http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/127186/index.do
Romanza Soins Capillaires et Corporels Inc. v. M.N.R. (December 15, 2015 – 2015 TCC 328, Boyle J.).
Précis: The appellant hired Ms. Riendeau as an esthetician for a period of 9 weeks in 2012. The sole issue before the Tax Court was whether she was engaged in insurable employment for EI purposes during that period. The Tax Court reviewed the well known tests and concluded that she was not an employee during that period of time. Accordingly the appeal was allowed.
Decision: The appellant hired Ms. Reindeau for a period of 9 weeks in 2012:
[3] Romanza operated a beauty salon under the name Romanza Salon and Spa in Laval, Quebec. She has since sold the salon and is now a lawyer. It was owned and operated by Mme Andria D’Elia at the time in question. The salon offers hairdressing, beauty care, tanning, make-up, nails, laser treatment services and massage therapy. Mme D’Elia testified for the Appellant.
[4] Liliane Riendeau is an esthetician who provided esthetic and electrolysis services at the salon. This included facials, manicures, pedicures and depilatory treatments.
[5] Mme Riendeau had worked as an esthetician in a number of other salons for forty years. Before interviewing and beginning to work at Romanza, she was interested in leaving her then current position at a salon in Rosemère because her work terms were to change to percentage commission remuneration.
[6] At that time, Mme Riendeau saw an online Kijiji advertisement for a position at Romanza Salon and Spa which was described as a salaried plus commission position for a qualified esthetician who could also do laser treatments. She attended an interview with Mme D’Elia. They discussed the terms of work and her compensation.
[7] At or about the time Mme Riendeau began to work at the salon, she entered into a written agreement entitled Contrat de Travail with Romanza which provides among other things that their contract was month-to-month, that clients remained the clients of Romanza, that the worker was responsible for any damage to the tools or equipment of Romanza, and that the worker would respect the salon’s opening and closing hours. The agreement also specified that the worker was a distinct person from Romanza and that Romanza would not be responsible for the debts or fiscal obligations of the worker. It also provided “le travailleur doit respecter le règlement de l’entreprise ainsi les tâches a accomplir”.
[8] The terms of their arrangement provided that Mme Riendeau would be paid a $15 hourly rate for esthetician work and would receive a 10% commission for products sold from the lines Romanza carried and offered for sale. This differed from the other estheticians at the salon who all received 40% to 60% of the customer fees for their services plus product sale commissions. No one else was paid an hourly rate.
[9] Their agreement also provided that Mme Riendeau would have the opportunity to exclusively offer her naturopath, herbal remedy and nutritionist services and products at Romanza Salon and Spa. According to Mme D’Elia Mme Riendeau was to pay a fixed percentage of her fees for these services to Romanza together with a 10% commission on sales of her line of related products. According to Mme Riendeau, she was to be paid her normal hourly rate for these services. She agrees she was to keep the product sales revenues less a 10% commission. She acknowledged she set the $60 fee to be charged to clients for these consultations.
[10] Mme Riendeau began to work at the Romanza Salon and Spa in August 2012.
The sole question before the Tax Court was whether Ms. Riendeau was an employee during that 9 week period.
The Court concluded that Ms. Riendeau knew that she would not be compensated as an employee:
[33] It appears from Mme Riendeau’s testimony describing her version of events and from her ability to answer questions asked of her, that she is a capable and articulate person. I conclude that Mme Riendeau knew and understood from the outset that she would be paid without any employee withholdings or vacation pay. She also understood and valued of the opportunity to develop her new health services and products venture. It is only reasonable to conclude that Mme Riendeau also understood that she would be an independent contractor and not an employee of Romanza.
The test of control tended to favour an independent contractor relationship:
[40] There is little to no evidence of Romanza’s control over its other workers at the salon. All of the other estheticians were independent contractors. In any event, it appears that Mme Riendeau’s circumstances were sufficiently different and distinct given her health services and product activities in addition to her other esthetician services offered by the salon.
[41] The services provided by Mme Riendeau to customers were provided individually and, given their nature, in a private room. No one else from Romanza including Mme D’Elia was qualified to provide some of these services.
The chance of profit/risk of lost test clearly favoured the independent contractor status:
[44] Mme Riendeau was paid an hourly rate for her esthetician services. She therefore had little chance of increasing profit and virtually no risk of loss with respect to those services. She obviously could have earned more money had she chosen to work more hours. However, in this case Mme Riendeau’s new venture of offering her naturopath, herbal remedy and nutritionist services and products at Romanza Salon and Spa was more significantly for her own account. She set the fee for those services. She would keep all of her product sales revenues subject to a 10% commission payable to Romanza. This is a very important consideration in this case. These products were not integrated into Romanza’s business as its other product lines were. Mme Riendeau may also have been entitled to keep most of the fees generated for these services; the evidence is not clear and the venture was too short-lived to be successful or significant.
As a result the Court concluded that Ms. Riendeau was not an employee during the period in question and the appeal was allowed:
[45] Having considered all of the relevant facts as they relate to the parties’ intention and the indicia of subordination above, the evidence does not establish on a balance of probabilities that Mme Riendeau was an employee of Romanza during the 9 weeks she worked there.
[46] The appeal is allowed.