Date: 20010726
Dockets: 2000-5066-EI,
2000-5068-CPP
BETWEEN:
RICCI MANUFACTURING LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasonsfor Judgment
MacLatchy, D.J.T.C.C.
[1] These appeals were heard on common evidence on June 26, 2001 at Toronto, Ontario.
[2] The Appellant appealed a ruling to the Minister of National Revenue (the "Minister") for the determination of the question of whether or not the Workers identified in Appendix A attached to the Reply to the Notice of Appeal were employed in insurable and pensionable employment while engaged by the Appellant for the respective periods identified in the said Appendix A, within the meaning of the Employment Insurance Act (the "Act") and the Canada Pension Plan (the "Plan").
[3] By letter dated June 30, 2000 the Minister informed the Appellant that it had been determined that the engagement of the Workers by the Appellant, during the periods in question, was both insurable and pensionable employment for the reason that the Workers were employed pursuant to contracts of service.
[4] It was mutually agreed by the parties that the Appellant is a Canadian controlled private corporation owned by Chi Chuen Cheng and his wife, Wai Mui Fung, each owning 50% of the Appellant's outstanding shares. Further, the Appellant manufactured sports wear and golf shirts receiving work orders for the manufacture of garments from its customers and provided the Workers with employment. The Appellant's customers provided the cut materials and specifications for the manufacture of the garments and the Appellant was responsible for meeting the quotas, deadlines and quality standards of the customers. The Workers hired by the Appellant were sewing machine operators who sewed the pieces of cloth together to create clothing for the Appellant's customers. The Workers were paid bi-weekly by cheque, based on a flat rate per piece produced as set by the Appellant, the work being performed on the Appellant's premises, that included plant with work stations each supplied with a sewing machine and all the necessary tools and materials needed by the Workers. The Appellant coordinated the day-to-day operation of the plant and set the plant rules, scheduling access to the sewing machines as well as the general administration of the plant including the allocation of work and quality review. The Workers were experienced operators who needed little direct supervision but the Appellant retained the right to control and supervise the work of the Workers. The Workers were not required to own, maintain or insure the machinery or facilities used in the performance of their services.
[5] The question to be answered by this Court is whether or not the Workers were engaged pursuant to contracts of service and were in an employer/employee relationship or were engaged under contracts for services and were independent contractors.
[6] Using the guidance of the Federal Court of Appeal's decision given in Wiebe Door Services Ltd. and M.N.R., 87 DTC 5025, the four-fold test should be addressed using the evidence adduced. Further, examination of the overall relationship existing between the Appellant and the Workers is required.
Control
[7] The Appellant owned the premises where the work was performed, set the hours of access to the machines required by the Workers, set the factory standards and insured the building and machines and provided liability coverage on the building and machinery. The president of the Appellant answered a questionnaire, as requested, and stated the Workers could substitute other workers to perform their duties but not without the knowledge and approval of the Appellant: this is control. The Workers could not perform other work on the premises other than that assigned by the Appellant. The Workers were to follow the routines and methods that are standard to the industry and must meet the deadlines set by the Appellant. Although little control or supervision was required with the Workers as they were all experienced and seasoned Workers, such control was clearly retained by the Appellant.
Tools
[8] The major tool required by the Workers to perform their function was owned by the Appellant, located in its plant and insured and maintained by the Appellant. The Workers could use their own scissors, tape measures, masks and ear protectors but these items were also available at the Appellant's plant. The sewing machine was the important tool used and the most expensive to own and maintain.
Chance of profit and risk of loss
[9] The only improvement in "take home pay" for the Workers was possible only if he or she worked faster and for longer hours. Also, if the Appellant suffered a loss, it did not fall on the Workers. Profits and losses in the business were those of the Appellant. The Appellant paid for liability insurance because it would be responsible for injury and/or accidents, not the Workers.
Integration
[10] Whose business is it? Clearly, it was the business of the Appellant. It provided the materials, specifications and other requirements of its customers in order that the Workers could perform their services. The Appellant owned and operated the business and the Workers merely performed their duties as directed by the Appellant.
[11] The Appellant may have thought the Workers were some type of independent contractors, but the facts presented proved otherwise. To determine the relationship existing, it is necessary to look at the tests above together with examination of the whole scheme that existed between the Appellant and the Workers.
[12] On balance, the evidence presented to this Court supports the argument that the Workers were employed pursuant to contracts of service and their employment is both insurable and pensionable.
[13] The appeals are dismissed and the decision of the Minister is hereby confirmed.
Signed at Toronto, Ontario, this 26th day of July 2001.
"W.E. MacLatchy"
D.J.T.C.C.
COURT FILE NO.: 2000-5066(EI)
STYLE OF CAUSE: Ricci Manufacturing Ltd. and M.N.R.
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: June 26, 2001
REASONS FOR JUDGMENT BY: Honourable Deputy Judge W.E. MacLatchy
DATE OF JUDGMENT: July 26, 2001
APPEARANCES:
Agent for the Appellant: Steve Lau
Counsel for the Respondent: Scott Simser
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
COURT FILE NO.: 2000-5068(CPP)
STYLE OF CAUSE: Ricci Manufacturing Ltd. and M.N.R.
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: June 26, 2001
REASONS FOR JUDGMENT BY: Honourable Deputy Judge W.E. MacLatchy
DATE OF JUDGMENT: July 26, 2001
APPEARANCES:
Agent for the Appellant: Steve Lau
Counsel for the Respondent: Scott Simser
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2000-5066(EI)
BETWEEN:
RICCI MANUFACTURING LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeal of Ricci Manufacturing Ltd. (2000-5068(CPP)) on June 26, 2001 at Toronto, Ontario, by
the Honourable Deputy Judge W.E. MacLatchy
Appearances
Agent for the Appellant: Steve Lau
Counsel for the Respondent: Scott Simser
JUDGMENT
The appeal is dismissed and the decision of the Minister is confirmed in accordance with the attached Reasons for Judgment.
Signed at Toronto, Ontario, this 26th day of July 2001.
|
"W.E. MacLatchy" |
D.J.T.C.C.
2000-5068(CPP)
BETWEEN:
RICCI MANUFACTURING LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeal of Ricci Manufacturing Ltd. (2000-5066(EI)) on June 26, 2001 at Toronto, Ontario, by
the Honourable Deputy Judge W.E. MacLatchy
Appearances
Agent for the Appellant: Steve Lau
Counsel for the Respondent: Scott Simser
JUDGMENT
The appeal is dismissed and the decision of the Minister is confirmed in accordance with the attached Reasons for Judgment.
Signed at Toronto, Ontario, this 26th day of July 2001.
|
"W.E. MacLatchy" |
D.J.T.C.C.