4 March 1994 Internal T.I. 9334726 - EARLY RETIREMENT ELIGIBLE SERVICE

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

RULINGS DIRECTORATE
CORRESPONDENCE SUMMARY

DOCUMENT TYPE:

Head Office Memo

Principal Issues:

Do periods of layoff or absence qualify as employment for purposes of "early retirement eligible service" in Reg. 8503(3)(C)(iii)

Position TAKEN:

No

Reasons FOR POSITION TAKEN:

Not intent of legislation

LEGAL:

na

FINANCE OPINION:

na

JURISPRUDENCE:

Serfanini, 89 DTC 653

RCT PUBLICATIONS:

NA

HAA NUMBER:

7265-1;7217-1

			March 4, 1994 

	Head Office	Head Office
	Registered Plans Division	Rulings Directorate
S. M. Black	(613) 957-8953
	Director
	Attention:  Margaret Gussow
			7-933472

Subparagraph 8503(3)(c)(iii) Meaning of "employed"

This is in reply to your memorandum of November 24, 1993, requesting our opinion as to whether a "period of lay-off" or a "period of temporary suspension of employment" can be considered to be a "period throughout which the member was employed by an employer" as per the definition of "early retirement eligible service" in subparagraph 8503(3)(c)(iii) of the Regulations.

The terms, period of lay-off and period of temporary suspension of employment, are not defined, however, you indicated in your letter that in this situation they referred to time for which the employee would not be paid but his name would still be on the books and he may be recalled to work. Separation slips would be issued for these periods to permit the individual to claim unemployment insurance benefits.

Early retirement eligible service is relevant in determining whether benefits will be reduced in situations of early retirement per paragraph 8503(3)(c) of the Regulations. It consists of periods of pensionable service and periods of employment.

Pensionable service must be based on periods of eligible service listed in paragraph 8503(3)(a), which include, periods of employment (subparagraph (i)) and eligible periods of temporary absence (subparagraph (iii)). The periods in question would likely qualify as eligible periods of temporary absence pursuant to its definition in subsection 8500(1) of the Regulations. Consequently, it is unlikely that such periods were also intended to be included as periods of employment either in subparagraph 8503(3)(a)(i) or in clause 8503(3)(c)(iii)(B).

The term, employed, is defined in subsection 248(1) of the Act as providing the duties of an office or employment, and employment is defined in subsection 248(1) of the Act as an individual in the service of another person. Both of these suggest that services should be performed for employment to exist, however, in the case of Serafini, 89 DTC 653, the judge concluded that services alone were not determinative of whether a person was still employed. Even though the employee no longer provided services he was considered to be employed because he was still receiving salary and benefits, and his particular contract specified that he was to retire at a later date.

Although there may be the rare exception, such as, where the employee is kept on salary, it is our opinion that a period of lay-off and a period of temporary suspension of employment generally would not be a period throughout which the member was employed by an employer as per the definition of early retirement eligible service in subparagraph 8503(3)(c)(iii) of the Regulations.

for Director
Financial Industries Division
Rulings Directorate