https://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/344908/index.do
1065438 Alberta Ltd. v. M.N.R. (September 19, 2018 – 2018 TCC 191, C. Miller J.).
Précis: This case turned on the somewhat simple question of whether a courier drive for the taxpayer, 1065438 Alberta Ltd., was an employee or an independent contractor:
[1] 1065438 Alberta Ltd. (the “Company”) appeals the decisions of The Minister of National Revenue (the “Minister”) pursuant to both the Employment Insurance Act (the “Act”) and the Canada Pensions Plan (the “CPP”) that the worker, Salendran Salendran, was an employee of the company for the period from January 1, 2015 to April 30, 2016. The Appellant maintains that Mr. Salendran was an independent contractor. Both Ms. Neema Jani, a 50% owner of the Company, and Mr. Salendran gave evidence of Mr. Salendran’s work as a courier driver for the Company. The Company had contracts with Dynamax for certain delivery services.
The Court held that although the relationship had many aspects of a contract of employment on balance they were not sufficient to set aside the intention of the parties to establish an independent contractor relationship.
Decision: Justice Miller essentially concluded that the indicia of an employment contract were not sufficient to oust the intention of the parties to create an independent contractor retationship:
As to the intention of the parties he found:
[5] Turning first then to the Parties’ intention, often the payor and worker are at odds over their status and it is therefore not possible to find a common intention. Here, however, although neither the representative of the Appellant, Ms. Jani and the guiding light of Appellant, nor Mr. Salendran, the worker, could provide the written contract between Mr. Salendran and the Company, I am satisfied from their testimony that it stipulated an independent contractor relationship. More importantly, the questionnaire from the Canada Revenue Agency (the “CRA”) which they both completed separately, as well as their oral testimony, was to that effect.
[6] Mr. Salendran seemed somewhat unsure of the legal distinction between employee and independent contractor claiming simply that being an independent contractor allowed him to make more money. It was clear, though, that he did not believe he had entered an employment arrangement.
[7] Ms. Jani was clearer in her view of what she believed an employee was compared to an independent contractor, as she acknowledged that the Company had hired some workers as employees, when the nature of the work justified such, such as regular hours during the day with an ongoing daily commitment. She distinguished this from Mr. Salendran’s role which was intermittent hours, not paid by the hour but only paid where the jobs were completed on a job-by-job basis.
[8] These views suggest that parties’ intention to be employee or independent contractor is not necessarily grounded in those factors that have traditionally legally been determinative. Putting great weight on the parties’ intention on this legal issue should be approached cautiously. Yes, it is up to parties to make their own contract. It is one thing though to agree on the concrete terms and conditions of time, remuneration, job responsibilities, etc. but to agree on the legal concept of employment or independent contractor, without fully appreciating what is entailed in that legal concept (other than the need, or not, to make source deductions: which is not a definer but a result) continues to be a concern of mine. As I soon depart this stage, I respectfully suggest that Courts do not see the evolution of the employee versus independent contractor issue as well settled as first thought.
An analysis of the other well-known factors, including chance of profit and risk of loss, led Justice Miller to conclude that the relationship was one of an independent contractor, not an employee:
[24] Mr. Salendran could increase his daily income by simply accepting any special delivery jobs offered to him, though he had no control over whether any such deliveries would be offered. He could also increase his profit by driving for others in his downtime. There was no opportunity for more profit by simply operating the Appellant’s van more efficiently, other than to free up time to take on other jobs. There was, though, the option of using his own vehicle more often, though recognizing there was a limited capacity in doing so. On balance there was some opportunity but it was not substantial.
[25] The risk of loss would likewise be limited, as it would arise primarily if Mr. Salendran did use his own vehicle on occasion. He had few, if any, other expenses although Ms. Jani suggested he likely had a home office, which would involve certain expense. Mr. Salendran testified that he did not have a home office. He was not responsible for repairs on the Appellant’s van, though he was on his own, nor for any other expenses connected to the corporate vehicle. If he missed a delivery, which he claimed he never did, then according to Ms. Jani he would be responsible for replacing the undelivered papers. Again, the risk of loss is minimal, though not non-existent.
[26] This may well be a case where a two-step analysis, the prism approach if you will, notwithstanding my concerns, can lead to a different result than limiting the analysis to just the traditional Wiebe Door test. Based on the Wiebe Door test, if there was no common intention as to the nature of the arrangement, I would have found on balance an employment relationship, though it would be a close call. So, if the first step is to have any influence at all on the overall analysis, then the fact that I would find employment based solely on the Wiebe Door test should not be determinative. I must cast that analysis within the framework of two arm’s length persons agreeing otherwise. Looking at the arrangement then through the payor’s and worker’s eyes, given their mutual understanding, while there are many indices of employment, they are not sufficiently strong to find the two sides got it wrong in devising an independent contractor arrangement.
[27] The Appeals are allowed and referred back to the Minister for reconsideration on the basis that Mr. Salendran was not an employee of the Appellant but was an independent contractor.