REASONS FOR JUDGMENT
Favreau J.
[1]
These are two appeals heard on common evidence,
from the decisions dated September 17, 2015, by the Minister of National
Revenue (Minister) that (1) workers François Blouin, Mathieu Breton, Xavier
Berthiaume, Michel Bacon, and Benoit Bellehumeur held insurable employment with
the appellant for the period from January 1, 2014, to June 18, 2015, and that
(2) worker Auguste Peterson held insurable employment with the appellant for
the period from May 23 to August 31, 2014. Workers François Blouin, Mathieu
Breton, Xavier Berthiaume, Michel Bacon, Benoit Bellehumeur, and Auguste Peterson,
are collectively referred to as the “workers”, and the periods from January 1,
2014, to June 18, 2015, and from 23 to August 31, 2014, are collectively
referred to as the “period at issue”.
[2]
The respondent submits that the workers’
employment was employment included in insurable employment under paragraph 6(g)
of the Employment Insurance Regulations, SOR/96-332 (Regulations)
because the appellant was then acting as a placement agency and the workers
were called to provide services to that placement agency’s clients, under the
direction and control of the appellant’s clients, while being paid by the
appellant.
[3]
The appellant submits that the workers provided
their services as independent contractors.
File histories
[4]
Worker Auguste Peterson filed a claim for employment
insurance benefits with Service Canada. Service Canada then asked the Canada
Revenue Agency (CRA) to determine whether the worker had held insurable
employment with the appellant during the period from May 23 to August 31, 2014.
[5]
In letters dated February 16, 2015, the CRA
advised Service Canada, the worker, and the appellant of its decision that the
worker’s employment with the appellant was insurable during the period at
issue, pursuant to paragraph 5(1)(d) of the Employment Insurance Act,
L.C. 1996, c. 23, as amended (Act), because the conditions of paragraph
6(g) of the Regulations were met.
[6]
The appellant appealed the CRA decision to the
respondent, who confirmed the CRA’s decision in letters dated September 17,
2015.
[7]
Workers François Blouin, Mathieu Breton, Xavier
Berthiaume, Michel Bacon, and Benoit Bellehumeur were selected in the process
of an examination by the CRA’s Trust Accounts Examination Section, which asked
the CPP/EI Rulings Division to decide whether these workers held insurable employment
with the appellant during the period from January 1, 2014, to June
18, 2015.
[8]
In letters dated June 19, 2015, the CRA advised
Service Canada, the workers, and the appellant of its decisions that the
workers’ employment with the appellant was insurable during the period at
issue, pursuant to 5(1)(d) of the Act, because the conditions of
paragraph 6(g) of the Regulations were met.
[9]
The appellant appealed the CRA’s decision to the
respondent, who confirmed the CRA’s decisions in letters dated September 17,
2015.
The presumptions of fact
[10]
The respondent assumed the following
presumptions of fact in the record of workers François Blouin, Mathieu Breton,
Xavier Berthiaume, Michel Bacon, and Benoit Bellehumeur:
[translation]
(a) the appellant is an incorporated entity;
(b) the appellant is also known as Les Éditions Bavard;
(c) the appellant’s sole shareholder is Mr. Yves Savard;
(d) the appellant operates a performance agency and artists’ agency;
(e) the workers were hired by the appellant under agreements concluded
in the province of Quebec;
(f)
the workers were hired as technicians;
(g) the workers were hired as technicians; the appellant’s role was to
provide technical workers, such as stage, audio, light, and video technicians,
to its clients (“clients”);
(h) the appellant invoiced its clients for the workers’ services,
namely:
(i) a lump sum; or,
(ii) an hourly rate between $21 and $24 for the hours worked in
2014;
(iii) an hourly rate between $22.50 and $28.50 for the hours
worked in 2015;
(i)
the appellant paid the workers for the services
that they provided to clients in a lump sum or at an hourly rate between $16
and $18;
(j)
the appellant determined the lump sum and the
workers’ hourly rate;
(k) during the period at issue, the appellant provided qualified
technicians, including the workers, to its clients;
(l)
the workers’ services were offered to support
the services of the clients’ technical teams;
(m) the workers performed the services according to the clients’ needs;
(n) the workers worked under the clients’ supervision through
supervisors, technical directors, managers, or show producers;
(o) the clients assigned the work location and the task lists to the
workers;
(p) with the exception of tools normally provided by employees in the
industry, the material and equipment were provided by the clients;
(q) the workers had to perform the tasks themselves and could not
sub-contract their work;
(r)
the appellant paid the workers for their
services by cheque; and,
(s) the appellant paid the workers on a weekly basis.
[11]
The presumptions of fact in the record of worker
Auguste Peterson that were assumed by the respondent are the same presumptions
of fact as those set out above except for paragraphs (f), (h), (i), and (j),
which read as follows:
[translation]
(f) the worker was hired as a sound technician;
(h) the appellant invoiced its clients for the services provided
by the worker, namely:
(i) a lump sum; or,
(ii) an hourly rate of between $12 and $24 for the hours worked;
(i)
the appellant paid the worker a rate of $17 per
hour for the services he provided to the clients;
(j)
the appellant determined the worker’s hourly
rate;
The issue
[12]
The issue is not whether the workers were
employees or independent workers, but rather to determine whether the appellant
was a placement agency during the period at issue and whether the appellant had
the obligation to withhold source deductions from the workers’ remuneration.
The testimony
[13]
Mr. Yves Savard, President and owner of 100% of
the appellant’s voting shares, testified at the hearing. He explained that the
appellant has operated since 1979 and that it offers services for the
production of shows and events, by providing stage, audio, lighting, and video
technicians, rigging personnel, etc. The appellant also provides the technical
direction for L’Équipe Spectra Inc.
[14]
The appellant has two employees, Mr. Savard and
an administrative assistant. The appellant keeps a database of stage
technicians’ names, which it uses when clients need workers.
[15]
Technicians are recruited based on
word-of-mouth. The candidates submit their résumés to Mr. Savard, who then
schedules interviews with the candidates to verify each one’s skills and
achievements. A service agreement is concluded with the technicians in a very
large majority of the cases. The appellant does not guarantee the number of
work hours.
[16]
For example, Mr. Savard introduced into evidence
the service agreement dated June 11, 2015, concluded with François Blouin, who
declared that he was an independent contractor. The services offered by the
technician are not exclusive and the agreement’s term is indefinite. The remuneration
for the technician’s services is a predetermined hourly rate or a lump sum
determined by the appellant. The hourly rate is not stated in the agreement
because it varies according to the venue’s rates. The technician undertakes to
submit an invoice for the services provided to the appellant, services which
are taxable supplies for the purposes of the Goods and Services Tax and the
Quebec Sales Tax. The appellant can terminate the agreement at any time without
cause, in which case the technician is only entitled to claim the payment due
for services provided before that termination.
[17]
The list of available technicians is updated
daily by the appellant after the technicians call, around 11:00, to provide
their availability for the next day. If the appellant has requests for the
technicians’ services, it calls them to ensure their availability and to tell
them when and where to report. The technicians are then also advised of the
hourly rate. In 2014, the hourly rate was between $16 and $18 an hour.
[18]
When the technicians arrived at the time and
place indicated by the appellant, the technicians received a technical data
sheet from the presenter indicating the layout of the venue, the placement of
the musical instruments, the scenes and rigging arrangement, the exact
placement of the lights, sound consoles, and speakers. According to Mr. Savard,
the part of the technical sheet that involves the lighting is sometimes given
to the lighting technicians the day before the general installation of the
equipment.
[19]
Mr. Savard is not present at the work location,
but he submits the list of the names of technicians who must be present at the
work location. If a technician does not report to work at the agreed time, the
presenter’s representative calls Mr. Savard to resolve the problem or to find
another technician. It is the responsibility of the presenter’s representative
to ensure that all the equipment is functioning properly. If a problem arises,
the technicians must resolve it. Mr. Savard gives the appropriate lighting
instructions to the technicians sent by the appellant to provide the services,
but the appellant or Mr. Savard do not supervise the work performed by the
technicians and do not assess the quality of the technicians’ work. However, it
sometimes happens that a presenter requests that certain technicians be
excluded or replaced at the work location. The appellant does not guarantee the
quality of work performed by the technicians sent by it to provide the
services.
[20]
The presenter gives the technicians their work
schedule when they arrive at the work location. A minimum of four hours of work
per call is the industry standard but is not a regulatory requirement. The
technicians provide their own small tools that may be required to install the
equipment that they operate. In the event that a technician breaks equipment,
the technician is responsible for the cost of the repair. The technicians do
not have to wear a uniform except to wear black clothes on stage.
[21]
Once the work was done, the technicians
submitted their respective invoices to the appellant, indicating the date and
number of the invoice, the name of the client for whom services were provided,
the dates worked, the nature of the work performed, the nature of the services
provided, the number of hours worked per day, the hourly rate, the fees per day
worked, the fees and taxes, if applicable, as well as the tax numbers.
According to Mr. Savard, the fees earned by the appellant for the services
provided by the technicians represent more than 50% of the appellant’s total
revenues.
[22]
The appellant pays the fees by cheque once a
week, on Thursdays. The cheques are sent to the Astral box office or are
mailed. The cheques are prepared by the appellant’s administrative assistant
and are signed by Mr. Savard or his spouse, without source deductions for
taxes, contributions to the Quebec Pension Plan, or Canada Employment
Insurance.
[23]
At the end of the year, the appellant issues
T4As to all technicians who were paid by the appellant over the year.
[24]
During his testimony, Mr. Savard also explained
that, on top of the work placement activities, the appellant acted as a
consultant for the technical management of events and shows. This activity can
include the preparing a budgetary estimate for an event, determining the equipment
necessary to put on the event, which can be rented by the appellant or by the
presenter, and determining how many technicians will be required to hold the
event.
[25]
The appellant’s main client for consultation
services are provided by Mr. Savard himself, who has more than 35 years of
experience in planning events and shows.
[26]
The appellant’s main clients for the
consultation services are L'équipe Spectra Inc. and the Groupe Evenko. Mr.
Savard introduced into evidence the detailed report of the appellant’s invoices
paid by L’équipe Spectra Inc. from April 15, 2008, to March 17, 2017, 2017,
which amounted to $446,087.54, excluding taxes. The payments to L’équipe
Spectra Inc. were made on retainer, generally every three months, and included
the cost of Mr. Savard’s services and an amount for the fees paid for the
technicians’ services. For the Groupe Evenko, the appellant issues one invoice
per event according to a budgetary estimate, with adjustments for
contingencies.
[27]
Mr. Savard also adduced into evidence an invoice
dated January 9, 2017, from Solotech Inc., for equipment rental and a purchase
order for Loto Québec’s Corporate Procurement division dated July 25, 2014, to
provide technical services and stage management for the Casino de Montréal for
the period from September 1, 2014, to August 31, 2016.
[28]
On cross-examination, Mr. Savard explained that
one of the technicians sent to a work location had a list of technicians who
were supposed to be on site and took the technicians’ attendance. The appellant
could also verify with the producer the hours worked by the technicians.
[29]
Two workers, Michel Bacon, a rigger, and Xavier
Berthiaume, an audio technician and soundman, testified at the hearing.
[30]
Mr. Bacon described the work of a rigger, namely
to install equipment on the rigs and control the rigs during the show. He
submitted an example of a production sheet for the installation of 32 rigs for
a show at Théâtre St-Denis. He also filed the service agreement that he
concluded with the appellant in 2015, an example of an invoice to the
appellant, dated April 17, 2017 (fees + taxes), and all his tax slips,
employment income, and various income for the 2014 and 2015 tax years, which
were attached to his Quebec income tax returns. Mr. Bacon explained that he
provided services to many companies and that he was also considered to be an
independent worker when he worked with the appellant. He admitted, however,
that sometimes he worked as a rigger as an employee with other organizations.
Finally, he explained that if he had to leave a work location, he had to find a
replacement. When this situation occurred, he still invoiced the appellant for
his services and paid his replacement. He claimed a deduction for the fees paid
to his replacement in the calculation of his income.
[31]
Mr. Berthiaume also filed his service agreement
with the appellant for 2013 and he filed a statement of his income and expenses
for 2014 that shows that he acted as an employee when he worked for theatres or
performance halls, and as an independent worker when he worked for the
appellant. He also explained that if he could not carry out a mandate from the
appellant, he had to then find a replacement that he would pay himself, unless
that replacement came from the appellant’s list of technicians, in which case
the replacement was paid directly by the appellant.
[32]
Mr. Michaël Frascadore of the L’équipe Spectra
Inc. testified at the hearing at the appellant’s request. He is currently
vice-president of production. L’équipe Spectra Inc. organizes the Festival International
de Jazz de Montréal, the FrancoFolies de Montréal, and Montréal en Lumière,
which represents 600 shows per year. L’équipe Spectra Inc. offers consultation
services (preparing stage design, production schedules, and equipment lists,
production management, technical management services, and stage technician
supplies). He has done business with the appellant for about eight years.
[33]
Mr. Frascadore explained that L’équipe Spectra
Inc. has a verbal agreement with the appellant, which is not exclusive. The appellant’s main competitors are Les Productions Pros-Spec,
Cubix, and Jardin à Cour. In his opinion, the appellant
is specialized in subcontracting and he calls on the appellant primarily to
supplement the basic teams because the Festival International de Jazz de
Montréal, the FrancoFolies de Montréal, and Montréal en Lumière have their own
teams and their own employees.
[34]
When he wants to call on the appellant’s
services, he asks the appellant to submit a bid. The bid is then reviewed; the
parties agree on the services to be provided and the parties negotiate the cost
of the services. When an agreement is reached, it is verbal and there is no
signed contract. After the appellant provides the services, it invoices
L’équipe Spectra Inc. by budget item. Examples of invoices dated during the
period at issue were filed into evidence as exhibit I-1 and the principal
budget item of these invoices is for technical workers.
[35]
Mr. Frescadore also explained that the appellant
always had a representative at the work location who had to ensure that the
technicians were on site and to record the hours worked by those technicians.
[36]
Mr. Martin Perreault of Solotech Inc. testified
at the hearing at the request of the respondent. Solotech Inc.’s main activity
is the sale and rental of equipment for shows, including workers for the
assembly, disassembly, and operation of stage equipment. It is a turnkey
service.
[37]
Mr. Perreault indicated that Solotech Inc. is
not a competitor of the appellant because the services offered by the two
companies are different. In 2014 and 2015, Solotech Inc. called on the
appellant’s services for occasional workers. For Solotech Inc., the appellant
only supplies workers.
[38]
In 2014, Solotech Inc. had 450 employees, of
which fifty or so were stage technicians. Solotech Inc. gives priority to its
employees before calling on freelance. Solotech Inc. does not guarantee a
number of hours to its technicians but does ensure ongoing training and a
higher qualification level, which improves the quality of their work and
ensures greater mobility in their assignments outside Quebec and even outside
Canada.
[39]
Mr. Perreault explained that, at the
technicians’ work locations, there was always a team leader or project manager
to connect the producer and the technicians, to ensure that the technical plan
was followed to the letter. The team leader is usually a representative of
Solotech Inc. or the technician whom Solotech Inc. finds most trustworthy.
[40]
The last person to testify was Mr. Arona Mbaye,
a CRA Appeals Officer. His Appeal Report was filed into evidence. Mr. Mbaye
explained that he had conducted telephone interviews with Mr. Yves Savard, the
workers with the exception of Benoit Bellehumeur, two representatives of
L’équipe Spectra Inc., and a representative of Solotech Inc., and that he had
consulted the following documents:
(a)
the report of the Rulings Officer;
(b) the information drawn from the CRA systems:
(i)
information about the payor; and
(ii)
information about the worker Peterson;
(c) information from the enterprise registrar;
(d) the documents received from the Rulings Division about the worker
Peterson and the other workers connected with the case;
(e)
the documents received from the Trust Accounts
section, namely:
(i) an unsigned copy of a sample service agreement; and
(ii) Yves Savard’s answers to the Rulings Officer’s questionnaire;
(f)
the five service agreements received from the
payor that were signed with the workers, except the one with the worker
Peterson;
(g) the documents received from L’équipe Spectra Inc., namely:
(i) the payor’s invoices;
(ii) the technicians’ time sheets; and
(iii) two occupancy permits granted to the payor for commercial
vehicle parking; and
(h) and invoices from Solotech Inc. for the months of June, July,
August, and October 2014, for the number of hours worked by the technicians
referred by the appellant.
[41]
Mr. Mbaye’s Appeal Report and testimony
indicates that:
(a)
many workers have dual tax status, namely that
of independent worker and of employee, all depending on the entity that they
are performing services for;
(b) the appellant issued, in 2014, four T4 slips and 249 T4A slips. For
2014 and 2015, about 300 workers received T4A slips from the appellant;
(c) the workers contacted by the CRA (Mr. Benoit Bellehumeur was
interviewed not by Mr. Mbaye but rather by another CRA officer) are a
representative sampling of the 300 workers affected by the CRA decisions;
(d) the six workers declared that they intended to be independent
workers in the performance of their duties for the appellant’s clients;
(e)
the appellant’s two main clients, L’équipe
Spectra Inc. and Solotech Inc., gave essentially the same answers and described
the same operating procedures in their relations with the appellant;
(f)
the Appeals Officer found that the appellant
acted as a placement agency given the tripartite nature of the relations
between the three parties in this case: the appellant, the clients, and the
workers. The workers were called by the appellant to provide services to the
appellant’s clients, under the direction and control of those clients, but all
the while being paid by the appellant;
(g) Mr. Mbaye did not consider in his review the consultation services
provided by the appellant to certain clients.
Legislative and regulatory provisions
[42]
The provisions of the Act and of the Regulations
that are relevant in this case are paragraphs 5(1)(d) and 5(4)(c)
of the Act and paragraph 6(g) of the Regulations. These
provisions read as follows:
5(1) Subject to
subsection (2), insurable employment is
…
(d)
employment included by regulations made under subsection (4) or (5); and
…
(4) The
Commission may, with the approval of the Governor in Council, make regulations
for including in insurable employment:
…
(c)
employment that is not employment under a contract of service if it appears to
the Commission that the terms and conditions of service of, and the nature of
the work performed by, persons employed in that employment are similar to the
terms and conditions of service of, and the nature of the work performed by,
persons employed under a contract of service;
6 Employment in any of the
following employments, unless it is excluded from insurable employment by any
provision of these Regulations, is included in insurable employment:
…
…..(g) employment of a person who is placed
in that employment by a placement or employment agency to perform services for
and under the direction and control of a client of the agency, where that
person is remunerated by the agency for the performance of those services.
[43]
Paragraph 6(g) of the Regulations
is promulgated under paragraphs 5(1)(d) and 5(4)(c) of the Act.
The effect of paragraph 6(g) of the Regulations is to include
employment that would not otherwise be considered insurable employment because
it is not governed by a contract of service, as in the case of independent
workers.
[44]
The term “employment” used in paragraph 6(g) of
the Regulations includes a business, trade, or occupation, and is not
used solely to designate a master and servant relationship (see the decision Sheridan
v. Canada, [1985] F.C.J. No. 230 (QL) delivered by Heald, Urie and Stone
JJ.) and the following cases of the Supreme Court of Canada: The Queen v.
Scheer Ltd., [1974] S.C.R. 1046 and Martin Service Station Ltd. v. M.N.R.,
[1977] 2 S.C.R. 996).
[45]
The term “placement agency”, used in paragraph
6(g) of the Regulations, is not defined in the Act or in
the Regulations. However, the Canada Pension Plan Regulations,
C.R.C. c. 385 provides the following definition of the term “placement agency”:
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.
(2) For the
purposes of subsection (1), placement or employment agency includes any person
or organization that is engaged in the business of placing individuals in
employment or for performance of services or of securing employment for
individuals for a fee, reward or other remuneration.
[46]
Given the similarity of the context that exists
between section 34 of the Canada Pension Plan Regulations and paragraph
6(g) of the Regulations, some judges of the Tax Court of Canada
applied the definition set out above to paragraph 6(g) of the Regulations
(see the decisions of Weisman D.J. in Carver PA Corporation v. M.N.R.,
2013 TCC 125, OLTCPI Inc. v. M.N.R., 2008 TCC 470, and Pro-Pharma
Contract Selling Services Inc. v. M.R.N., 2012 TCC 60).
[47]
The Federal Court of Appeal has not definitively
ruled, to date, on the definition to give to the expression “placement agency”,
as used in paragraph 6(g) of the Regulations. However, the
Federal Court of Appeal agreed, in OLTCPI Inc. v. Canada, [2010] F.C.J.
No. 379 (QL), to analyze the status of the appellant for the purposes of the Act
and for the purposes of the Canada Pension Plan, based on the definition
in subsection 34(2) of the Canada Pension Plan Regulations. The Federal
Court of Appeal found that, to determine whether a person is a placement agency
within the meaning of subsection 34(2), the question is whether the person
concerned is merely supplying workers or is doing so in the course of providing
a distinct service.
[48]
The Federal Court of Appeal’s decision is
inspired by the words of Porter D.J. of the Tax Court of Canada in Supreme
Tractor Services Ltd. V. M.N.R., [2001] T.C.J. No. 580 (QL), which explained in
more detail the distinction between merely supplying workers and providing a
distinct service.
[49]
The analysis of the legislation in the above
case essentially reiterates the words of my colleague, Hogan J., in. Diane
Barbeau v. M.N.R., 2015 TCC 131.
Analysis
[50]
The first issue to decide in this case is a
question of mixed fact and law, namely whether the appellant was acting as a
placement agency during the period at issue in relation to workers. If not, the
issue ends there. If so, it should be considered whether the workers were
called to provide services to the appellant’s clients under the direction and
control of those clients, and whether the workers were paid by the appellant.
[51]
First, it should be noted that the expression
“placement agency” is defined in the Canada Pension Plan Regulations
to include certain situations and is therefore not exhaustive. Further, that
definition does not require that the person who supplies the workers’ services,
which is the situation in this case, do so on an exclusive basis or any other
basis.
[52]
Accordingly, as soon as a person supplies the
services of persons receiving a fee or other form of remuneration, that person
is acting as a placement agency.
[53]
The appellant’s position is that supplying
specialized workers is part of a larger service offered to the appellant’s
clients. The service offered by the appellant includes technical management,
production management, supplying specialized workers, rental, repair, and
purchase of equipment.
[54]
The appellant looks after the production
management and technical management of shows and events. This means that the
show producer sends a technical data sheet to the appellant and, following the
analysis of that document, the appellant ensures that the technical equipment
necessary for lighting and audio (sound, lighting, stage management and
material) are available and usable during the time required for the show.
[55]
The technical data sheet given to the appellant
included information related to the show (length of the show, number of persons
on stage, instruments, stage design, available equipment, data sheet for the
room).
[56]
The appellant enters into agreements with
businesses in order to rent material and it negotiates and buys material for
certain clients. The appellant also plans the technical costs for the material
rental and technical personnel in order to respect the budgetary estimate for
the show. In doing so, it undertakes to its clients that the required material
will be available and operational before the beginning of the show. Also,
based on the services offered, the appellant determines the number of
specialized technicians required to assemble and disassemble the stages. The
technical personnel on site during a show vary considerably according to the
importance, the activity, and the infrastructure of the location.
[57]
Supplying specialized workers is part of a
service offered to the appellant’s clients. Therefore, when the clients chose
to do business with the appellant, these clients expect the appellant to
determine the technicians required to perform the that service and expect those
technicians be on site during the show. Also, the appellant’s clients expect
equipment to be adequately assembled and disassembled by the technicians, so that
the show meets the artistic demands of the artist.
[58]
It was also demonstrated that the appellant
offered a variety of services to its clients, for example, for the shows of
Nick Cave & The Bad Seeds, Diana Krall, and the annual Gala ADISQ. The
appellant coordinates the production with the show producer; i.e. plans the
schedule and responds to certain needs:
-
coordinates the start of the assembly according
to the arrival of the trucks belonging to the artist;
-
coordinates the disassembly of the show with the
time of the end of the show; and
-
obtains the parking permits from the cities or
the municipality so that the trucks transporting the material necessary for the
show can park legally.
[59]
The appellant offers its service as a production
manager for the annual Gala ADISQ. The appellant’s representative, Mr. Yves
Savard, attends meetings in order to coordinate the show’s production.
Therefore, with a team of twelve people, he plans the equipment rental, the
schedule of the event, and the supply of technical personnel. Mr. Savard also
offers his expertise based on his thirty-five years of experience in the field.
[60]
This description of the services offered by
appellant indicates that the clients call on its services to plan, coordinate,
and manage shows and that supplying workers is part of the services offered by
the appellant to its clients.
[61]
Based on the evidence in the record, there is no
doubt that the appellant offers a range of services, sometimes including
turnkey solutions with many services and other times a single service, such as
supplying specialized workers. Each case where a client calls on the appellant
for an event or a show is a specific case.
[62]
The respondent filed en liasse as exhibit I-1, a
series of the appellant’s invoices dated within the period at issue and
addressed to different organisations like the FrancoFolies de Montréal, the
Festival International du Jazz de Montréal, the FIJM company for a Diana Krall
show at the Salle Wilfrid-Pelletier, Montréal en Lumière, and the Metropolis
for different shows, which cover only the supply of technical workers. With
respect to these invoices, the appellant did not adduce any document, contract,
or purchase order that shows that the supply of technical workers was part of a
group of services offered by the appellant to each client.
[63]
Indeed, Mr. Savard recognized that the appellant
did not have a contract with the clients that it supplied with technical
workers. The only document dated within the period at issue indicating that the
appellant supplied technical and stage management services is the purchase
order for the Casino de Montréal and that purchase order does not refer to the
supply of technical workers.
[64]
Accordingly, as there is not any evidence, I
cannot accept the appellant’s proposition that for each event where the
appellant supplied the workers’ services during the period at issue, the supply
of workers was part of a group of services that were in fact supplied by the
appellant to its clients.
[65]
With regard to providing workers’ services
during the period at issue, the appellant therefore acted as a placement
agency. It is not the availability of services that is relevant, but rather the
actual services provided for each event.
[66]
The second test for the application of paragraph
6(g) of the Regulations, namely that the person must be called by
this agency to perform services for a client, is not disputed by the appellant.
It is admitted that the appellant communicates with technicians so that they
can perform their services for the appellant’s clients.
[67]
The third test for the application of paragraph
6(g) of the Regulations is that the person must be under the
direction and control of the client.
[68]
The appellant’s position is that the technicians
are not under the direction and control of the clients. The clients do not tell
the technicians how they should do their work. The clients expect good
cooperation from the technicians to achieve the expected result. Monitoring the
results through performance control, productivity control, and quality control,
does not mean that the technicians are subordinate or under the client’s
control and direction. The time or location constraints are not criteria for
establishing a relationship of subordination.
[69]
For the respondent, the technicians do not work
in a vacuum. They are part of the production team coordinated by the production
manager, who is a representative of the client and they have to integrate into
the clients’ business. The productions are equivalent to a list of tasks to
perform and are the team’s game plan. The concept of direction and control must
be interpreted according to the modern meaning of the words and includes the
power to control whether that power is exercised or not.
[70]
In light of the facts presented, I must find
that the workers were under the direction and control of the clients they
served.
[71]
The services performed by the workers are the
same as those performed by salaried technicians of other organizations. Indeed,
some workers sometimes act as salaried workers and sometimes as independent
workers while performing the same services.
[72]
The client’s exercise of the power of direction
and control is especially reflected by the clients’ right to exclude from the
workplace a technician who is under the influence of drugs or alcohol, to
require the replacement of a technician who arrives late to work, or to exclude
certain technicians with whom they had problems in the past. In these
situations, it is not control of the result, but rather control of the worker.
[73]
From an operational point of view, the control
and direction over the workers is more tenuous because the workers are
technicians. The workers know how to assemble, disassemble, and operate the
equipment that they are responsible for. However, the technical specifications
prepared by presenter or the producer tell the workers everything that they
have to do on the stage. They do not have any discretion in this regard.
Everything is determined in advance: the type of equipment to be installed, the
amount, and their placement on the stage. All the workers report to the
production manager who ensures the coordination and running of the event. The
workers cannot leave the workplace at their discretion and they cannot take
breaks when they want to, because they must often work as a team. In my
opinion, the management of the workers at their work location is significant
enough for these workers to be considered to be under the direction and control
of the producer or presenter.
[74]
The fourth and final test for the application of
paragraph 6(g) is that the person must be remunerated by the agency. In
my opinion, this requirement is also met in this case. I do not think that the
appellant acts as an intermediary between its clients and the workers because
it invoices its clients with an increase on the workers’ hourly rate and it
gives the workers only part of what it bills its clients. According to the
evidence, the workers are not paid if they do not invoice the appellant. This
approach indeed demonstrates that the appellant does not act merely as an
intermediary.
[75]
Because all the conditions for the application
of paragraph 6(g) of the Regulations have been met, the appeals
are dismissed. Accordingly, the appellant is deemed to be the workers’ employer
and had to make the source deductions with respect to the remuneration paid to
the workers in accordance with section 7 of the Insurable Earnings and
Collection of Premiums Regulations, SOR/97-33 and subsection 82(1)
of the Act.
Signed at Ottawa, Canada, this 29th day of August 2017.
“Réal Favreau”
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