Date: 19990419
Docket: A-240-98
OTTAWA, ONTARIO, MONDAY, APRIL 19, 1999
LETOURNEAU J.A.
NOËL J.A.
BETWEEN:
ATTORNEY GENERAL OF CANADA,
Plaintiff,
- and -
RITA SIROIS,
Defendant.
JUDGMENT
The application for judicial review is allowed, the decision by the Tax Court of Canada is set aside and the matter is referred back to that Court to be decided on the basis that a contract of service existed between the defendant and the payer covering the period from December 20, 1995 to December 20, 2000.
Certified true translation
Bernard Olivier, LL. B.
Date: 19990419
Docket: A-240-98
LETOURNEAU J.A.
NOËL J.A.
BETWEEN:
ATTORNEY GENERAL OF CANADA,
Plaintiff,
- and -
RITA SIROIS,
Defendant.
Hearing held at Montréal, Quebec, Thursday, February 25, 1999
Judgment rendered at Ottawa, Ontario, Monday, April 19, 1999
REASONS FOR JUDGMENT BY: DESJARDINS J.A.
CONCURRED IN BY: LÉTOURNEAU J.A.
NOËL J.A.
Date: 19990419
Docket: A-240-98
LETOURNEAU J.A.
NOËL J.A.
BETWEEN:
ATTORNEY GENERAL OF CANADA,
Plaintiff,
- and -
RITA SIROIS,
Defendant.
REASONS FOR JUDGMENT
DESJARDINS J.A.
[1] The Court has before it an application for judicial review based on s. 28 of the Federal Court Act1 asking it to set aside a decision of the Tax Court of Canada which found that the defendant Sirois did not hold insurable employment within the meaning of s. 3(1)(a) of the Unemployment Insurance Act ("the Act").2
[2] The facts are as follows. Prior to December 20, 1995 the defendant, who by profession is a nurse, had acted for several years as coordinator of nursing care for the Centre d'Accueil Sénécal/Les Ateliers Le Cap ("the payer"). The defendant's working conditions were governed by the Regulation respecting certain conditions of employment of officers of regional councils and of health and social services establishments ("the Regulation")3 adopted pursuant to the Act respecting health services and social services.4
[3] On April 27, 1994, following an administrative reorganization, a notice of intention to abolish a position was served on the defendant pursuant to s. 130 of the Regulation, requiring her to make an election between the three options mentioned in s. 131:
| 130. If an officer cannot be reinstated or reassigned under section 129, the employer shall advise the officer in writing of the elimination of the position . . . |
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| 131. On receiving the notice prescribed in section 130, the officer shall, before the date on which the position is to be eliminated, elect one of the following options: |
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(2) reassignment and entry on the recall list;
(3) pre-retirement leave and the retirement indemnity;
(4) severance pay.
| The election of the officer takes effect on the date on which the position is eliminated. |
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[4] The defendant exercised the third option and concluded an agreement with the payer giving to the option she had elected.
[5] Under that agreement,5 the defendant's pre-retirement leave began on December 20, 1995 and ended on December 20, 2000, the date on which she undertook to take her retirement. During that five-year period, the agreement stipulated that the defendant would be on paid leave 14 hours a week, on paid sick leave 2.625 hours a week and on unpaid leave 18.375 hours a week. Accordingly, during that period the defendant did not have to provide any work to the payer but, pursuant to s. 168 of the Regulation, she continued to participate in group insurance plans and pay a contribution to the pension plan for the 16.625 paid hours per week. By paragraph 8 of the agreement the employment relationship between the defendant and the payer would not be finally broken until the date on which the defendant was eligible for a retirement pension without actuarial penalty, namely December 20, 2000.
[6] During the pre-retirement period the unemployment insurance premiums were collected from the defendant's salary. On August 28, 1996, in response to a request for a decision by the defendant, who objected to these premiums being deducted from the amounts she was receiving from the payer, the Minister of National Revenue ("the Minister") decided that the defendant had to pay these premiums as an employer-employee relationship continued to exist between herself and the payer during the period in question.6 The Minister indicated in his decision that it was based on ss. 3(1)(a) and 61(1) of the Act, which provided the following:
| 3. (1) Insurable employment is employment that is not included in excepted employment and is
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3. (1) Un emploi assurable est un emploi non compris dans les emplois exclus et qui est, selon le cas :
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| (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 . . . |
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| a) un emploi exercé au Canada pour un ou plusieurs employeurs, en vertu d'un contrat de louage de services ou d'apprentissage exprès ou tacite, écrit ou verbal, que l'employé reçoive sa rémunération de l'employeur ou d'une autre personne et que la rémunération soit calculée soit au temps ou aux pièces, soit en partie au temps et en partie aux pièces, soit de toute autre manière; . . . |
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| 61. (1) Where any question arises under this Act as to whether a person is required to make a payment of an employee's premium, or an employer's premium, or as to the amount of any such premium, in a year,
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61. (1) Lorsque se pose, en vertu de la présente loi, la question de savoir si une personne doit verser une cotisation ouvrière ou patronale ou quel devrait être le montant d'une telle cotisation, au cours d'une année :
|
| (a) the person concerned may, on or before April 30 in the immediately following year, apply to the Minister to determine the question; or |
| (b) the Minister on his own initiative may at any time determine the question. |
|
| a) la personne intéressée peut, au plus tard le 30 avril de l'année suivante, demander au ministre de régler la question; |
| b) le ministre peut, de sa propre initiative, régler la question à n'importe quel moment. |
|
[7] The defendant appealed this decision to the Tax Court of Canada. The trial judge quashed the Minister's decision on the ground that the defendant did not hold insurable employment within the meaning of s. 3(1)(a) of the Act during the relevant period. He wrote:7
| . . . since the pre-retirement agreement between the appellant and the payer no control or supervision, or integration of the appellant into the payer's business, or obligation by the appellant to provide any service whatever, has existed: the employer's only existing obligation has been to provide remuneration, without any return on the part of the appellant. |
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| The Court accordingly arrives at the conclusion that this was not a contract of service within the meaning of s. 3(1)(a) of the Unemployment Insurance Act. |
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[8] In my opinion, the judge erred in concluding that no contract of service existed on the ground that the defendant was no longer providing any work. The courts have recognized that even if an employee, who is still receiving money from his or her employer, is no longer working it does not necessarily follow that there is no longer a contract of service between the employee and the employer. The Court has to consider whether the employment relationship has been broken.
[9] In Attorney General of Canada v. Verreault,8 the company Les Produits Alimentaires Anco Ltée told its employees on July 31, 1984 that the plant was closing forthwith and that each of its employees would be considered to be on leave until September 30, 1984, on which date they would be dismissed. At the same time the employer gave each of its employees a cheque for the period of leave and a cheque representing vacation pay. Unemployment insurance premiums were paid for each of the affected employees during the period of the leave and, in addition, the employees continued benefiting from their group insurance and earning vacation pay.
[10] On August 2, 1984 Verreault made an application for unemployment insurance benefits. The Commission refused to grant the benefits on the grounds that Verreault was still employed by the business until September 30, 1984. This decision was upheld by the board of referees but reversed on appeal by the umpire, who found that Verreault's employment had terminated on July 31, 1984, the date on which he physically ceased working for the employer. On judicial review Pratte J.A. speaking for this Court, held that the umpire had made an error of law in deciding that the employment contract terminated in July. At that time the Court laid down the principle that the parties to a contract of service could legally agree to extend its duration for a period in which the employee would be excused from providing any work.
[11] In the case at bar the defendant's situation is governed by the Regulation. Having elected the "pre-retirement leave" option mentioned in s. 131, the defendant was placed on reserve within the meaning of s. 1 of the Regulation:
| "placing on reserve" means the situation of an officer following the elimination of the officer's position due to a staff surplus or administrative reorganization, and after the officer has elected the option of replacement, reassignment and placement on a recall list or pre-retirement leave . . . |
|
[12] Under the Regulation, there is no breach in the relationship of employment between the employer and the officer placed on reserve.
[13] If the officer elects the replacement option, under ss. 133, 134 and 135 of the Regulation he or she continues providing his or her services to the employer in duties that take into
consideration the officer's training, experience and reinstatement plan, and retains his or her status as an officer for 24 months from the date on which the position was eliminated.
[14] An officer who has chosen reassignment and entry on the recall list under s. 162 retains his or her salary and all working conditions for as long as he or she is not reassigned or reinstated for a period of 24 months from the date the position is eliminated. Section 164 provides that the employment relationship cannot be broken until this period has expired.
[15] Section 167 of the Regulation provides for an officer who has chosen the pre-retirement option that his or her pre-retirement leave begins on the date the officer's position was eliminated and ends on the date on which he or she becomes eligible for a retirement pension without actuarial reduction, in accordance with his or her pension plan. Under s. 168, the officer continues to participate in the pension plan and group insurance plans. Section 169 provides that during pre-retirement leave an officer will receive a pre-retirement allowance in an amount based on the duration of the pre-retirement period.
[16] An officer who chooses the severance pay option breaks his or her employment relationship with the employer from the date the position is terminated. Section 175 of the Regulation provides that:
| 175. An officer may elect severance pay in an amount equal to 3 months of salary per year of continuous service with one or more employers as an officer or general manager. Notwithstanding the foregoing, the benefit shall be not less than 3 months of salary nor more than 12 months of salary. The basis for calculating the benefit is the salary the officer was receiving on the date on which the position was eliminated. |
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| In such case, there is termination of the employment relationship between the officer and the employer from the date on which the position was eliminated. The officer shall then cease to contribute to the pension plan and to benefit from the officer's group insurance plan. |
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[17] Accordingly, the position of an officer who chooses one of the first three options mentioned in s. 131 of the Regulation is quite different from that of one who elects the severance pay. Whereas the latter's employment relationship with the employer is broken, an officer who has elected one of the first three options is "placed on reserve" and clearly his or her employment relationship with the employer is not broken. It is still the same contract of service, except that the terms have changed.
[18] The defendant argued that since December 20, 1995 the defendant is no longer able to return to work with the payer and has a duty to retire when the agreement expires, on December 20, 2000. Further, she said, under s. 168 of the Regulation an officer on pre-retirement leave continues to have a contractual relationship with the payer solely for the purpose of participating in the retirement plans and group insurance plans of managerial staff. In support she cited the judgment of this Court in Canada (Attorney General) v. Therrien-Beaupré9 in which, she argued, the Court held that an employee participating in a deferred salary leave plan could not be regarded as holding insurable employment during the period of leave specified in the plan. She concluded that although the agreement between the payer and herself stipulated that an employment relationship would continue until December 20, 2000, a careful analysis of the circumstances surrounding conclusion of the agreement leads to the conclusion that a true contract of service has not existed between the parties since December 20, 1995.
[19] Therrien-Beaupré had to do with s. 13(1) of the Unemployment Insurance Regulations,10 which excludes from insurable employment any employment which is less than a minimum number of hours of work and pay.11 This is the basis on which the exception was made. The claimant received deferred salary leave under the terms of a collective agreement. In fact, she actually received prepaid salary leave. It was agreed between the claimant and her employer that the latter would not work during the first period of nine months and that her full salary, actually covering a period of twenty-seven months, would be spread over thirty-six months. The result was that from the outset the claimant received seventy-five percent of the salary agreed upon for the twenty-seven-month period. However, during the first period of nine months her salary was not "earned" during that period since it was a period of leave. The claimant therefore did not meet the requirements laid down by s. 13(1) of the Regulations.
[20] That case has no relevance here. No regulatory provisions are at issue. Only the general principles covering contracts apply to the facts of this case.
[21] Even if the defendant no longer had to return to work, the employment relationship between herself and the payer, as laid down in the agreement, was not broken. In the circumstances the defendant still held insurable employment.
[22] I would allow the application for judicial review, set aside the decision by the Tax Court of Canada and refer the matter back to that Court to be decided on the basis that a contract of service existed between the defendant and the payer covering the period from December 20, 1995 to December 20, 2000.
[23] I would award no costs, since the plaintiff requested none.
I concur.
Gilles Létourneau J.A.
I concur.
Marc Noël J.A.
Certified true translation
Bernard Olivier, LL. B.
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
COURT FILE No: A-240-98
STYLE OF CAUSE: Attorney General of Canada v. Rita Sirois
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: February 25, 1999
REASONS FOR JUDGMENT: Desjardins J.A.
CONCURRED IN BY: Létourneau J.A.
Nöel J.A.
DATED: April 19, 1999
APPEARANCES:
Roger Roy for the applicant
Eugène Abarrategui for the respondent
SOLICITORS OF RECORD:
Morris Rosenberg for the applicant
Deputy Attorney General of Canada
Ottawa, Ontario
A.G.E.S.S. for the respondent
Longueuil, Quebec
__________________
1 R.S.C. 1985, c. F-7.
2 R.S.C. 1985, c. U-1.
3 Ministerial order 998-91, July 10, 1991, G.O.Q., July 31, 1991, 123d year, No. 31, at p. 2883, amended by ministerial order 1180-92, August 12, 1992, G.O.Q., August 26, 1992, 124th year, No. 37, at p. 4299.
4 R.S.Q., c. S-5, s. 154.
5 Plaintiff's record, at p. 93.
6 Plaintiff's record, at p. 75.
7 Plaintiff's record, at p. 9.
8 October 20, 1986, A-186-86, Pratte, Marceau and Lacombe JJ.A. (C.A.).
9 May 19, 1994, A-414-92 (F.C.A.).
10 CRC Vol. XVIII, c. 1576.
11 The wording of s. 13(1) of the Unemployment Insurance Regulations reads as follows:
13. (1) Subject to subsection (2), the employment with an employer in any week of a person whose cash earnings are less than 20 per cent of the maximum weekly insurable earnings and also is employed for less than 15 hours is excepted from insurable employment.
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