Date: 19991125
Docket: 1999-2603-EI
BETWEEN:
MARY LOU MCKENNA,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Weisman, D.J.T.C.C.
[1] This is an appeal under subsection 103(1) of the Employment Insurance Act (the "Act").[1]
The Issue
[2] At issue is whether the Appellant accumulated sufficient insurable hours to qualify for unemployment benefits during the relevant period.
The Employment of the Appellant
[3] The Appellant was employed by York University as a writing instructor during the 1997-98 academic year. She received a fixed wage in the amount of $9,806.80 payable in equal monthly instalments over the 35-week life of the contract.
[4] She was required by the terms of that contract to spend at least 174 contact hours in one-on-one tutoring sessions with individual students. In addition, she was responsible for group teaching, committee work, the training and supervision of teaching assistants, liaison work with writing-intensive courses, participation in professional development activities, or any other activities that would make her expertise in the teaching of writing available to her colleagues in the Faculty of Arts.
[5] The Appellant, accordingly, had considerable discretion both in the number of insurable hours she could work, and in the proportion thereof she could work at home.
The Regulations
[6] The method of determination of hours of insurable employment where a person's earnings are not paid on an hourly basis is covered by section 10 of the Employment Insurance Regulations (the "Regulations")[2] the relevant subsections of which provide as follows:
"10.(1) Where a person's earnings are not paid on an hourly basis but the employer provides evidence of the number of hours that the person actually worked in the period of employment and for which the person was remunerated, the person is deemed to have worked that number of hours in insurable employment.
(2) Except where subsection (1) and section 9.1 apply, where there is doubt or lack of specific knowledge on the part of the employer as to the actual hours of work performed by a worker or by a group of workers, the employer and the worker or group of workers may, subject to subsection (3) and as is reasonable in the circumstances, agree on the number of hours of work that would normally be required to gain the earnings referred to in subsection (1), and, where they do so, each worker is deemed to have worked that number of hours in insurable employment.
(3) Where the number of hours agreed to by the employer and the worker or group of workers under subsection (2) is not reasonable or no agreement can be reached, each worker is deemed to have worked the number of hours in insurable employment established by the Minister of National Revenue, based on an examination of the terms and conditions of the employment and a comparison with the number of hours normally worked by workers performing similar tasks or functions in similar occupations and industries.
(4) Except where subsection (1) and section 9.1 apply, where a person's actual hours of insurable employment in the period of employment are not known or ascertainable by the employer, the person, subject to subsection (5), is deemed to have worked, during the period of employment, the number of hours in insurable employment obtained by dividing the total earnings for the period of employment by the minimum wage applicable, on January 1 of the year in which the earnings were payable, in the province where the work was performed.
(5) In the absence of evidence indicating that overtime or excess hours were worked, the maximum number of hours of insurable employment which a person is deemed to have worked where the number of hours is calculated in accordance with subsection (4) is seven hours per day up to an overall maximum of 35 hours per week."
The Position of the Appellant
[7] The position of the Appellant is that her actual hours of insurable employment in the period of employment were not known or ascertainable by her employer. Subsection 10(4) is accordingly applicable, and if applied, results in sufficient insurable hours for her to qualify for unemployment benefits.
[8] The Appellant admitted that she did not maintain a log or diary of her actual hours worked in insurable employment. However, because of her 12 prior years experience in performing the same duties, she was able to calculate a reliable and accurate average of the insurable hours that she worked. She accordingly arrived at the sum of 720 insurable hours. She further admitted to completing an Application for Unemployment Benefits, which indicated that she worked 12 hours per week or 420 hours over the life of the contract. She did this in the mistaken belief that her Application had to be congruent with the Record of Employment, which indicated 420 hours.
[9] The Appellant's Director confirmed that he did not know and was not able to ascertain the number of actual hours of insurable employment worked by the Appellant in the period of employment. It was his testimony that the various activities undertaken by the Appellant were all contemplated by the terms of her contract, and that the total of 720 insurable hours was reasonable and comparable to the number of hours that he himself worked in similar circumstances.
The Position of the Respondent
[10] The position of the Respondent is that section 10 of the Regulations propounds a scheme based generally upon the degree of the employer's knowledge of the actual hours worked by the employee. It was argued that subsection 10(1) applies where the employer has full knowledge, subsection 10(4) applies where there is no knowledge, and that subsection 10(3) applies in situations such as the present, where the employer has partial knowledge of the actual number of hours worked, in this case 174. A comparison of the English and French versions of subsection 10(3) leads to the conclusion that the words "no agreement can be reached" does not mean that the parties must have tried and failed to agree. In the Respondent's view, subsection 10(4) should be narrowly construed and applied only as a last resort, because it perpetuates the abuses the new regulatory scheme was designed to obviate, and leads to absurd results.
[11] The new system is based on total earnings and hours, rather than weeks of work. The old scheme gave rise to situations where some employees had hours of work of greater value for unemployment insurance purposes than did others. To apply subsection 10(4) to the present fact situation is to defeat the intent of Parliament, and leads to the absurd result that the Appellant is deemed to have worked over 1430 insurable hours. This is almost twice the number she herself claimed. The Regulations must not be construed in a manner which is likely to produce arbitrary or capricious results.[3]
[12] The Respondent relied upon three different documents in determining that the Appellant's actual hours of work totalled 420, thereby disqualifying her from unemployment benefits. First, there was a chart derived from a random sample of universities, which did not apply to writing instructors, and ascertained only how each institution calculated insurable hours. The criteria specified in subsection 10(3) were not addressed. Second, another chart was produced that purportedly contained hourly equivalents for reporting employment insurance earnings. This was based upon a formula devised by an academic staff relations person at York University, and was used to complete its Records of Employment. It, however, did not reflect actual hours of work and related only to teachers and not to writing instructors. Finally, the Respondent referred to the Appellant's Application for Unemployment Benefits wherein she indicated that she worked 420 hours over the life of the contract, as aforesaid.
[13] Recognizing that the Minister of National Revenue took irrelevant factors into account in exercising his discretion under subsection 10(3) of the Regulations, counsel invited me to invoke the doctrine in Tignish Auto Parts Inc. v. M.N.R.[4] and Canada (A.G.) v. Jencan Ltd.[5], and find that the Appellant's insurable hours totalled 420 pursuant to her Application for Unemployment Benefits.
The Jurisprudence
[14] I have been referred to two reported decisions offering guidance in the interpretation of section 10 of the new Regulations.
[15] Franke v. M.N.R.[6] dealt with the meaning of "the employer provides evidence of the number of hours that the person actually worked" in subsection 10(1). The Appellant taught Political Science courses at the University of Victoria. He had considerable discretion as to the number of insurable hours he worked outside the classroom in such responsibilities as preparation, writing lectures, and marking examinations. At trial, he produced a detailed breakdown of the number of hours he spent in carrying out his duties. The evidence of the employer as to the Appellant's insurable hours was derived in part from the application of a formula negotiated between the Canadian Association of University Teachers and employment insurance officials. The Court held that the formula failed to provide evidence of the number of hours that the Appellant actually worked. In the result, the appeal was allowed and the Minister's decision was varied under subsection 103(3) of the Act, to accord with the Appellant's documented insurable hours.
[16] In Furtado v. M.N.R.[7], the Appellant was employed as superintendent of a building owned by the employer. Her responsibilities consisted of rent collection and cleaning the premises. The employer disagreed with the Appellant's claimed hours, but could not specify the actual number of hours she worked. In the result, subsection 10(4) was applied. The Appellant was found to lack sufficient insurable hours to qualify for unemployment benefits, and her appeal was dismissed.
Analysis
[17] The Respondent's arguments were convoluted and unconvincing. This is a direct result of attempting to fit this fact situation into subsection 10(3) of the Regulations, where it plainly does not belong. Subsection 10(3) deals with hours normally worked and not hours actually worked. It applies where the number of hours normally worked as agreed to by the employer and the worker or group of workers under subsection 10(2) is unreasonable, or no agreement on hours normally worked can be reached. Subsection 10(3) makes no mention of hours actually worked and is inapplicable thereto.
[18] Before me is a clear case in which the Appellant's actual hours of insurable employment in the period of employment were not known or ascertainable by the employer within the meaning of subsection 10(4) of the Regulations. Formulae may be of assistance in determining hours normally worked under subsection 10(3), but not hours actually worked under subsection 10(4)[8].
[19] If this conclusion may lead to results that are not in accord with the intent of Parliament in enacting the new Regulations, that is a matter for Parliament to address and not the courts[9].
[20] The appeal will be allowed and the decision of the Minister varied under paragraph 103(3)(a) of the Act to provide that the number of insurable hours worked, and for which the Appellant was remunerated during the 1997-98 academic year, was 720.
Signed at Toronto, Ontario, this 25th day of November 1999.
"N. Weisman"
D.J.T.C.C.