January 18, 2012 by Canadian Underwriter
An auto body mechanic who had a verbal agreement with his employer, no paycheque or any other written record of his employment – and who completed only two weeks of work before he was seriously injured in an auto accident – is an employee for the purposes of calculating his income replacement benefits, an Ontario arbitrator has ruled.
Dennis Ferguson was seriously injured in a motor vehicle accident in August 2007 when his car was broadsided by another vehicle. The accident killed his two-month-old daughter, his stepdaughter and his fiancée and left his six-year-old stepson brain injured.
ING calculated his weekly income replacement benefit at $27.70, based on its contention that Ferguson was “self-employed” at the time. Ferguson, on the other hand, said he was a new employee of an auto body and repair shop in Brantford called MS Welding. If employed, he was entitled to $294.12 per week.
Ferguson had his first child with his fiancée in June 2007. His expanding family prompted him to close his own business, DH Custom Auto, which had lost money every year since it had been established in 2005. He began to look for more consistent work to support his family.
Ken Baker of MS Welding hired Ferguson, offering $1,200 per week. Ferguson asked for a cash advance of $1,800 to pay for first and last month’s rent upon his move to Brantford. They agreed he would work off the advance by deducting $200 per week from his salary.
Ferguson worked at MS Welding for only two weeks prior to the accident, at which point he did not return to work.
ING claimed Ferguson was self-employed at the time of the accident. The insurer argued that Ferguson did not have a written contract with MS Welding; the auto body shop did not remit or make any source deductions off his payment; and Ferguson did not receive a paycheque, nor did he have any pay stubs, appear on the company payroll or have any attendance records to support his employment status.
The arbitrator found Ferguson was indeed “employed,” noting that Ferguson had no ownership interest in MS Welding; he had a set salary and work hours fixed by his employer; he had not worked long enough before the accident for the company to open a payroll account and remit source deductions; and that it was common in the auto body repair business to hire on the basis of verbal, as opposed to written, agreements.