AE Hospitality Ltd. v. M.N.R.

AE Hospitality Ltd. v. M.N.R.
Court (s) Database
Tax Court of Canada Judgments
Date
2019-05-17
Neutral citation
2019 TCC 116
File numbers
2015-1919(EI), 2015-1920(CPP), 2016-3767(CPP), 2016-3768(EI), 2016-3781(CPP), 2016-3782(EI)
Judges and Taxing Officers
Johanne D’Auray
Subjects
Employment Insurance Act
Decision Content
Docket: 2015-1919(EI)
BETWEEN:
AE HOSPITALITY LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeals of AE Hospitality Ltd., 2015-1920(CPP), 2016-3768(EI), 2016‑3767(CPP), Omar Gonzalez, 2016-3782(EI) and 2016-3781(CPP) on April 3, 4, 5 and 6, 2018, and October 1, 2018 at Toronto, Ontario.
Before: The Honourable Justice Johanne D’Auray
Appearances:
Counsel for the Appellant:
Ian R. Dick
Stephanie J. Kalinowski
Counsel for the Respondent:
John Chapman
JUDGMENT
The appeal pursuant to subsection 103(1) of the Employment Insurance Act is allowed on the basis that AE Hospitality Ltd. was not a placement agency pursuant to subsection 6(g) of the Employment Insurance Regulations (“Regulations”), except for the period of July 1, 2012 to November 30, 2012 with respect to Ms. Sinchi.
For the purposes of the Regulations dealing with placement agency, the decisions of the Minister of National Revenue dated January 28, 2015 for the period from January 1, 2012 to December 2, 2013, are modified on the basis that Ms. Rubio was not employed in insurable employment for the period from
January 1, 2012 to December 2, 2013 and that except for the period from July 1, 2012 to November 30, 2012, Ms. Sinchi was not employed in insurable employment for the remaining of period in 2012 up to December 2, 2013.
Signed at Ottawa, Canada, this 17th day of May 2019.
“Johanne D’Auray”
D’Auray J.
Docket: 2015-1920(CPP)
BETWEEN:
AE HOSPITALITY LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeals of AE Hospitality Ltd., 2015-1919(EI), 2016-3768(EI), 2016‑3767(CPP), Omar Gonzalez, 2016-3782(EI) and 2016-3781(CPP) on April 3, 4, 5 and 6, 2018, and October 1, 2018 at Toronto, Ontario.
Before: The Honourable Justice Johanne D’Auray
Appearances:
Counsel for the Appellant:
Ian R. Dick
Stephanie J. Kalinowski
Counsel for the Respondent:
John Chapman
JUDGMENT
The appeal pursuant to subsection 28(1) of the Canada Pension Plan is allowed on the basis that AE Hospitality Ltd. was not a placement agency pursuant section 34 of the Canada Pension Plan Regulations (“Regulations”) except for the period of July 1, 2012 to November 30, 2012 with respect to Ms. Sinchi.
For the purposes of the Regulations dealing with placement agency, the decisions of the Minister of National Revenue dated January 28, 2015 for the period from January 1, 2012 to December 2, 2013, are modified on the basis that Ms. Rubio was not employed in pensionable employment for the period from January 1, 2012 to December 2, 2013 and that except for the period from July 1, 2012 to November 30, 2012, Ms. Sinchi was not employed in insurable employment for the remaining of period in 2012 up to December 2, 2013.
Signed at Ottawa, Canada, this 17th day of May 2019.
“Johanne D’Auray”
D’Auray J.
Docket: 2016-3768(EI)
BETWEEN:
AE HOSPITALITY LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeals of AE Hospitality Ltd., 2015-1919(EI), 2015-1920(CPP), 2016‑3767(CPP), Omar Gonzalez, 2016-3782(EI) and 2016-3781(CPP) on April 3, 4, 5 and 6, 2018, and October 1, 2018 at Toronto, Ontario.
Before: The Honourable Justice Johanne D’Auray
Appearances:
Counsel for the Appellant:
Ian R. Dick
Stephanie J. Kalinowski
Counsel for the Respondent:
John Chapman
JUDGMENT
The appeal pursuant to subsection 103(1) of the Employment Insurance Act is dismissed and the decisions of the Minister of National Revenue dated June 20, 2016 are confirmed on the basis that the persons listed in Schedule A of the Reasons for Judgment were employed in insurable employment with the appellant pursuant to paragraph 5(1)(a) of the Employment Insurance Act, for the period from January 1, 2013 to December 31, 2013.
Signed at Ottawa, Canada, this 17th day of May 2019.
“Johanne D’Auray”
D’Auray J.
Docket: 2016-3767(CPP)
BETWEEN:
AE HOSPITALITY LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeals of AE Hospitality Ltd., 2015-1919(EI), 2015-1920(CPP), 2016-3768(EI), Omar Gonzalez, 2016-3782(EI) and 2016-3781(CPP) on April 3, 4, 5 and 6, 2018, and October 1, 2018 at Toronto, Ontario.
Before: The Honourable Justice Johanne D’Auray
Appearances:
Counsel for the Appellant:
Ian R. Dick
Stephanie J. Kalinowski
Counsel for the Respondent:
John Chapman
JUDGMENT
The appeal pursuant to subsection 28(1) of the Canada Pension Plan is dismissed and the decisions of the Minister of National Revenue dated June 20, 2016 are confirmed on the basis that the person listed in Schedule A of my Reasons for Judgment were employed by the Appellant in pensionable employment pursuant to paragraph 6(1(a) of the Canada Pension Plan for the period from January 1, 2013 to December 31, 2013.
Signed at Ottawa, Canada, this 17th day of May 2019.
“Johanne D’Auray”
D’Auray J.
Docket: 2016-3782(EI)
BETWEEN:
OMAR E GONZALEZ,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeals of AE Hospitality Ltd., 2015-1919(EI), 2015-1920(CPP), 2016-3768(EI), 2016‑3767(CPP), and Omar Gonzalez, 2016-3781(CPP) on April 3, 4, 5 and 6, 2018, and October 1, 2018 at Toronto, Ontario.
Before: The Honourable Justice Johanne D’Auray
Appearances:
For the Appellant:
The Appellant himself
Counsel for the Respondent:
John Chapman
JUDGMENT
The appeal pursuant to subsection 103(1) of the Employment Insurance Act is dismissed and the decision of the Minister of National Revenue dated June 20, 2016 is confirmed on the basis that the Appellant was employed by AE Hospitality Ltd. in insurable employment for the period from January 1, 2013 to December 31, 2013 pursuant to paragraph 5(1)(a) of the Employment Insurance Act.
Signed at Ottawa, Canada, this 17th day of May 2019.
“Johanne D’Auray”
D’Auray J.
Docket: 2016-3781(CPP)
BETWEEN:
OMAR E GONZALEZ,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeals of AE Hospitality Ltd., 2015-1919(EI), 2015-1920(CPP), 2016-3768(EI), 2016‑3767(CPP), and Omar Gonzalez, 2016-3782(EI) on April 3, 4, 5 and 6, 2018, and October 1, 2018 at Toronto, Ontario.
Before: The Honourable Justice Johanne D’Auray
Appearances:
For the Appellant:
The Appellant himself
Counsel for the Respondent:
John Chapman
JUDGMENT
The appeal pursuant to subsection 28(1) of the Canada Pension Plan is dismissed and the decision of the Minister of National Revenue dated June 20, 2016 is confirmed on the basis that the Appellant was employed by AE Hospitality Ltd. in pensionable employment for the period from January 1, 2013 to December 31, 2013, pursuant to paragraph 6(1)(a) of the Canada Pension Plan.
Signed at Ottawa, Canada, this 17th day of May 2019.
“Johanne D’Auray”
D’Auray J.
Citation: 2019 TCC 116
Date: 20190517
Docket: 2015-1919(EI)
2015-1920(CPP)
2016-3768(EI)
2016-3767(CPP)
BETWEEN:
AE HOSPITALITY LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
Docket: 2016-3782(EI)
2016-3781(CPP)
AND BETWEEN:
OMAR E GONZALEZ,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
D’Auray J.
I. Background
[1] During the years under appeal, AE Hospitality Ltd. (“AE”) was in the business of providing workers to two catering companies, 1513563 Ontario Ltd., operating as Encore Food with Elegance (“Encore”), and Applause Catering Inc. (“Applause”) or collectively (“the catering companies”) for events that they catered. AE provided supervisors, servers, bartenders and chefs to the two catering companies and charged the catering companies for such services.
[2] AE has appealed the Minister of National Revenue’s (“Minister”) decisions with respect to the Employment Insurance Act (“EIA”) [1] and the Canada Pension Plan (“CPP”) [2] dated January 28, 2015 (“2015 decisions”).
[3] AE has also appealed the Minister’s June 20, 2016 decisions (“2016 decisions”), which are also in respect of the EIA and CPP.
[4] Mr. Gonzalez has only appealed the 2016 decisions.
[5] The 2015 decisions determined that AE was a placement agency with respect to two workers, Ms. Gladys Sinchi and Ms. Lorena Rubio. The Minister’s position is that pursuant to the Employment Insurance Regulations (“EIR”), [3] Ms. Sinchi and Ms. Rubio were placed in employment by AE, for the period from January 1, 2012 to December 2, 2013, to perform services for and under the direction and control of AE’s clients, namely the catering companies. The Minister also determined that AE was a placement agency pursuant to the Canada Pension Plan Regulations (“CPPR”) [4] on the basis that AE placed Ms. Sinchi and Ms. Rubio to perform services for its clients, the catering companies, where the terms and conditions of the employment and the remuneration paid constituted a contract of service or were analogous to a contract of service.
[6] The 2016 decisions dealt with whether the workers hired by AE were “employees” or “independent contractors”. Alternatively, the 2016 decisions considered whether AE was a placement agency pursuant to the provisions of the EIR and the CPPR. The applicable period is from January 1, 2013 to December 31, 2013.
[7] The 2016 decisions apply to 218 workers, including the supervisors, servers, bartenders and chefs that AE provided to the catering companies. The names and job functions of the 218 workers are listed in Schedule A, attached to the Reasons for Judgment. Ms. Sinchi and Ms. Rubio are included in the list of workers listed in Schedule A. Mr. Gonzalez is also included in the list of workers in Schedule A.
II. Position of the Parties
[8] The Respondent’s position with respect to the 2016 decisions is that the workers are employed of AE and are under a contract of service pursuant to paragraphs 5(1)(a) of the EIA and 6(1)(a) of the CPP for the period of January 1, 2013 to December 1, 2013.
[9] Alternatively, the Respondent’s position with respect to the 2016 decisions is that if a contract of service does not exist between AE and the workers, AE is a placement agency. The Respondent argues that pursuant to the provisions of the EIR, the workers were placed in employment for the period from January 1, 2013 to December 31, 2013 to perform services for and under the direction and control of AE’s clients. The Respondent also submits that pursuant to the provisions of the CPPR, the workers were placed by AE to perform services for its clients, the catering companies, where the terms and conditions of employment and the remuneration paid constituted a contract of service or were analogous to a contract of service.
[10] AE submits that the 218 workers listed in Schedule A are independent contractors. Accordingly, AE’s position is that the workers are not employees under a contract of service pursuant to paragraphs 5(1)(a) of the EIA and 6(1)(a) of the CPP as alleged by the Respondent. Therefore, the Minister’s 2016 decisions are incorrect in fact and in law.
[11] AE also submits that it is not a placement agency since the conditions required for a placement agency pursuant to the provisions of the EIR and the CPPR are not met. The workers were not under the direction and control of the catering companies, as required by the EIR. AE further submits that the workers were not placed by AE to perform services for its clients, the catering companies, where the terms and conditions of employment and the remuneration paid constituted a contract of service or were analogous to a contract of service, as required by the CPPR. Therefore, the Minister’s 2015 decisions with respect to Ms. Rubio and Ms. Sinchi and the Minister’s 2016 decisions with respect to 218 workers are incorrect in fact and in law.
[12] The appeals with respect to the 2015 and 2016 decisions were heard under common evidence.
III. Issues
[13] With respect to the Minister’s 2016 decisions, the issue is whether the 218 workers listed in Schedule A are independent contractors or employed by AE under a contract of service pursuant to paragraph 5(1)(a) of the EIA and paragraph 6(1)(a) of the CPP for the period from January 1, 2013 to December 31, 2013.
[14] Alternatively, if I were to decide there was no contract of service between AE and the workers, whether AE is a placement agency under subsection 6(g) of the EIR and section 34 of the CPPR and accordingly the employer of the workers for the period of January 1, 2013 to December 31, 2013.
[15] With respect to the Minister’s 2015 decisions, the issue is whether AE is a placement agency under subsection 6(g) of the EIR and section 34 of the CPPR and accordingly the employer of Ms. Sinchi and Ms. Rubio for the period from January 1, 2012 to December 2, 2013.
IV. Facts
[16] The witnesses for the Appellant at trial were Mr. Cary Silber, the president and sole shareholder of AE, Ms. Rebecca Belton, a server, bartender and supervisor, Ms. Robyn Kirsch, a server, bartender, supervisor for AE and a sales representative for the catering companies, Mr. Omar Gonzalez, a server and bartender and Mr. Darrin Green, a chef.
[17] The witnesses for the Respondent were Ms. Sinchi, a server and supervisor and Ms. Amanda Hagerman, a chef.
AE
[18] AE is a staffing company. It was incorporated on June 28, 2012.
[19] AE hires supervisors, servers, bartenders and chefs to work at events catered by Encore or Applause. The workers provide services for various types of events, including weddings, funerals, christenings, Bar/Bat Mitzvahs, fundraisers, trade shows, corporate events and other special events. These events range anywhere from two guests to two thousand guests in attendance.
[20] To avoid confusion, unless I refer to a specific job function, I will refer to the supervisors, servers and bartenders collectively as the “wait staff”. I will refer to the wait staff and the chefs collectively as the “workers”.
[21] During the years in issue, AE provided workers to only two catering companies, namely Encore and Applause. AE did not have a written agreement with Encore or Applause for providing the workers.
[22] Mr. Cary Silber is the sole shareholder, director and president of AE. Mr. Silber testified that he has been in the hospitality industry for almost 40 years.
[23] With respect to AE, Mr. Silber’s role is to ensure that skilled workers are provided to the catering companies.
[24] AE does not have any employees. All of AE’s workers are independent contractors who work as supervisors, servers, bartenders and chefs. AE’s booking coordinator is also an independent contractor.
[25] AE’s clerical and accounting work is done for a fee by personnel of the catering companies.
Catering Companies
[26] Encore was incorporated in 2003. Ms. Ruth Silber, Mr. Silber’s spouse, is the sole shareholder of Encore. Mr. Silber is also an officer and director of Encore.
[27] Mr. Silber stated that Encore had approximately 25 employees during the years under appeal.
[28] Encore has a production kitchen facility where the food is prepared for the events. All of the workers that AE provides Encore work offsite at external event venues because Encore does not have a banquet facility.
[29] Mr. Silber owns 25% of the shares of Applause via his holding corporation. David Silber, Mr. Silber’s son, also owns 25% of the shares of Applause via his own holding company. Two other corporations own the rest of the shares of Applause.
[30] Mr. Silber is also an officer and director of Applause.
[31] During the years under appeal, Mr. Roshan Wanasingha also owned shares in Applause. He was an employee of Encore but acted as the head chef (“Head Chef”) for both Encore and Applause. Due to a conflict, Mr. Wanasingha stopped working for the catering companies. He did not leave on good terms. There is ongoing litigation between Mr. Wanasingha and Mr. Silber.
[32] Applause was created to target the high-end kosher catering market. Applause holds most of its events at the Beth Tzedec synagogue, where its kitchen commissary is located. Applause also caters external kosher events. The workers that AE provides Applause work onsite at the synagogue or offsite at external event venues.
[33] Kosher food preparation requires religious supervision to ensure the food is prepared according to Jewish dietary laws. These laws are administered through the Council of Orthodox Rabbis. Applause is required to have a mashgiach present during the food preparation. A mashgiach is a religious supervisor who supervises food preparation and ensures kosher laws are followed. The mashgiach works for the Council of Orthodox Rabbis. AE pays the Council for the mashgiach’s services. Since kosher laws require food to be prepared in a specific way, AE workers have to comply with the kosher laws while performing their duties at Applause events.
[34] In addition to managing AE, Mr. Silber is also involved in the day-to-day operations of the catering companies. In this role, Mr. Silber’s duties relate to the sales, administration and finances of the catering companies. His sales duties involve going to see venues, creating menus, dealing with all other logistical issues and dealing with the clients of the catering companies, whom I will refer to as the “end user(s)”. Mr. Silber sometimes contracts with the end users on behalf of the catering companies. In carrying out these duties, Mr. Silber is also involved in determining how many workers the catering companies will require for an event. However, it is generally the catering coordinators and the salespeople at the catering companies who carry out these tasks. Mr. Silber’s administrative duties involve invoicing, checking accounts payable and receivable and dealing with suppliers. The suppliers include rental companies, linen companies and florists. Mr. Silber’s financial duties involve checking bank deposits, bank statements and cash flows.
[35] Mr. Silber stated that to a degree, he is more involved in the day-to-day operations of Encore and Applause than AE.
[36] Although, during the years in issue AE worked only with these two catering companies, the catering companies conducted business without AE’s involvement.
Workers (Wait Staff and Chefs)
[37] With respect to the wait staff, AE establishes a roster of people by receiving resumes.
[38] Mr. Silber stated that he only hires workers with experience. Experienced workers do not have to be trained. Many of the workers are hired through the referrals of other staff members.
[39] Many of the wait staff that AE hires work multiple jobs in and out of the hospitality industry. AE does not have a policy to prevent wait staff from providing services to competitors in the hospitality industry. Mr. Silber stated that for many of the servers, AE is not their primary source of income and unlike the supervisors, there is high turnover for servers.
[40] However, most of the chefs that work for AE are career chefs. They are employed by Encore and/or Applause. Mr. Silber stated that at times AE had to hire chefs who did not work for Encore or Applause.
[41] Mr. Wanasingha, the Head Chef of the catering companies, hired the chefs on behalf of the catering companies and AE. Due to his expertise, the Head Chef was in a better position than Mr. Silber to hire chefs.
Shifts
[42] Once the AE booking coordinator receives the booking requirements from the catering coordinator of Encore or Applause regarding the number of wait staff required for an event, the booking coordinator will contact the wait staff to offer them a shift for an event. AE uses StaffMate, a software program used in the hospitality industry, to contact the wait staff and to offer them scheduled shifts.
[43] The AE booking coordinator uses StaffMate to send an e-mail to the wait staff, which asks them to check StaffMate for available shifts. The wait staff are then able to accept or decline the shift on StaffMate. Mr. Silber testified that wait staff could refuse a shift without any repercussions.
[44] There are approximately 140 persons on the AE roster. AE selects the wait staff that a shift is offered to from its roster. The people are chosen based on the type of event, the size of the event and the experience required for the event. The end users may request a specific wait staff or chef to work their event and AE will try to accommodate such requests.
[45] A different system is in place for the chefs. AE does not have a roster of chefs. StaffMate is also not used to offer shifts to the chefs. It is either the Head Chef or the kitchen manager of Encore and Applause who selects the chefs that will work at the events. The chefs are employees of Encore and Applause and are chosen based on their level of experience, their qualifications and the type of event. A schedule is prepared on a weekly basis for the chefs. The schedule is posted in the kitchen of the catering companies.
[46] Mr. Silber stated that AE does not guarantee a minimum number of shifts for workers. He also stated AE does not have a minimum requirement for the number of hours each worker must work. However, he stated that under Ontario laws, it is mandatory that the workers be paid at least for four hours per shift.
[47] Mr. Silber testified that if a member of the wait staff needs to cancel a shift, they must advise the AE booking coordinator. The AE booking coordinator is then responsible to find a replacement from AE’s roster. AE requests to be notified of a cancellation at least 24 hours in advance, but if the time limit for cancelling is not met, AE still finds a replacement for the worker.
The Day of the Event
[48] As mentioned above, AE’s events range from a two guests to two thousands guests.
[49] For a large event, at least one supervisor is required. However, a supervisor is not required for small events.
[50] Before a large event, the catering companies forward a package containing the event details to the AE booking coordinator. The AE booking coordinator then forwards these instructions to the supervisors.
[51] The instructions deal with the room configuration, the table settings, whether the event will have a sit down meal or a buffet, the composition of the menu, the time for serving the meals, if cocktails will be offered, if special drinks need to be prepared and the list of the workers expected to work at the event.
[52] The supervisor usually advises the bartenders where the bar has to be set up, at what time the bar will open and close and if special drinks are required. The supervisor also communicates with the Head Chef in order to coordinate the timing for serving each meal course.
[53] At large events, the supervisor acts as a liaison between the wait staff, the Head Chef and the end user. On the day of the event, the supervisor introduces herself or himself to the end user as the point of contact throughout the event. The supervisor confirms the instructions received by the catering company with the end user. After meeting with the end user, the supervisor relays the information that he or she receives from the AE booking coordinator to the workers and ensures that the event is taking place pursuant to the instructions he or she had received from the catering company.
[54] The servers and the bartenders, once they arrive at the event, have to report to the supervisor. When servers or bartenders finish a shift, they have to advise the supervisor that they are leaving. The supervisor notes the time that the servers or the bartenders start and finish their shifts. The supervisor forwards the list with the times to the AE booking coordinator, who keeps track of the staff hours.
[55] The wait staff use their own means of transportation to get to the event. However, if the event is outside the Greater Toronto Area, they are paid for their travel time for an hour or an hour and a half, depending on the location of the event.
[56] In order to cut preparation time at the event, the meals for the events are prepared in advance. On the day of the event, either some of these chefs or other employees of the catering companies are required to use the Encore/Applause van to transport the food to the event venue. The chefs who are not required to transport the food must arrive at the venue using their own means of transportation.
[57] At the event, the Head Chef has the instructions from the catering company as to how the end user would like the meals served, and at what time. The Head Chef relays the instructions to the chefs and distributes tasks among the chefs accordingly. The chefs then take apart the order, check the menu and go over the timing with the Head Chef to determine when each meal is required to be served to the guests. The chefs also setup any buffet if that option is chosen by the end user. For large events, finishing the food generally requires the chefs to be broken down into four sections: salad, garde-manger, hot section and desserts. For consistency, the chefs have pictures of the plated food.
[58] If there are issues at the event, the end user expresses them to the supervisor, who deals with the issues. If there are complaints after the event, the end user generally contacts the salesperson at the catering company; they do not contact AE directly.
[59] For large events, the sales representative of the catering company who dealt with the end user may attend the event. Mr. Silber testified that the sales representative attends the event for the purpose of continuity and because the end users feel more comfortable with them present. He stated that the sales representative is mainly present at the event for public relations purposes and not to supervise the event. If there is an issue, the end user may communicate with the catering sales representative, who will pass the information along to the supervisor. Mr. Silber stated that he also attends some of the events, either small or large, for business development purposes. When he attends an event, the end users may also approach him if they have any changes they would like to make, such as altering the event schedule.
[60] For smaller events, the wait staff receive the instructions for the event by e-mail from the AE booking coordinator, who received the instructions from the catering company. The chefs receive the instructions directly from the catering companies. Depending on the size of the event, sometimes one or two workers may be sufficient. At the event, the workers first meet with the end user and they ensure that the requirements of the end user are met.
Contractual Relationship
[61] There are 50 chefs listed in Schedule A. Only five independent contractor agreements were filed in evidence for the chefs. With respect to the other 45 chefs, Mr. Silber stated that the independent contractor agreements were not available.
[62] With respect to the wait staff, out of 168 wait staff, 166 had signed an independent contractor agreement. It was only Ms. Sinchi and Ms. Rubio who had not signed an independent contractor agreement. Mr. Silber stated that he did not realize until the start of the appeal process that Ms. Sinchi and Ms. Rubio, did not sign an independent contractor agreement. Mr. Silber stated that this was due to an administrative mistake.
[63] The relevant part of the AE independent contractor agreement states as follows:
INDEPENDENT CONTRACTOR AGREEMENT
This INDEPENDENT CONTRACTOR AGREEMENT made as of this _____ day of ______, 201___
BETWEEN:
AE HOSPITALITY STAFFING, a corporation incorporated
under the Laws of Ontario
(the “Company”)
And
__________________________________________________Name
Of the City of ___________________________ Province of Ontario
(the “Independent Contractor”)
WHEREAS the Independent Contractor has expertise in the area of the company’s business and is willing to provide services to the Company;
AND WHEREAS the Company is willing to engage the Independent Contractor as an Independent Contractor, and not as an employee, on the terms and conditions set forth;
NOW, THEREFORE, it is agreed as follows:
ENGAGEMENT OF INDEPENDENT CONTRACTOR
The Company hereby engages the Independent Contractor in accordance with the responsibilities and in accordance with the provisions of this Agreement (hereinafter referred to as the “Services”)
RELATIONSHIP BETWEEN THE PARTIES
The Independent Contractor and the Company expressly agree that the Independent Contractor is a self-employed, independent contractor and is not an employee of the Company for any purpose, including, but not limited to, (i) income tax withholdings, Canada Pension Plan contributions or Employment Insurance premiums; (ii) workplace safety insurance coverage; and (iii) employee benefits.
SERVICES TO BE PROVIDED BY THE INDEPENDENT CONTRACTOR
During the term of this Agreement, the Independent Contractor shall have the full and complete obligation and responsibility for the performance of the services as set forth on the company, pursuant to the terms and conditions set forth in this Agreement, and the Independent Contractor shall be obliged to the Company for the performance of all such duties and /or work.
The Independent Contractor agrees to perform all services, as defined by the company, in compliance with all federal, provincial or local statutes, laws, ordinance and regulations, judicial orders or decisions that are applicable now or in the future to the Services.
PAYMENT FOR SERVICES
The Independent Contractor shall be paid the Independent Contractor rate according to the hours based on a bi-weekly payment. If a question or dispute arises as to the qualification of hours worked by the Independent Contractor in performing the Services, it will be resolved by the Company acting reasonably. The Independent Contractor understands and agrees that any and all future changes to the amount payable to the Independent Contractor will not be considered a repudiation of this Agreement by the Company.
The Independent Contractor acknowledges and agrees that the sole compensation for its services under this Agreement shall be payment described above, and not entitled to any other compensation for such services.
INCOME TAX DESIGNATION AND INDEMNIFICATION
The Company shall not withhold from sums becoming payable to the Independent Contractor under this Agreement, any amounts for federal, provincial, or local taxes including federal or provincial income taxes and employment taxes (including Canada Pension Plan contributions and Employment Insurance contributions). The Independent Contractor agrees that any tax obligation of the Independent Contractor arising from the payments made under this Agreement will be the Independent Contractor’s sole responsibility. The independent Contractor will indemnify and save harmless the Company and each of its directors by any taxing authority based upon the Company’s failure to withhold any amount form the payment for tax purposes.
[…]
10. Immediately upon the termination of this Agreement or of the Independent Contractor’s services for the Company, or upon the Company’s request, the Independent Contractor agrees to return to the Company all uniforms and other tangible items.
[…]
17. Upon termination of this Agreement, Independent Contractor shall not engage in any further written or oral communication with any of the Company’s customers concerning the Company, its products, its employees or its business.
[…]
22. This Agreement may not be assigned by the Independent Contractor without the Company’s prior written consent. The Independent Contractor shall not assign any portion of the work to be performed hereunder without any prior written consent of the Company. This Agreement may be assigned by the Company in connection with a merger or sale of all or substantially all of its assets, and in other instances with the Independent Contractor’s consent, which consent shall not be unreasonable withheld or delayed.
[…]
[Emphasis added.]
V. Analysis
A. Minister’s 2016 Decisions – Contract of Service between AE and the Workers
[64] Under this heading, I will only address the issue as to whether there was a contract of service between AE and the workers with respect to the Minister’s 2016 decisions. I will address the Minister’s 2015 and 2016 decisions with respect to the placement agency issue under a separate heading below.
(1) Relevant Provisions
[65] Paragraph 5(1)(a) of the EIA sets out what insurable employment is for the purposes of a contract of service. It 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;
[66] The relevant provisions of the CPP that deal with pensionable employment read as follows:
2. (1) In this Act,
“employment” means the state of being employed under an express or implied contract of service or apprenticeship, and includes the tenure of an office;
6. (1) Pensionable employment is
(a) employment in Canada that is not excepted employment;
(2) General Case Law Principles
[67] The Supreme Court of Canada in 671122 Ontario Ltd. v Sagaz Industries Canada Inc. [5] discussed the analysis that must be undertaken in order to determine if a contract of service exists between a worker and an employer. Justice Majors, delivering the reasons for judgment for the Court, referred to the principles enunciated by Justice MacGuigan of the Federal Court of Appeal in Wiebe Door Services Ltd. v Minister of National Revenue. [6] Justice Major stated as follows:
44. According to MacGuigan J.A., the best synthesis found in the authorities is that of Cooke J. in Market Investigations, Ltd. v. Minister of Social Security, [1968] 3 All E.R. 732 (Q.B.D.), at pp. 737-38 (followed by the Privy Council in Lee Ting Sang v. Chung Chi-Keung, [1990] 2 A.C. 374, per Lord Griffiths, at p. 382):
The observations of Lord Wright, of Denning, L.J., and of the judges of the Supreme Court in the U.S.A. suggest that the fundamental test to be applied is this: “Is the person who has engaged himself to perform these services performing them as a person in business on his own account?”. If the answer to that question is “yes”, then the contract is a contract for services. If the answer is “no” then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors, which may be of importance, are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task.
[…]
47. Although there is no universal test to determine whether a person is an employee or an independent contractor, I agree with MacGuigan J.A. that a persuasive approach to the issue is that taken by Cooke J. in Market Investigations, supra. The central question is whether the person who has been engaged to perform the services is performing them as a person in business on his own account. In making this determination, the level of control the employer has over the worker's activities will always be a factor. However, other factors to consider include whether the worker provides his or her own equipment, whether the worker hires his or her own helpers, the degree of financial risk taken by the worker, the degree of responsibility for investment and management held by the worker, and the worker's opportunity for profit in the performance of his or her tasks.
48. It bears repeating that the above factors constitute a non-exhaustive list, and there is no set formula as to their application. The relative weight of each will depend on the particular facts and circumstances of the case.
[Emphasis added.]
[68] With respect to the integration test, Justice Majors in Sagaz confirmed Justice MacGuigan’s approach that the integration test can still be of assistance, but that it must be addressed from the point of view of the employee and not the employer. Justice Majors stated:
43. Despite these criticisms, MacGuigan J.A. acknowledges, at p. 563, that the organization test can be of assistance:
Of course, the organization test of Lord Denning and others produces entirely acceptable results when properly applied, that is, when the question of organization or integration is approached from the persona of the “employee” and not from that of the “employer,” because it is always too easy from the superior perspective of the larger enterprise to assume that every contributing cause is so arranged purely for the convenience of the larger entity. We must keep in mind that it was with respect to the business of the employee that Lord Wright [in Montreal] addressed the question “Whose business is it?”
[Emphasis in original.]
[69] The decisions in Sagaz and in Wiebe Door make it clear that the central question that a court must assess in determining if a worker is an employee or independent contractor is: whether the worker who has been engaged to perform services is performing them as a person in business on his or her own account.
[70] In determining if a person is in business on his or her own account, Justice Majors stated that the level of control that the employer exercises over the worker will always be a factor. Other factors are whether the person performing the services provides his or her own equipment, whether he or she hires his or her own helpers, the degree of the financial risk taken, the degree of responsibility for investment and management that he or she has, whether and how far he or she has an opportunity of profiting from sound management practices in the performance of his or her task and whether the employees are integrated into the employer’s business. These factors are not exhaustive and the weight given to each factor will depend on the facts and the circumstances of the case.
[71] In most cases that deal with whether a person is an independent contractor, there will be compelling points suggesting that a worker is an employee and other compelling points suggesting that a worker is an independent contractor. As Justice MacGuigan stated in Wiebe Door, the plain fact is that in a large number of cases the court can only perform a balancing operation by weighing the factors that point in one direction and balancing them against those pointing in the opposite direction. That said, what must always remain is the search for the total relationship of the parties.
[72] More recently, the Federal Court of Appeal considered the intention of the parties in determining whether a person is an independent contractor or an employee. In 1392644 Ontario Inc. o/a Connor Homes v Minister of National Revenue, [7] Justice Mainville of the Federal Court of Appeal reviewed the cases in which the intentions of the parties were considered. Justice Mainville stated that the intention should be the first step in the analysis. The second step is to ensure that the facts an