Tax Court of Canada

Employment Insurance

That parties agreed to characterize contract as contract for services was not determinative of nature of contract

Insurance company hired individual as agent under Agent Contract in April 2012 and was terminated in November 2012. Company issued 2012 T4A in name of individual, reporting amount of $7,084.91 in self-employed commissions. In 2012 income tax return, individual declared gross commission income from self-employment of $7,084, and reported he incurred $7,098 in expenses to earn this income; individual declared net loss of $14. Individual appealed decision of Minister finding that he did not hold insurable employment. Appeal allowed. Individual was considered employee under art. 2085 of Civil Code of Quebec and held insurable employment. Fact that parties agreed to characterize contract as contract for services was not determinative of nature of contract. First, this was contract of adhesion; individual did not have opportunity to discuss whether he wanted to be independent contractor or employee. Second, individual was in vulnerable position given that he had been unemployed for several months at hiring. There was higher level of micromanagement than one would expect from most employers. Individual felt compelled to justify his absence from office; individual’s business card showed no indication that he was independent contractor or agent; any ordinary person would assume individual was employee of company. Individual did not represent several insurance companies, although company claimed he was free to do so; this was red herring. Company told agents how they should behave on internet, how to talk to people, how to dress to meet potential clients, what kind of pen to use for signing applications, how to deal with objections face to face and on phone, how to conclude sale, how to develop relationship over year, and when to send birthday cards. Company exercised control over every aspect of agents’ work and corrected mistakes when any were found. Fact that individual paid weekly rent of $18 for use of computer was red herring; fact that agents were given large degree of autonomy in performing their duties was normal. Company executives were not just coaches; they were there to supervise, assist, and give direction. It was obvious from testimony of company witnesses that they knew they were not supposed to say agents were being supervised, that meetings were mandatory, and that agents were not free to do whatever they wished. Evidence showed company had power of direction and control over agents who hired assistant. Code did not expressly preclude employee from employing assistant or that someone who would otherwise be employee could not be one because he hired assistant.

Mazraani v. Minister of National Revenue (Apr. 12, 2016, T.C.C. [Employment Insurance], Pierre Archambault J., 2013-3484(EI)) 264 A.C.W.S. (3d) 1078.

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