Michael Legg et compagnie v. M.N.R.

Michael Legg et compagnie v. M.N.R. Court (s) Database Tax Court of Canada Judgments Date 2006-04-21 Neutral citation 2006 TCC 228 File numbers 2005-3894(EI) Judges and Taxing Officers Paul Bédard Subjects Employment Insurance Act Decision Content Docket: 2005-3894(EI) BETWEEN: MICHAEL LEGG ET COMPAGNIE, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, and DEBORAH GRIFFITHS, Intervener. ____________________________________________________________________ Appeal heard on March 9, 2006 at Montréal (Québec) Before: The Honourable Justice Paul Bédard Appearances: For the Appellant: The Appellant himself Counsel for the Respondent: Christina Ham Counsel for the Intervener: Claude Marc Boudreau ____________________________________________________________________ JUDGMENT The appeal is allowed and the decision of the Minister is vacated in accordance with the attached Reasons for Judgment. Signed at Ottawa, Canada, this 21st day of April 2006. Paul Bédard Bédard, J. Citation: 2006TCC228 Date: 20060421 Docket: 2005-3894(EI) BETWEEN: MICHAEL LEGG ET COMPAGNIE, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, and DEBORAH GRIFFITHS, Intervener. REASONS FOR JUDGMENT Bédard, J. [1] On April 29, 2005, Deborah Griffiths (the "Worker") filed an application to determine if she had worked or not in insurable employment for the company Michael Legg Clothiers Inc. (the "Appellant") for the period from November 14, 2004 to January 15, 2005 (the "disputed period"). [2] By letter dated July 26, 2005, the Respondent informed the Appellant that the Worker's employment was insurable during the disputed period because there was an employer/employee relationship between the Worker and the Appellant. Furthermore, the Respondent informed the Appellant that the insurable hours of the Worker for the said period were established to be 279 and the insurable earnings to be $2,901.60. The Appellant is appealing from this decision. [3] In reaching his decision, the Respondent relied on the following uncontested (except for subparagraph 5(l)) assumptions of fact: a) the Appellant had been incorporated on May 19, 1995; b) the Appellant was operating a business in the retail sales of clothes; c) the Appellant's business is located at 422 Main Road in Hudson; d) the Worker provided services to the Appellant as a salesperson from March 10, 2004 to August 31, 2004; e) the Worker worked at the Appellant's retail location in Hudson; f) the Worker was required to respect a work schedule established by the Appellant; g) the Worker worked under the supervision and direction of the Appellant's managers; h) the Worker received a salary based on an hourly wage of $10.00; i) on August 31, the Worker was injured at the Appellant's location; j) the Worker subsequently stopped working for the Appellant because of her injury; k) the Worker received Worker's Compensation from September 1, 2004 to November 12, 2004; l) the Worker was to return to work for the Appellant on November 14, 2004, however, the Appellant refused to allow the Worker to return to her position as salesperson; m) the Worker filed a complaint against the Appellant to a provincial labour authorities under the "Loi sur les accidents de travail et les maladies professionnelles"; n) on January 18, 2005, the Worker and the Appellant signed an agreement for an amount equivalent to 9 weeks of work of 31 hours per week at a rate of $10.00 per hour ($2,790), plus an additional 4% vacation pay ($111.60) for a total of $2,901.60; o) on January 31, 2005, following the agreement, the Appellant issued a record of employment to the Worker stating that the first day of work to be March 10, 2004 and the last day paid to be November 29, 2004, the total insurable hours was 769 and the total insurable earnings were $7,417.77, an amount of $2,790.00 was indicated as a CSST settlement not included in the insurable hours and the insurable earnings. Analysis [4] The facts are relatively simple: when the Worker was to return to work for the Appellant on November 14, 2004, the latter refused to allow her to return immediately to her position as salesperson. The Appellant asked the Worker to wait a couple of weeks in order to reorganize the working schedule. The Worker filed on November 29, 2004 a complaint (Exhibit I-1) against the Appellant to a provincial labour authority under the "Loi sur les accidents de travail et les maladies professionnelles". On January 18, 2005, a settlement (Exhibit A-1) was reached between the Appellant and the Worker. The Appellant gave the Worker monetary compensation equivalent to 9 weeks of work of 31 hours per week at a rate of $10.00 per hour ($2,790) plus an additional 4% vacation pay ($111.60) for a total of $2,901.60. Under this settlement, the Appellant issued to the Worker a Record of Employment for lack of work. [5] The issues are as follows: i) Did the Worker work in insurable employment for the Appellant from November 14, 2004 to January 15, 2005, the disputed period? In other words, during the disputed period did the Worker work 9 weeks for 31 hours per week for a total of 279 hours of insurable employment as per subsection 10.1(1) of the Employment Insurance Regulations? ii) Did the amount of $2,901.60 fall under the definition of retiring allowance? [6] The relevant provision of the Employment Insurance Act reads 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; ... [7] The relevant regulatory provisions are as follows: Employment Insurance Regulations 9.1 Where a person's earnings are paid on an hourly basis, the person is considered to have worked in insurable employment for the number of hours that the person actually worked and for which the person was remunerated. Insurable Earnings and Collection of Premiums Regulations 1.(1) The definition in this subsection apply in these Regulations. "retiring allowance" means an amount received by a person: (a) on or after retirement of the person from an office or employment in recognition of the person's long service, or (b) in respect of a loss of an office or employment of the person, whether or not received as, on account or in lieu of payment of, damages or pursuant to an order or judgment of a competent tribunal. (allocation de retraite) ... PART I INSURABLE EARNINGS Earnings from Insurable Employment 2.(1) For the purposes of the definition "insurable earnings" in subsection 2(1) of the Act and for the purposes of these Regulations, the total amount of earnings that an insured person has from insurable employment is (a) the total of all amounts, whether wholly or partly pecuniary, received or enjoyed by the insured person that are paid to the person by the person's employer in respect of that employment, and (b) the amount of any gratuities that the insured person is required to declare to the person's employer under provincial legislation. (2) For the purposes of this Part, the total amount of earnings that an insured person has from insurable employment includes the portion of any amount of such earnings that remains unpaid because of the employer's bankruptcy, receivership, impending receivership or non-payment of remuneration for which the person has filed a complaint with the federal or provincial labour authorities, except for any unpaid amount that is in respect of overtime or that would have been paid by reason of termination of the employment. (3) For the purposes of subsections (1) and (2), "earnings" does not include b) a retiring allowance; ... [8] Therefore, according to section 9.1 of the Employment Insurance Regulations, a person who is paid on an hourly basis is considered to have worked in insurable employment for the number of hours that the person actually worked and for which the person was remunerated. [9] According to the definition of "insurable earnings", they include the total insurable earnings that the insured person receives from the employer for this employment, but not including a retiring allowance. A retiring allowance is defined as an amount received in respect of a loss of employment, whether or not this amount is received as payment of damages. [10] Counsel for the Worker pointed out that the employment relationship was not broken during the disputed period. In other words, he claimed that even if an employee is no longer working it does not necessarily follow that there is no longer a contract of service during this period. The Federal Court of Appeal[1] recognized that a contract of service exists as long as the employment relationship is not broken. It also recognized that a contract of service can exist if the employee no longer provides a service. The Federal Court of Appeal also indicated in its decision that no regulatory provisions were involved and that when such provisions are involved, which is the case in the present appeal, they must be reviewed to determine an employment's insurability. Consequently, whether or not the employment relationship was broken, what must be asked in this case is whether the employment was insurable in light of section 9.1 of the Employment Insurance Regulations. In this regard, I agree with the reasoning of my colleague Lamarre, J. in Lefebvre v. Canada(Minister of National Revenue - M.N.R.), [2004] A.C.I. no 69 (Q.L.), 2004CCI131 at paragraphs 7-13. [11] I agree with counsel for the Worker the pay given to the Worker cannot be considered a retiring allowance unless the employment relationship was broken. However, I believe that it is unnecessary in this case to determine whether or not the employment relationship was broken during this period because, in any case, the Worker did not, in my opinion, work in insurable employment during the disputed period. In fact, section 9.1 of the Employment Insurance Regulations stipulates that a person paid on an hourly basis is considered to have worked in insurable employment for the number of hours that the person actually worked and for which the person was remunerated. In this case, the evidence revealed that the Worker was paid on an hourly basis and that she did not work the 279 hours for which she was paid. [12] On these grounds, the appeal is allowed and the decision of the Minister is vacated. Signed at Ottawa, Canada, this 21st day of April 2006. Paul Bédard Juge Bédard CITATION: 2006TCC228 COURT FILE NO.: 2005-3498(EI) STYLE OF CAUSE: Michael Legg et compagnie and M.N.R. and Deborah Griffiths PLACE OF HEARING: Montréal, Québec DATE OF HEARING: March 9, 2006 REASONS FOR JUDGEMENT BY: The Honourable Justice Paul Bédard DATE OF JUDGMENT: April 21, 2006 APPEARANCES: For the Appellant: The Appellant himself Counsel for the Respondent: Christina Ham Counsel for the Intervener: Claude Marc Boudreau COUNSEL OF RECORD: For the Appellant: Name: Firm: For the Respondent: John H. Sims, Q.C. Deputy Attorney General of Canada Ottawa, Ontario For the Intervener: Name: Claude Marc Boudreau Firm: Boudreau Clermont Montréal, Québec [1] Canada(Attorney General) v. Sirois, [1999] F.C.J. No 523. (Q.L.).