and paragraph 113.1(7)(a) the employee and the employer pay the same
rate, calculated upon the same base. This may occur more than once, if the
employee is employed by more than one employer during a year. In the case of
C.D. Ruban, if all of the premiums were paid the employee and the employers
together might very well pay more than the maximum contributions due if C.D.
Ruban were employed by only one employer during the year. In such a case, which
is the case presented by the Appellant to this Court, C.D. Ruban may apply
under subsection 8(2) and obtain a refund of the excess employee contributions
above her employee's rate applied to the greater of her salary, wages and
earnings or maximum contributory earnings for the year, because the amounts so
deducted for employee's contributions are "deemed to be an overpayment
made by the employee on account of the employee's contribution for that
year". Upon a proper application being made, a refund would occur.
However, neither of her employers has a right to make such an application or to
obtain a similar refund in whole or in part under section 9 of the Act or any other
provision of the Act.
A similar possibility was discussed in the House of Commons
at the time that the proposed provisions of the Canada Pension Plan were
reviewed. In particular, the Honourable J.W. Monteith, Q.C., M.P., Stratford, Ontario, stated as follows:
"Mr. Chairman, I am not sure that this is the time I
should make the few remarks I wish to make, but I will preface them by stating
that it is not politically popular to speak on behalf or in defence of
employers at this time. There is an aspect of this clause which I feel should
be brought to the general attention of the people of Canada. While
contributions are to be paid by both employer and employee, if an employee
occupies more than one position during a year - six months with one firm and
six months with another - he will have paid his full annual deduction twice. If
the employee occupies a position for which he is paid a high salary he is apt
to have his full deductions made in the first three months, or perhaps even in the
first month. If an employee of that type worked for two or three different
firms in a period of a year, making his full contribution through pay-roll
deduction by each of the three employers, he is entitled by the provisions of
this clause to a refund. However, there is no provision which would allow an
employer who has made full contributions on behalf of three individuals
occupying one position in one year to apply for a refund.
As I have stated, I realize it is not politically popular
at this time to plead an employer's case, but I think these facts should be
made known to the public. This attitude was adopted by the government, as
explained to the committee, at least partially because this is what is done in
the United States. I am not complaining about this situation, nor do we intend
to amend the clause or vote against it, but I feel the public should understand
the situation. I understand that government actuaries have accepted the fact
that there will be overpayments by employers and that these overpayments are
not subject to a refund." (House of Commons Debates, February 25, 1965,
page 11757)
[33]
Accordingly, once it is
found that the Workers were employed in pensionable employment with the
Appellant, CPP contributions must be made by the Appellant on behalf of
the Workers.
[34]
The agent made various
other arguments; one of which is that section 34 of the Regulations is
ambiguous. However, he has failed to demonstrate to me how precisely the
section is ambiguous.
[35]
In conclusion, during
the period January 1, 2005 to December 31, 2007, the Appellant’s Workers were
employed by it in pensionable employment. In accordance with the agreement of
the parties, the assessment is referred back to the Minister for
reconsideration and reassessment on the basis that the assessment is to be
reduced by the amount of $32,915.09.
Signed at Ottawa, Canada, this 28th
day of May 2013.
“V.A. Miller”
Email this Content