[OFFICIAL ENGLISH TRANSLATION]
Date: 20011010
Docket: 2001-229(EI)
BETWEEN:
S.V. FORMATION INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Somers, D.J.T.C.C.
[1] This appeal was
heard at Montréal, Quebec, on July 10, 2001.
[2] By letter dated
October 23, 2000, the Minister of National Revenue ("the
Minister") informed the appellant of his decision that the
employment held by Gilles Gionet, the worker, was insurable for
the period from October 8, 1998, to October 8, 1999, because it
met the requirements for a contract of service and because there
was an employer-employee relationship between the appellant and
the worker. It was also determined that the worker had a total of
1,890 insurable hours and that his insurable earnings for the
last 27 weeks were $34,300.
[3] Subsection 5(1) of the
Employment Insurance Act reads in part as follows:
5.(1) Subject to subsection (2), insurable employment is
(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;
...
[4] The burden of
proof is on the appellant, which must show on a balance of
probabilities that the Minister's decision is wrong in fact
and in law. Each case stands on its own merits.
[5] In making his
decision, the Minister relied on the following presumptions of
fact, which were either admitted or denied:
[TRANSLATION]
(a)
the appellant operated a private vocational school;
(admitted)
(b)
the appellant offered courses in welding, household appliances
and office automation; (denied)
(c)
the worker was hired as a welding teacher; (denied)
(d)
the worker informed the appellant how his courses were
progressing; (denied)
(e)
the worker had to obtain the appellant's agreement before
introducing new techniques in teaching his courses; (denied)
(f) the appellant
established the course schedule and the worker's working
hours; (denied)
(g)
the worker taught 35 hours of courses a week, from 8:00 a.m. to
3:30 p.m. each day; (denied)
(h)
the appellant found the students; (denied)
(i) the appellant
provided the premises, materials and all the equipment needed by
the worker; (denied)
(j) the worker
was paid $35 an hour; (denied)
(k)
at the end of each week, the worker filled out a time sheet;
(denied)
(l) the appellant
issued invoices in the worker's name; (denied)
(m) the
worker was paid by cheque every two weeks; (admitted)
(n)
the worker had no risk of financial loss or chance of profit;
(denied)
(o)
the worker's work was an integral part of the appellant's
activities; (denied)
(p)
during the period at issue, the worker worked 27 pay periods of
70 hours each, that is, 27 x 70 hours, for a total of 1,890
insurable hours; (denied)
(q)
during the last 14 pay periods, which include the last 27 weeks
of work, the worker's insurable earnings amounted to $34,300.
(denied)
[6] Karina
Béland, an employee of the appellant, and Gilles Gionet,
the worker, were the only witnesses at the hearing.
[7] The appellant,
which was incorporated in 1989, operated a private vocational
school and offered courses in welding, household appliances and
office automation.
[8] The
Ministère de l'Emploi et de la Solidarité
(Emploi-Québec) established and funded the program
in question. The project was aimed at the re-entry into the
labour market of 12 participants who were to receive training in
welding and fitting to qualify them to work as welders-fitters
(Exhibit A-2).
[9] The worker was
hired as a welding teacher. Pursuant to a verbal agreement, the
appellant selected the workers who gave courses based on the
objectives established by Emploi-Québec. The hourly
rate of $35 paid to the worker was set by
Emploi-Québec.
[10] The worker invoiced
the appellant, adding GST and QST. He was paid every two weeks.
The course hours established by Emploi-Québec were
from 8:00 a.m. to 3:00 p.m. The worker gave the courses
based on his availability and, once the schedule was established,
it was his responsibility to find a substitute, when needed,
among the other workers who had already been accepted.
[11] The worker taught
between 25 and 35 hours a week. Although the students had 35
hours of courses a week, there was no requirement that he teach
35 hours a week, since he was considered self-employed. He
was paid for his course hours alone and not for the time he spent
on course preparation. Nor was he paid for exam marking, sick
days, holidays or departure days.
[12] The students applied
to the appellant to take the welding courses. The worker filled
out an attendance book and gave it to the appellant.
[13] The appellant had no
right to supervise the worker or the exam marking. An
Emploi-Québec representative checked the quality of
teaching. The worker had to submit a written report to that
department every four months. However, the worker met with the
appellant's representatives once or twice a month, although
he was under no obligation to do so. The worker was free to
introduce teaching techniques without the appellant's
consent, but he had to inform the appellant if there were major
changes. Those major changes were sent to the department for its
approval.
[14] The appellant provided
the premises and equipment and recruited the students through
advertising. The worker provided his expertise and his own
teaching books.
[15] The worker, who
testified for the Minister, said that he started teaching courses
at the appellant's institution in 1997 and that the appellant
established the work schedule, namely from 8:00 a.m. to 3:30 p.m.
He also said that, if he had to be absent, he had to notify the
appellant 24 hours in advance and the appellant found a
substitute.
[16] The worker said that
he had to follow a teaching program that had already been
established. He stated that he had about eight hours of
preparation a week for which he was not paid. He did not incur
any expenses during the period when he taught at the
appellant.
[17] According to the case
law, the traditional test that confirms the existence of an
employer-employee relationship is the control test.
[18] Counsel for the
appellant submitted some cases in support of the appeal. The
facts set out in those decisions are similar to the facts of this
case.
[19] In Okanagan
University College and M.N.R. (98-539(UI) and
98-100(CPP)), Associate Chief Judge Garon of this Court, as
he then was, concluded that the worker had been hired by the
payer pursuant to a self-employment contract.
[20] The courts have
established a series of tests for determining whether a contract
is a contract of service or a contract for services. In Wiebe
Door Services Ltd. v. M.N.R., [1986] 3 F.C. 553, the Federal
Court of Appeal listed the following four tests:
(a) the degree
or absence of control exercised by the alleged employer;
(b) ownership of
tools;
(c) chance of profit
and risk of loss;
(d) the degree to
which the alleged employees' work is integrated into the
alleged employer's business.
The Control Test
[21] The payer had no
control over the worker. The study program was established and
funded by Emploi-Québec. The payer had to operate
within the limits of the budget. The worker was free to prepare
his courses based on his expertise. The payer was not an expert
in the field and therefore could not tell the worker how to teach
the courses. What was involved was a promise by the worker to
provide a certain result. It was Emploi-Québec and
not the payer that evaluated the teaching. The worker taught
according to the schedule established by
Emploi-Québec and according to his availability;
however, he could offer his services to other employers outside
that schedule. Based on these facts, the worker was to be
considered self-employed.
Ownership of Tools
[22] The payer provided the
premises and the equipment, while the worker provided his
expertise to meet the teaching quality requirement established by
Emploi-Québec. These facts could be interpreted in
the worker's favour, but this test is not the decisive one
for distinguishing between a contract of service and a contract
for services.
Chance of Profit or Risk of Loss
[23] The worker was paid
$35 an hour. He invoiced the payer for the hours he taught. If he
was absent, a substitute was chosen from among the group of
teachers, so the worker could not invoice the payer for the hours
worked by the substitute. This arrangement therefore reduced his
income. The worker was not paid for course preparation or exam
marking. This way of paying the worker for services rendered
leads to the conclusion that he was self-employed.
Degree of Integration
[24] The evidence shows
that the worker was integrated into the payer's operations
and seems to favour the worker's arguments, but the worker
taught within the framework of a program established by
Emploi-Québec. He was completely free to change his
method of teaching provided that the result was consistent with
the program established by Emploi-Québec. This test
is not decisive in determining the nature of the relationship
between the payer and the worker.
[25] The courts are
consistent in considering the degree of control that the payer
had over the worker. The payer was rather the coordinator of
course hours, while the worker, since he was the expert, could
prepare and teach the students based on his experience and
knowledge. Since the payer was not an expert in the field, it
could not tell the worker how to attain the objective established
by Emploi-Québec.
[26] It must be recalled
that the facts as a whole are what determine the nature of the
contractual relationship between the payer and the worker.
[27] Having regard to all
the circumstances, the appropriate conclusion is that the worker
must be considered self-employed. He was not hired by the payer
under a contract of service.
[28] The appeal is
allowed.
Signed at Ottawa, Canada, this 10th day of
October 2001.
D.J.T.C.C.
Translation certified true
on this 31tst day of January 2003.
Sophie Debbané, Revisor
Cases submitted by the appellant
Michelin Tires (Canada) Ltd. and M.N.R.
and Maria Forster, 83-303(UI), TC 437, May 22, 1985
Okanagan University College and
M.N.R., 98-539(UI) and 98-100(CPP)
Dr. William H. Alexander v. M.N.R., 70
DTC 6006
Bastasic and M.N.R., 98-251(UI),
August 17, 1999
Calgary (City) v. Canada (Minister of
National Revenue - M.N.R.), [1988] T.C.J. No. 1038
518306 Ontario Ltd. v. Canada (Minister of
National Revenue - M.N.R.), [1986] T.C.J. No. 5
Sverdlova v. Canada (Minister of
National Revenue - M.N.R.), [1986] T.C.J. No. 104
Cases submitted by the Minister
Elia v. Canada (Minister of
National Revenue - M.N.R.), [1998] F.C.J. No. 316 (QUICKLAW),
March 3, 1998 (F.C.A.)
Wiebe Door Services Ltd. v. M.N.R.
(F.C.A.), [1986] 3 F.C. 553
Gallant v. Canada (Department of
National Revenue) (F.C.A.), [1986] F.C.J. No. 330
(QUICKLAW), May 22, 1986
M.N.R. v. Emily Standing, A-857-90
(F.C.A.), September 29, 1992
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