[OFFICIAL ENGLISH TRANSLATION]
2001-229(EI)
BETWEEN:
S.V. FORMATION INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on July 10, 2001, at Montréal, Quebec, by
the Honourable Deputy Judge J. F. Somers
Appearances
For the Appellant: Louis Tassé
Robert Duong (Student-at-Law)
For the Respondent: Nancy Dagenais (Student-at-Law)
JUDGMENT
The appeal is allowed and the decision of the Minister is set aside in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 10th day of October 2001.
|
"J. F. Somers" |
D.J.T.C.C.
Translation certified true
on this 31tst day of January 2003.
Sophie Debbané, Revisor
[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
...
[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.
|
"J. F. Somers" |
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