Date: 20000316
Docket: 1999-284-EI
BETWEEN:
NATHALIE GUIMOND,
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 January 28, 2000.
[2] The appellant instituted an appeal from the decision by the Minister of National Revenue (the "Minister") that her total insurable earnings while she was employed by the payer Le Café Terrasse 1957 Inc. during the last 20 weeks of 1996 were $3,508.31 and her total insurable earnings with the same employer in 1997 were $4,892.24 because direct tips are not insurable earnings.
[3] The burden of proof is on the appellant. She has to show on a balance of evidence that the Minister's decision is unfounded in fact and in law. Each case stands on its own merits.
[4] In making his decision, the Minister relied on the following facts stated in paragraph 5 of the Reply to the Notice of Appeal, which were either admitted or denied:
[TRANSLATION]
(a) The payer operates a café; (admitted)
(b) during the period in issue, the appellant was a waitress with the payer; (admitted)
(c) she worked under a contract of service; (admitted)
(d) she was paid a basic hourly wage plus tips; (admitted)
(e) the tips were held in common in the cash register until the end of the shift; (admitted)
(f) the manager or the waitress in charge distributed the total tips as follows: 78% to the waitresses and 22% to the dishwashers and cooks; (admitted)
(g) these amounts were not recorded or monitored by the payer. (denied)
[5] The appellant, a waitress with the payer from January 7, 1996 to June 27, 1997, was paid a basic hourly wage plus tips. The total tips were distributed as follows: 78% to the waitresses and 22% to the dishwashers and cooks.
[6] The café owner had established a system for allocating all tips. A waitress designated by the employer was to add up the tips for the day and the evening after working hours. The tips were allocated on a percentage basis in accordance with the number of hours worked and the total was entered in a computer. The tips were distributed after working hours and there was no official record for the purpose of entering the amount of tips distributed.
[7] The appellant sent Revenue Canada a return of income and benefits for 1996 reporting income of $5,844.75 on the "Other employment income" line.
[8] The Minister relies in particular on subsection 3(1) of the Unemployment Insurance (Collection of Premiums) Regulations, section 93 of the Employment Insurance Act and subsection 2(1) of the Insurable Earnings and Collection of Premiums Regulations.
[9] Subsection 3(1) of the Unemployment Insurance (Collection of Premiums) Regulations reads in part as follows:
3. (1) The amount from which an insured person's insurable earnings shall be determined is the amount of his remuneration, whether wholly or partly pecuniary, paid by his employer in respect of a pay period, and includes
(a) any amount paid to him by his employer as, on account or in lieu of payment of, or in satisfaction of
(i) a bonus, gratuity, retroactive pay increase, share of profits, accumulative overtime settlement or an award,
. . .
[10] Subsection 2(1) of the Insurable Earnings and Collection of Premiums Regulations reads in part as follows:
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 the total of all amounts, whether wholly or partly pecuniary, received or enjoyed by the person that are paid to the person by the person's employer in respect of such employment.
. . .
[11] In Association des employés civils v. Minister of National Revenue, N.R. 1168, Umpire Marceau rightly considered the service charge amount that the appellant distributed among its employees as part of their earnings, and the notices of assessment were therefore justified.
[12] In rendering his decision, the umpire wrote as follows at page 4:
[TRANSLATION]
. . . The method the employer adopted for obtaining from its clients these amounts which it must pay to its employees (percentage included in computing an aggregate price or added to a base price) and the fact that their amount remains to be determined are immaterial; what is important is that they are amounts payable and promised by the employer in consideration of the employee's work.
[13] The two regulatory provisions cited above refer to amounts paid to the employee by the employer in the context of the employment.
[14] In the instant case, the payer apparently established a system to enable the employees to share the tips received in the context of their work. The tips were distributed without any checks being made by the payer.
[15] There is no evidence that it was the payer that paid the tips to the employees or that the payer was assessed for this portion of the remuneration. The evidence is not complete with respect to the amounts paid to the appellant during the period in issue.
[16] The tips were not remuneration paid by the payer under subsections 3(1) of the Unemployment Insurance (Collection of Premiums) Regulations and 2(1) of the Insurable Earnings and Collection of Premiums Regulations.
The appeal is dismissed.
Signed at Ottawa, Canada, this 16th day of March 2000.
"J.F. Somers"
D.J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
Translation certified true on this 31st day of January 2001.
Erich Klein, Revisor