Self-employed

I. The Legislation

In order to be entitled to benefits a claimant must be unemployed. In accordance with subsection 11(1) of the Employment Insurance Act, a week of unemployment for a claimant is a week in which he does not work a full working week.

Subsection 11(1)  Employment Insurance Act   Employment Insurance Act

Pursuant to subsection 30(1) of the Employment Insurance Regulations, a claimant who is self-employed; or who operates a business on his or her own account or in partnership or co-adventure; or, who is employed in any other employment in which he or she controls their own working hours, is considered to have worked a full working week and is therefore not entitled to benefits.

Subsection 30(1)  Employment Insurance Regulations   Employment Insurance Regulations

However, subsection 30(2) of the Employment Insurance Regulations provide that where a claimant is employed or engaged in the operation of a business to such a minor extent that a person would not normally rely upon it as a principal means of livelihood, he or she will not be regarded as working a full working week.

Subsection 30(2)  Employment Insurance Regulations   Employment Insurance Regulations

II. Principles of Law

a. Test for Whether Employment “So Minor in Extent”

There are six factors to be considered in determining whether a claimant meets the “so minor in extent” criteria set out in the regulations:

  1. the time spent by the claimant on the business;
  2. the capital and resources invested in the business;
  3. financial success or failure of the enterprise;
  4. continuity of the business;
  5. the nature of the business as it relates to the claimant’s ordinary occupation or trade;
  6. willingness of the claimant to seek or accept other employment.

Veillet v. C.E.I.C., A-58-94 Judgment Of The Federal Court Of Appeal, November 16, 1994 (F.C.A.)
Canada (A.G.) v. Magee (1993), 162 N.R. 236 (F.C.A.)
 A-1085-92 Judgment Of The Federal Court Of Appeal
Canada (A.G.) v. Jouan (1995), 179 N.R. 127 (F.C.A.)
 A-366-94 Judgment Of The Federal Court Of Appeal

But the most important, most relevant and only basic factor to be taken into account in all cases is the time spent by the claimant on the business in question. The conclusion in a particular case depends directly and necessarily on the time spent.

Newhook v. Canada, A-977-96 Judgment Of The Federal Court Of Appeal, June 9, 1998 (F.C.A.)
Lemay v. Canada, A-662-97 Judgment Of The Federal Court Of Appeal, March 16, 1998 (F.C.A.)
Turcotte v. Canada, A-664-97 Judgment Of The Federal Court Of Appeal, March 16, 1998 (F.C.A.)
Canada (A.G.) v. Lazar, A-245-97 Judgment Of The Federal Court Of Appeal, February 4, 1998 (F.C.A.)
Canada (A.G.) v. Jouan (1995), 179 N.R. 127 (F.C.A.)
 A-366-94 Judgment Of The Federal Court Of Appeal
Canada (A.G.) v. Taschuk (1996), 199 N.R. 6 (F.C.A.)
 A-616-95 Judgment Of The Federal Court Of Appeal
Fatt v. Canada (A.G.), A-406-94 Judgment Of The Federal Court Of Appeal, April 3, 1995 (F.C.A.)

Subsection 30(3) of the Employment Insurance Regulations has incorporated the six factors listed above as the circumstances to be considered in determining whether a claimant’s employment or engagement in the operation of business is of a minor extent.

Subsection 30(3) Employment Insurance Regulations   Employment Insurance Regulations

The failure of the Board of Referees to expressly address the criteria in subsection 30(3) suggest that they were not considered. This constitutes a reviewable error.

Canada (A.G.) v. Miller, [2002} F.C.J. No. 60 (F.C.A.) A-772-00 Judgment Of The Federal Court Of Appeal

b. Onus of Proof

Where a claimant is operating a business, the onus is on him or her to rebut the presumption that he or she is working a full working week.

Lemay v. Canada, A-662-97 Judgment Of The Federal Court Of Appeal, March 16, 1998 (F.C.A.)
Turcotte v. Canada, A-664-97 Judgment Of The Federal Court Of Appeal, March 16, 1998 (F.C.A.)

c. “Employed in any other employment”

In accordance with subsection 30(1) of the Employment Insurance Regulations, a claimant who is employed in any employment (other than the operation of a business) in which he or she controls their own working hours, is considered to have worked a full working week during that week.
Subsection 30(1) Employment Insurance Regulations

The legislation assumes that an employer-employee relationship exists. When relying on these provisions, the Commission must prove that there was an arrangement of a contractual nature between an employer and employee. Furthermore, there must be remuneration, primarily of a monetary nature, received or to be received, in exchange for the provision of services.

Berube v. C.E.I.C. (1990), 124 N.R. 354 (F.C.A.) A-986-88 Judgment Of The Federal Court Of Appeal
Vinet v. Canada (1989), 100 N.R. 190 (F.C.A.)
 A-771-88 Judgment Of The Federal Court Of Appeal

d. Real Estate Agents

The regulations create a presumption that someone engaged in employment in which he or she controls their own working hours is not unemployed unless there is evidence to the contrary. It is more difficult to rebut this presumption in the case of a person who is registered as a real estate agent and engaged in that employment. But it is wrong to interpret the regulations as meaning that employment as a real estate agent is necessarily or automatically excluded from the exemption provided for in subsection 30(2) of the Employment Insurance Regulations. Furthermore, simply because a claimant holds a real estate license does not mean he or she is self-employed.

Veillet v. C.E.I.C., A-58-94 Judgment Of The Federal Court Of Appeal, November 16, 1994 (F.C.A.)
Madhavji v. Canada, A-377-87 Judgment Of The Federal Court Of Appeal, May 31, 1988 (F.C.A.)

III. Related Topics