Date : 20010309
Docket: 2000-2638-EI
BETWEEN:
MICHEL DUPLIN,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasonsfor Judgment
Tardif, J.T.C.C.
[1] This is an appeal from a determination dated March 24, 2000, concerning the work done by the appellant for Les Constructions Léo Barolet Inc. (hereinafter "the payer") during the following periods: 17-01-93 to 11-12-93, 02-01-94 to 24-12-94, 29-01-95 to 16-12-95, 04-02-96 to 05-10-96 and 06-01-97 to 03-01-98.
[2] The appeal is one of a group of cases relating to employment with any of three companies that were all run and controlled by Léo Barolet.
[3] To avoid repetition, most of the appellants, including the appellant in the instant case, agreed that the respondent could begin by adducing evidence that was common to all the cases.
[4] That evidence, which was made up of the testimony of Serge Marseille and Marc Tremblay, showed that a major investigation of the companies run by Léo Barolet had been launched.
[5] After irregularities were found during a visit to the companies' place of business in Weedon, Léo Bartolet's spouse authorized and allowed the investigators to take with them for analysis and for examination in detail at their Sherbrooke offices several boxes of documents concerning employees.
[6] During the in-depth audit and analysis of the documents, the investigators observed that the employer had set up an hour bank for each employee. Indeed, they noted that the employees were generally always paid for approximately the same number of hours, namely about 43. When there was less work, the missing hours were made up by drawing hours from the bank, thus ensuring a normal pay week.
[7] Conversely, during very busy periods, if an employee worked more hours than the normal week, the extra hours worked were recorded in or credited to that employee's hour bank. Each employee had an hour bank that was updated weekly. Depending on the period concerned, the bank had either a positive or a negative balance.
[8] There was no doubt about the hour bank's existence, since the documentary evidence was very convincing and a number of workers admitted that it existed.
[9] The analysis of the documents also revealed that a number of workers regularly provided services to Mr. Barolet's companies without pay outside their work period shown in the payroll journal. That finding was made on the basis of a great number of invoices signed by employees who were not listed in the payroll journal on the dates of the invoices. With respect to some weeks, the payroll journal indicated fewer hours than the number actually worked considering the nature of the services provided as established by the invoices. According to the respondent, this is the main evidence common to all of the cases.
[10] The appellant, Michel Duplin, agreed to that evidence being part of the record in his case. He described himself as a construction worker and jack of all trades. He detailed his varied work experience and referred to the many occupational and family problems he has had to face over the years.
[11] Describing himself as an honest worker who is very concerned about the many injustices that exist, he testified that he had been obliged to accept the hour bank, which had been unilaterally imposed by the employer. He said that he had never worked for the employer without pay.
[12] Regarding these two important questions, I pointed out to the appellant that he had himself made certain written statements during the proceedings he had initiated with a view to being heard by the Tax Court of Canada.
[13] It would be appropriate to reproduce here some extracts from the appellant's correspondence:
Letter dated July 3, 1999:
[TRANSLATION]
. . .
I admit that I agreed to have an hour bank set up during the so-called insurable period in order to keep my job and stabilize my paycheque for the weeks I worked and reported.
I admit that my wife's state of health and the lack of income security at my former employer's led me not to insist on time and a half after 43 hours and to have those hours put, at straight time, into an hour bank used to stabilize my meagre wages when I was away accompanying my wife when she received medical care.
. . .
Sorry, Ms. Lemire, I am really the one who had a hard time at my former employer's because of my refusal to jump in for easy gains. Several of my fellow workers feared that I was the one who revealed the existence of their nice fat pay envelopes.
Letter dated April 2, 2000:
[TRANSLATION]
. . .
That I am the type to never refuse to help out free of charge?
. . .
[14] Since he was unable to deny the above extracts, the appellant fell back on the argument that too much importance should not be given to the words he had used or was using.
[15] As I said at the hearing, even though the case may inspire sympathy, I must render a decision on the basis of the evidence adduced.
[16] Moreover, I think that it is important to point out that the Tax Court of Canada's decisions are rendered on the balance of evidence, with the burden of proof always being on the appellant when it comes to insurability. In other words, the Court reviews and assesses all of the evidence. When there is any doubt, the Court generally favours the appellant. That said, I cannot render a decision by assuming or considering all sorts of facts or factors that have nothing to do with the appeal.
[17] In the case at bar, the appellant seemed to judge very harshly certain practices that existed at the companies run by Léo Barolet. At the same time, he also admitted that he had indeed contributed to and participated in those same practices, some of which required a minimum amount of work without pay; I am referring, inter alia, to the various errands that the employees ran for the companies.
[18] When services are provided or errands are run for an employer, I do not think that this automatically means there is no contract of service, where this is done from time to time or in special circumstances. However, if the services or errands are recurring, frequent and performed or run by a majority of an employer's employees, this raises questions; even where those providing such services or running such errands characterize what they are doing as free and voluntary, as mutual aid volunteer work, as support or as an expression of solidarity with their co-workers, the fact remains that such conditions, circumstances and facts are hard to reconcile with a genuine contract of service, under which all work must be paid work.
[19] Although the evidence did not show any connection between the hour bank and the work done without pay outside the periods referred to in the records of employment, there is good reason to be sceptical, since it is fairly unusual for employees to agree to work for their employer without pay, especially if that employer never pays overtime.
[20] The appellant admitted that he had received envelopes containing cash, adding that the cash was payment for work and expenditures that had nothing to do with his employment. Rather, he said, it was for computer graphics work, which he even claimed to have done at below cost. This is quite surprising for someone who speaks very harshly of his former employer.
[21] The appellant did not submit any objective information or facts or any documentary evidence to back up his claims. He would have liked the Court to rule in his favour based solely on his assertions that he is an honest man and a worker who has had his share of misfortune in life. I do not question the appellant's honesty; I have no doubt that life has been hard on him, but I repeat that this Court must render its decisions essentially on the basis of the evidence adduced and the applicable law.
[22] In the instant case, the evidence showed a possibly unscrupulous employer that had set up a real system which enabled it to get workers who were no doubt highly qualified without ever having to pay overtime.
[23] A minimum level of protection for employees is often related to and dependent on union certification; without such certification, employees may tend to be docile, co-operative and agreeable in order to keep their jobs. Some people may be afraid of losing their jobs if they do not go along with all of their employer's requirements and whims.
[24] In the case at bar, there was no evidence that the employer forced, induced or encouraged work without pay on pain of dismissal or even some indirect penalty, such as not being recalled when operations resumed. Such evidence would have been important and above all very relevant.
[25] Moreover, I did not understand why the employer, about whom some harshly critical remarks or comments were made, was not summoned to testify. Is this an indication that the various systems put in place were rather to the advantage of all concerned? Without evidence, I cannot draw any definite conclusions. However, given the extent and scope of the scheme, I can assume that not all the workers employed by Barolet were opposed to, offended by and dissatisfied with it.
[26] His mere assertion that he did not agree with his employer's scheme is not enough to allow one to conclude that the appellant's position is well-founded, especially since he expressly admitted that he was involved in it.
[27] It is not up to this Court to punish possible abuses of power by an employer. On the matter of insurability, I must basically decide whether the facts brought out in the evidence show that there was a genuine contract of service during the period or periods at issue. A genuine contract of service exists where a person performs work that is defined in time and generally described in a payroll journal, in return for which that person receives fair and reasonable remuneration from the payer, which must at all times have the power to control the actions of the person it is paying. The remuneration must correspond to the work performed for a defined period of time.
[28] The parties may agree on whatever they wish between themselves, but the respondent has no obligation to respect or accept what they choose. The insurability of work depends on certain fundamental conditions being met. In some cases, even where the parties have agreed on or imposed certain conditions or features, these are in no way enforceable against third parties, including the respondent.
[29] Only the real facts are to be taken into account in determining whether or not a genuine contract of service existed. Often, the facts have been falsified, disguised or even hidden, which is why the Court must rely on the whole of the available tendered evidence. The only relevant facts and information are those relating to the performance of work, to the remuneration paid and to the existence or non-existence of a relationship of subordination.
[30] In other words, the intention of the parties to a work agreement is in no way conclusive for the purpose of characterizing that agreement as a contract of service. It is basically one factor among many.
[31] The fundamental components of a contract of service are essentially economic in nature. The records kept, such as payroll journals and records concerning the mode of remuneration, must be genuine and must also correspond to reality. For example, the payroll journal must record hours worked corresponding with the wages paid. Where a payroll journal records hours that were not worked or fails to record hours that were worked during the period shown, that is a serious indication of falsification. Such is the case where pay does not correspond with the hours worked. Both situations create a very strong presumption that the parties have agreed on a false scenario in order to derive various benefits therefrom, including benefits with respect to taxes and employment insurance.
[32] It is possible for an arrangement to be more profitable for one party than the other, but this is a secondary effect that is not relevant in characterizing a contract of service, since as soon as a contract of employment is shaped by false or inaccurate information, it no longer meets the essential conditions for being characterized as a contract of service. Thus, when the evidence shows that the records containing the information essential to the existence of a genuine contract of employment are false and incomplete, it becomes essential to prove conclusively that the real facts support the existence of a genuine contract of service.
[33] In the case at bar, the respondent concluded that the work performed outside the periods referred to in the various records of employment was so performed under a genuine contract of service. This is a determination that is rather surprising and totally unjustified given the available facts as revealed by the investigation; I am referring, inter alia, to the hour banks and the work done outside the work periods shown in the records of employment. The purpose of an hour bank is often to make a week insurable when the number of hours worked for that week would require a finding of uninsurability. Evidence also adduced by the respondent showed that several employees, including the appellant, provided services outside the periods referred to in the records of employment.
[34] The effect of such facts was to invalidate any contract of service that may have existed. The respondent takes no account of this and moreover concludes that, for the weeks at issue in this case, the appellant has not submitted any concrete, tangible information that could demonstrate the soundness of his arguments on the balance of evidence.
[35] The facts in no way support the determination made by the respondent, who concluded for no reason and quite bewilderingly that the periods referred to in the records of employment were periods during which there was a genuine contract of service. Neither the facts available at the time of the respondent's analysis nor the evidence adduced in this Court support a finding that periods other than those indicated in the records of employment were insurable weeks. The determination gives the impression that the respondent wanted to profit as much as possible from the premiums payable for insurable weeks, all at the expense of a serious, logical and appropriate analysis based on the available evidence.
[36] In the circumstances, and in view of the weight of evidence and the fact that I am not at all bound by any assessment or determination concerning the facts to which the appeal relates, I conclude that it cannot be found on the balance of evidence that the work performed by the appellant was performed under a contract of service. The periods during which that work was done were never really established, since the payroll journal did not reflect reality. Accordingly, it can in no way be concluded from the evidence that there was a contract of service between the appellant and Les Constructions Léo Barolet Inc.
[37] The appeal is allowed, as the work performed by the appellant was not done under a genuine contract of service, and this was the case throughout the periods at issue.
Signed at Ottawa, Canada, this 9th day of March 2001.
"Alain Tardif"
J.T.C.C.
Translation certified true on this 4th day of July 2002.
[OFFICIAL ENGLISH TRANSLATION]
Erich Klein, Revisor
[OFFICIAL ENGLISH TRANSLATION]
2000-2638(EI)
BETWEEN:
MICHEL DUPLIN,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on January 30, 2001, at Thetford Mines, Quebec, by
the Honourable Judge Alain Tardif
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Stéphanie Côté
JUDGMENT
The appeal is allowed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 9th day of March 2001.
|
"Alain Tardif" |
J.T.C.C.
Translation certified true
on this 4th day of July 2002.
Erich Klein, Revisor