Institut de réadaptation en déficience v. M.N.R., docket 97-1962-UI

Date: 19990521

Dockets: 97-1962-UI; 97-1964-UI

BETWEEN:

INSTITUT DE RÉADAPTATION EN DÉFICIENCE PHYSIQUE

DE QUÉBEC,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

and

LOUISE LEBLANC,

Intervener,

AND

BETWEEN:

INSTITUT DE RÉADAPTATION EN DÉFICIENCE PHYSIQUE

DE QUÉBEC,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

Somers, D.J.T.C.C.

[1] These appeals were heard on common evidence at Québec, Quebec, on March 9, 1999.

[2] The appellant is appealing from decisions by the Minister of National Revenue (“the Minister”) finding that the employment held by Louise Leblanc and Mario Bessette from September 2 to December 27, 1996, with the payer, the Institut de réadaptation en déficience physique de Québec (“the institute”) was insurable because there was a contract of service between the workers and the appellant.

[3] Subsection 5(1)(a) of the Employment Insurance Act reads as follows:

(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 the balance of evidence that the Minister’s decisions were unfounded in fact and in law. Each case turns on its own facts.

[5] In making his decision in appeal No. 97-1962(UI), which concerns the worker Louise Leblanc, the Minister relied on the following facts, which the appellant admitted, denied or said it had no knowledge of:

[TRANSLATION]

(a) The appellant is a public body whose purpose is to rehabilitate persons with physical disabilities. (admitted)

(b) The appellant is under the jurisdiction of, inter alia, the Centre François Charron de Québec (“the centre”), which employs various rehabilitation workers. (denied)

(c) The worker was hired by the appellant, pursuant to a written agreement, to provide services to the centre. (admitted)

(d) The worker was to participate in a software-assisted learning project with the centre’s clients, submit reports to the centre and provide its clients with computer training. (denied)

(e) The worker worked mainly at the centre under the supervision of Maurice Blouin, the appellant’s person in charge of the project. (denied)

(f) The worker had to adhere to a work schedule that corresponded to the service provided to clients; she generally worked from 9:00 a.m. to 4:00 p.m. Monday to Friday. (denied)

(g) The worker had to work solely with the clients determined by Maurice Blouin; they were the centre’s clients. (denied)

(h) The worker used all the educational equipment or tools belonging to the centre; she did not have to incur any expenses in performing her work for the appellant. (denied)

(i) The appellant was free to terminate the worker’s contract of employment at any time. (denied)

(j) The worker was paid fixed wages of $840 every two weeks for 30 hours of work a week. (denied)

(k) The worker was paid by the centre by direct deposit. (no knowledge)

(l) The worker worked under a contract of employment that set out her working conditions, her remuneration and the term of her contract (renewable as required). (denied)

(m) The work done by the worker was fully integrated into the appellant’s needs. (denied)

[6] The Minister alleged similar facts in appeal 97-1964(UI), which concerns the worker Mario Bessette.

[7] The appellant is a public body whose purpose is to rehabilitate persons with physical disabilities. The Commission des écoles catholiques de Québec (CECQ) has an agreement with the appellant to ensure that the target clientele can receive the necessary educational services.

[8] Maurice Blouin has been working as a part-time research officer for the appellant for the past 12 years. He seeks out contracts and receives grants. He worked in the laboratory about 10 years ago, and the main contract was with the CECQ.

[9] The laboratory was a specific project of the appellant, which undertook, through Mr. Blouin, to provide the services required by the CECQ. Mr. Blouin had his own laboratory, ran it himself and took care of obtaining grants from certain companies. The laboratory operated in accordance with the CECQ’s project requirements.

[10] The Centre François Charron, which is not a legal entity, hired workers pursuant to a written contract signed by Maurice Blouin through which the workers got involved in the software-­assisted learning project with the centre’s clients and undertook to submit reports and any other documents requested by the centre.

[11] The interconnections were as follows: Maurice Blouin was an employee of the appellant. The appellant signed a contract with the CECQ. Under that contract, the appellant was to provide services to clients in accordance with the CECQ’s requirements. The centre had to operate in accordance with the CECQ’s project requirements and, for that purpose, hired specialists to provide clients with services with respect to which the standards were set by the CECQ. The CECQ undertook to pay the institute and the centre for the services they provided.

[12] Mr. Blouin hired five people in 1996, including the two workers referred to in these appeals. Each worker signed a contract with the centre. The way each worker was paid was determined based on the amount of the grants and the worker’s qualifications. Louise Leblanc received a fixed amount of $840 every two weeks for 30 hours of work a week. Mario Bessette received a fixed amount of $1,080 every two weeks for 30 hours of work a week.

[13] Maurice Blouin said that the laboratory equipment, estimated to be worth about $130,000, would be the appellant’s property once the laboratory closed.

[14] The workers were paid regularly by the appellant every two weeks.

[15] Mr. Blouin said that there was minimal supervision of the workers. He checked their work once a day. A time sheet was signed by him and the worker. Mr. Blouin said that hours of work varied but that the workers had to be on the appellant’s premises. Two letters by the appellant, one dated January 20, 1997, and the other October 22, 1998, confirm that the workers were employed by the appellant.

[16] Pierre Bédard, the appellant’s human resources manager since 1989, testified at the hearing of these appeals. He looks after employee remuneration. The appellant has 1,200 employees, who have different working conditions and who work at different sites in the Québec City area. According to Mr. Bédard, the appellant has about 60 units and hires permanent and part-time employees. Other employees were also hired on a term basis to replace a permanent worker.

[17] A letter by the appellant dated October 22, 1998, indicates that Mario Bessette was employed by the appellant from October 14, 1997, to April 16, 1998. That worker had to sign a time sheet. Mr. Bédard said that the appellant had no record of Mr. Bessette as an employee and that the laboratory managed by Maurice Blouin was not part of the institute before 1996. The letter by the appellant dated January 20, 1997, indicates that Louise Leblanc was employed by the centre’s rehabilitation and social integration computer and terminology laboratory as a special education teacher from August 30, 1995, to January 17, 1997. The letter is signed by Maurice Blouin. Mr. Bédard said that as human resources manager he was the only one who issued work certificates and that he never had a file on Louise Leblanc.

[18] Mr. Bédard said that there is a budget for all the units and that the laboratory managed by Mr. Blouin is not part of the institute; it is funded through grants. According to Mr. Bédard, each manager is responsible for his or her budget. However, he admitted that he does not work in the finance department.

[19] Caroline Bergeron, a translator, testified as well. She said that she is a self-employed worker at the institute and has been providing services to Maurice Blouin for five years. However, she does not work specifically in the laboratory.

[20] Louise Leblanc also testified at the hearing of the appeals. She stated that she worked for Maurice Blouin as a special education teacher from August 30, 1995, to January 31, 1997. She did not sign a contract until August 23, 1996. She said that the equipment belonged to the laboratory. Her work schedule, which could be changed by Mr. Blouin, was from 9:00 a.m. to noon and 1:00 p.m. to 4:00 p.m. five days a week. The hourly rate was determined by Mr. Blouin, and her wages, after tax deductions, were paid to her every two weeks by direct deposit. She never prepared or sent invoices or incurred any expenses during the period of her employment. She said that the operating criteria were not determined by the worker.

[21] It would be appropriate to define here the expressions “contract of service” and “contract for services”.

Contract of service:

[A] contract of service is a contract under which one party, the servant or employee, agrees, for either a period of time or indefinitely, and either full time or part time, to work for the other party, the master or the employer. . . . A contract of service does not normally envisage the accomplishment of a specified amount of work but does normally contemplate the servant putting his personal services at the disposal of the master during some period of time.

Contract for services:

[A] a contract for services is a contract under which the one party agrees that certain specified work will be done for the other. . . . A contract for services does normally envisage the accomplishment of a specified job or task and normally does not require that the contractor do anything personally.

To distinguish a contract of service from a contract for services, it is necessary to look at the whole of the various elements that constitute the relationship between the parties. The courts have consistently held that there are four basic elements that distinguish a contract of service from a contract for services.

[22] The case most often referred to is the Federal Court of Appeal’s decision in Wiebe Door Services Ltd. v. M.N.R., [1986] 3 F.C. 553. The basic elements listed are as follows:

1. the degree or absence of control exercised by the employer;

2. ownership of the tools;

3. the chance of profit or risk of loss;

4. integration of the employee’s work into the employer’s business.

[23] In the case at bar, there is some debate about the identity of the institution or unit that hired the workers. Maurice Blouin is an employee of the institute, a body whose purpose is to rehabilitate persons with physical disabilities. Under a contract between the appellant and the CECQ, the appellant provides services to clients whom the CECQ cannot serve.

[24] The appellant has about 60 units that operate in various places in the Québec City area. One of the services provided is the laboratory. The centre is managed by Maurice Blouin, who is an employee of the appellant. No evidence was adduced to show that that unit is a legal entity.

[25] The appellant argued that the activities offered to clients are the CECQ’s activities and not the institute’s. It is true that the CECQ has established certain criteria for serving that clientele, which has special needs. The facts showed that the appellant is closely connected to that specialized service.

Control

[26] Maurice Blouin, an employee of the appellant, hired the workers through the centre. He determined the amounts paid to the workers and their attendance at work. While the workers were specialists in the field in question, supervision was not as strict as for someone in a less important position. The workers had to ask Mr. Blouin for permission to be away from work. The fact that Mario Bessette also worked elsewhere is not a determining factor. Mr. Blouin went to see the workers at least once a day. For these reasons, it must be concluded that the appellant, through its employee Mr. Blouin, had control over the workers.

Ownership of the tools

[27] The evidence showed that the workers did not have any tools. Although the centre had a $130,000 budget separate from the institute’s budget, the workers were paid by the appellant by direct deposit after the usual tax deductions; the tools therefore became the appellant’s property.

Chance of profit or risk of loss

[28] The workers were paid regularly at an hourly rate determined by Maurice Blouin. They never prepared invoices for the appellant; they therefore had no chance of profit and ran no risk of loss.

Integration

[29] To determine how integrated an employee’s work is into a payer’s business, the overall relationship between the parties must be examined. The evidence as a whole is what must be looked at. The testimony of Maurice Blouin and Pierre Bédard and the documents show that the laboratory, the centre and the institute were closely connected. The laboratory and the institute offered the same kind of professional activities. The institute could not operate without the specialized services provided by the workers on an ongoing basis. It must therefore be concluded that the workers’ work was integrated into the appellant’s business.

[30] The appellant, through its counsel, submitted case law in support of its appeals, but the cases in question turn on their own facts. The appellant bore the burden of proving that the Minister’s decisions were unfounded in fact and in law. It has not discharged that burden of proof.

[31] During the period at issue, the workers held insurable employment within the meaning of paragraph 5(1)(a) of the Employment Insurance Act, since there was a contract of service between the appellant and them.

[32] The appeals are dismissed and the Minister’s decisions are confirmed.

Signed at Ottawa, Canada, this 21st day of May 1999.

“J.F. Somers”

D.J.T.C.C.

[OFFICIAL ENGLISH TRANSLATION]

Translation certified true on this 29th day of February 2000.

Erich Klein, Revisor