Date: 19991022
Docket: 98-1104(UI)
98-1105(UI)
98-1106(UI)
98-181(CPP)
98-182(CPP)
98-183(CPP)
BETWEEN:
BAY PUBLISHING LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Bell, J.T.C.C.
[1] The issue is whether the Appellant
is liable under the Employment Insurance Act
("EIA") for employment insurance premiums and
under the Canadian Pension Plan ("CPP")
for CPP contributions. This will involve a determination
of whether:
• Jody Unger
("Unger"), in respect of the period November 12, 1996
to July 1, 1997;
• Daphne Massey
("Massey"), in respect of the period March 15, 1997 to
October 15, 1997; and
• Christopher
Stephenson ("Stephenson"), in respect of the period
July 21, 1997 to November 25, 1997
were in insurable employment with the Appellant as described
in section 5 of the EIA and in pensionable employment as
described in section 6 of the CPP.
FACTS:
[2] The Appellant was, during the
period in question, a publishing company that sold advertising
for local magazines. Its director was one Evelyn Butler
("Butler"). The Appellant entered into contracts with
Unger, Massey and Stephenson, which contracts were designed to
establish the relationship of independent contractor and not of
employee between each of those persons and the Appellant. Among
other things the agreement provided a confirmation of the
relationship of
Independent-Contractors, not that of Employer-Employees
[3] The agreement provided that the
"Sales Agent" would not be entitled to holiday pay,
statutory holidays, CPP benefits or EIA benefits.
It also provided that such agent would not engage in any
activities competitive with the Appellant. It then provided for
the payment of commissions with advances in respect of same at
the commencement of the relationship. Another term of the
agreement required the Sales Agent to follow the Appellant's
procedures which were set forth in schedules to the
agreement.
[4] The evidence of Butler was that
agents were not required to be in the office if they did not wish
to be there, could choose their own hours of work and clients to
solicit, could choose when and where to work and to whom sales
would be offered.
[5] Butler said that the Appellant
provided office space, letterhead and business cards stating that
the agents would provide their own vehicle, own their equipment
and pay expenses such as telephones, computers, et cetera. She
stated that they had an opportunity to make a profit if they were
diligent but would lose commissions if the bill in respect of
advertising sold was not paid within a certain time limit. She
stated that they could take holidays when they liked, that they
could determine how much they wanted to work, what expenses they
incurred and that they could delegate or hire a person to deliver
magazines, that being part of their procedure. She stated that
she sold sixty to eighty percent of the advertising.
[6] Massey testified that she was
expected to arrive at the office at 9:00 o'clock each
morning, that she had a desk at the office and that no one else
used that desk. She said that she had to make a request of Butler
for time off and let her know what she would be doing. She also
stated that she had to attend weekly sales meetings. She stated
that at the staff meetings, Butler wanted forms filled out and
that they had to be filed on a weekly basis. She said that
anything signed by a client had to be approved by Butler before
publication. She said also that the Appellant provided business
cards, fax, telephone, postage meter, contracts, letterhead and
paper. She said that Butler insisted that she hire a specific
person, impliedly selected by Butler for assistance.
[7] Dianne Kennedy
("Kennedy") testified that she worked for the Appellant
from March, 1995 until April, 1997. She said that she was the
office manager, answered the telephone, looked after accounts
receivable and bank deposits, photocopies and lay-outs and
delivered them to the art director. She said that she was hired
as an employee. She testified that the sales agents had their own
desks, went out to clients, brought material back to the office
and laid out ads. She stated that the agents did not have other
jobs. She said that all workers had to give notice to Butler if
they wanted holidays and that representatives were absolutely not
free to hire replacement workers. She also stated that they were
expected to call into the office several times a day or show up
at the office. She concluded by saying that she was support staff
for all the staff and that she did as much work for them as she
did for Butler. On cross-examination she stated that she was
fired by Butler.
RESPONDENT'S SUBMISSIONS:
[8] Butler said, without referring
specifically to Wiebe Door Services Ltd.[1] that respecting the control
test, the agents dressed as they saw fit, charged what they saw
fit, were given business cards for convenience to establish
assurance in the market place, paid for their own vehicles and
their lunches, that the Appellant did not offer training but
simply offered instruction and did not call meetings.
[9] With respect to risk, Butler said
that the agents were paid on a commission basis and would lose
the commission if the account was not paid in ninety days. She
submitted that their earnings were contingent on what they did
and that there was no ceiling. She stated that if she offered to
supply some things she was simply helping the agents out. She
said that they would let her know when they took time off. She
referred to a common sense test and asked how she could control
someone that she didn't see most of the day. She made brief
mention only of the tools test and the integration test.
[10] Respondent's counsel submitted that
the agreement in each case was not prepared by the agent, that
there was a non-competition clause in the agreement and that a
commission would be paid only if all procedures were followed.
She stated that with respect to control, there was a certain
amount of training, the payor had first call on the agents'
time, that they were expected to be in the office between 9:00
a.m. and 5:00 p.m., that they didn't feel free to work
elsewhere without approval, the example of one witness being her
desire to work as a waitress. She submitted that the workers did
not feel free to send a sales replacement, there being a problem
even with respect to who could deliver magazines. She stated that
the Appellant could terminate the relationship, that the agents
were required to wear proper business attire and that time sheets
were required in two cases.
[11] With respect to tools and ownership
thereof, counsel submitted that all agents made calls from the
office, that telephones were provided, that business cards were
provided, sales contracts were provided and that invoices were
provided. She stated that the secretary typed letters for these
agents on the Appellant's letterhead. She also said that they
had use of fax, photocopies, desk, office space, kits and
brochures, pens and postage.
[12] With respect to profit and risk of
loss, counsel stated that there was little risk if any and that
the agents had little say in what to charge. She stated that with
Butler selling sixty to eighty percent of the ads there was
little room left for the workers to earn more. She submitted that
the only risk of loss was if payment had not been made in ninety
days and that in that case the Appellant would suffer the
most.
ANALYSIS AND CONCLUSION:
[13] Section 5(1) of the EIA defines
insurable employment, subject to subsection 2, as employment in
Canada by one or more employees, under any express or implied
contract of service ... written or oral, whether the earnings are
calculated by time or by the piece, or partly by time and partly
by the piece, or otherwise.[2]
[14] Section 6 of the CPP defines
pensionable employment to include employment in Canada that is
not excepted employment.[3]
[15] Both parties referred to a number of
cases which are of little, if any, use in the determination of
this matter. This case clearly appeared to be the result of
strained, if not hostile, relations between Butler and the
agents. Although not all three of the agents appeared to give
evidence, the testimony of Massey and of Kennedy, the employee,
have persuaded me that, on balance, the agents were not
independent contractors. It is difficult for workers to be
categorized as independent contractors when a substantial measure
of control over their efforts is exercised. The term
"independent contractor" presents an image of someone
who is in business for himself or herself and who is available to
various parties for the performance of their services for a fee.
This is not always the situation but an independent contractor
working with only one party must have a substantial measure of
independence from the control and direction of that party in
order to establish and maintain that categorization. The
Appellant has failed in this case to meet the onus of
establishing such relationship with Unger, Massey and Stephenson.
The result is that they were in insurable employment under the
EIA and within pensionable employment under the
CPP.
[16] Accordingly, the appeal is
dismissed.
Signed at Ottawa, Canada this 9th day of November,
1999.
J.T.C.C.
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