Citation : 2006TCC645
Date: 20061214
Docket: 2006-955(EI)
BETWEEN:
CAROL DESJARDINS,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Savoie D. J.
[1] This appeal was
heard on September 21, 2006, at Montréal, Quebec.
[2] It is an appeal
from a decision of the Minister of National Revenue
("the Minister") pertaining to the number of insurable hours
that the Appellant worked while employed by Louis Desjardins, carrying on
business as "Desjardins enreg.9" ("the Payor") from
February 23 to October 21, 2004 ("the period in
issue").
[3] On November 23, 2005,
the Minister notified the Appellant of his decision that the Appellant had 764
hours of insurable employment. At the heart of this dispute is the Minister's
determination that the allowance forwarded to the Commission de la construction
du Québec ("the Commission") does not create insurable hours for the
Appellant.
[4] In making his decision,
the Minister relied on the following assumptions of fact:
[TRANSLATION]
5. a) The Payor was licensed on September 29, 1997. (admitted)
(b) Louis Desjardins is the sole owner of the business. (admitted)
(c) The Appellant is Louis Desjardins' brother. (admitted)
(d) The Payor operated a masonry business. (admitted)
(e) The Appellant was hired as a bricklayer apprentice. (admitted)
(f) The Appellant's working conditions were
governed by the order respecting Quebec construction employees. (admitted)
(g) The Payor paid Appellant by the hour in
accordance with the rules set out in the order. (admitted)
(h) On November 23, 2004, the Payor issued a Record
of Employment to the Appellant indicating that the first day of work was
February 23, 2004, that the last day worked was
October 21, 2004, that the total hours of insurable employment were
764 hours and that the total insurable earnings were $18,499.95. (denied)
(i) The Appellant was paid by the Payor for
his hours worked. (admitted)
(j) The Payor had to forward to the Commission
de la construction du Québec an allowance equal to 11% of the remuneration
earned by the Appellant each week. (admitted, except that the Appellant says
that this amount is 11.5%)
(k) This allowance consisted of 6% as compulsory
annual vacation and 5% as public holidays not worked (admitted, except that the
Appellant says that the amount is 5.5%, not 5%)
(l) The Commission de la construction du
Québec had to pay these allowances to the Appellant on the dates specified in
the order. (admitted)
(m) On public holidays, the Appellant received
no pay from the Payor. (admitted)
(n) On public holidays, the Appellant had no
hours of insurable employment. (denied)
(o) The allowances forwarded to the Commission
de la construction du Québec did not generate insurable hours for the Appellant.
(denied)
[5] The Appellant admitted
all the Minister's assumptions of fact except those set out in subparagraphs 5(h),
(j), (k), (n) and (o), which he denied.
[6] The evidence
discloses that, on November 23, 2004, the Payor did indeed issue a Record of Employment (ROE),
as stated in paragraph 5(h) of the Reply to the Notice of Appeal.
[7] However, it has
been shown that, on December 15, 2004, the Payor provided the same
worker with another ROE for the same period as the previous ROE, but in which
the Payor reported 820 hours of insurable employment.
[8] At the hearing, the
Appellant explained that the second ROE was prepared at his request after he
learned that the computation of his hours of insurable employment had not taken
into account the allowances which the Payor had forwarded to the Commission.
[9] At the hearing, the
Appellant specified that the Payor had to forward an allowance to the
Commission equal to 11.5% of the Appellant's remuneration, which represented 6%
for compulsory annual vacations and 5.5% for public holidays not worked.
[10] Thus, this Court
must determine what the Appellant's hours of insurable employment were during
the period in issue, or, to further circumscribe the debate, whether the
allowance forwarded to the Commission creates hours of insurable employment for
the Appellant.
[11] On several
occasions, a false interpretation of the scope of section 9.1 of the Employment
Insurance Regulations has given rise to some confusion as to whether allowances
forwarded to the Commission are insurable.
[12] This Court had to
decide this issue in Massicotte v. Minister of National Revenue, 1999-238
(EI), April 20, 2000, [2000] T.C.J. No. 244, where Cuddihy J., after providing
a brief historical overview of the issue, stated as follows at paragraph 20:
This regime was put in place
to correct a number of deficiencies as a result of which a number of workers
were often deprived of all vacation pay mainly as a consequence of construction
workers' high degree of mobility. Indeed, it has long been acknowledged that a
large proportion of workers in the construction industry work for a number of
different employers in the course of a single year, depending on the contracts
obtained by those employers. As a result of this situation, at annual vacation
time, workers had to run from one employer to another to claim their vacation
pay, which very often could not be recovered either because the employer was
insolvent or had simply disappeared.
The Quebec legislator thus
decided a number of years ago to correct the situation by introducing a special
regime under which the vacation pay amount would be paid every week and
remitted to a third party who would hold it in trust for and on behalf of the
workers and would pay them this vacation pay twice a year.
. . . provide that every employee shall have
four weeks of compulsory annual vacation each year (two weeks in summer and two
weeks in winter) as well as a certain number of statutory holidays. Thus each
week, in addition to paying them their normal wages, the employer is required
to pay each worker an amount equal to 11% of wages . . .
…Giroux v. Canada (Employment and Immigration
Commission),
A-527-87, April 15, 1988).
In that case, Pratte J.,
writing for the Court, held that the amounts received by a construction worker
could not be earnings at the time they were paid by the Commission de la
construction du Québec since it merely remitted to the employees their own
savings. This reasoning by the Federal Court of Appeal confirmed with respect
to Quebec construction industry workers the reasoning adopted by the Supreme
Court of Canada in Bryden, [1982] 1 S.C.R. 443, and reaffirmed by the
Federal Court of Appeal in Vennari, [1987] 3 F.C. 129.
The point to be taken from
these decisions is that the amounts paid by a trustee to an employee as
vacation pay cannot be considered to be earnings at the time they are paid.
Instead these amounts constitute earnings at the time the employer pays them to
the employee since that is when the employee is taxed on those amounts and pays
employment insurance premiums.
It is thus in this specific
context that one must determine the application of section 10.1 of the
Employment Insurance Regulations to the amounts paid to an employee by his
employer each week in respect of annual vacation and statutory holidays.
[13] What, then, are the
Appellant's hours of insurable employment? Such hours are determined by section
9.1 of the Regulations because his earnings are paid on an hourly basis, and he
is therefore considered to have worked in insurable employment during the
number of hours that he actually worked and for which he was remunerated prior
to the termination of employment.
[14] Does the amount equal
to 11.5% of the salary earned, an amount which the Payor forwarded to the
Commission at the end of each week as compulsory annual vacation and statutory
holiday pay, create hours of insurable employment?
[15] In my opinion, the
decision of the Federal Court of Appeal in Giroux, supra, must
apply.
[16] The annual vacation
allowances that the Appellant received from the Commission are not to be
treated as remuneration. In my opinion, the reasoning continues to be valid and
does not change whether the insurable period is calculated in weeks or in
hours.
[17] This dispute must be
settled in accordance with section 9.1 of the Employment Insurance
Regulations, which provides that where a person's earnings are paid on an
hourly basis, the person is considered to have been working in insurable
employment during the number of hours that the person actually worked and for
which the person was remunerated.
[18] The evidence
discloses that the Minister properly determined the Appellant's number of hours
of insurable employment under section 9.1 of the Employment Insurance
Regulations and in accordance with the interpretation articulated in the cases
cited above.
[19] The Appellant has
not succeeded in proving that this Court's intervention is warranted, and this
Court must find that, in accordance with the Employment Insurance Regulations,
the Appellant had 764 hours of insurable employment, that is to say, that the
allowances paid to the Commission do not create hours of insurable employment for
the Appellant.
[20] Consequently, the
appeal is dismissed and the Minister's decision is confirmed.
Signed at Grand-Barachois, New Brunswick), this 14th day of December 2006.
"S.J. Savoie"
Translation
certified true
on this 11th day
of July 2007.
Brian McCordick,
Translator
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