September 2, 2010 by Canadian Underwriter
An Ontario arbitrator found a man seriously injured in an auto accident to be ‘employed’ for the purpose of calculating income replacement benefits, even though his contract was oral and he did not work long enough at his new job to establish a demonstrated history of payments and/or payroll deductions.
Dennis Ferguson, who owned his own body shop, DH Custom Auto, was seriously injured in a motor vehicle accident in August 2007. The accident claimed the lives of his two-month old daughter, his stepdaughter and fiancée.
Just before the time of the accident, in June 2007, Ferguson decided to shut down his own (money-losing) business and work for MS Welding, a new Brantford auto body and repair shop in Brantford, Ontario. He entered into a verbal agreement that he would work for Ken Baker in the new shop in exchange for a weekly salary of $1,200.
Baker gave Ferguson a cash advance of $1,800, agreeing that Ferguson would work off the advance at $200 per week deducted from Ferguson’s salary.
After the accident in August, Ferguson could not return to work. Baker told him to consider the $1,800 his salary paid to date and that he would receive no further income from his work for MS Welding.
ING disputed that Ferguson was ‘employed,’ arguing that Ferguson was not on the MS Welding payroll, received $1,800 in cash, never received a T4 from MS Welding and didn’t have a (written) employment contract.
Finding Ferguson instead to be ‘self-employed,’ ING calculated his weekly IRB benefit to be $27.70.
But the arbitrator found Ferguson met the legal definition of ‘employed,’ since he:
• did not own any part of MS Welding;
• did not have a location for his own “business” (since he performed duties at Ken Baker’s shop);
• did not have the discretion to refuse the work assigned to him;
• did not participate in the everyday operations of MS Welding, other than in the duties assigned to him;
• did not determine his own hours; and
• received a set wage.
Upon the determination that he was ‘employed,’ Ferguson was entitled to have his IRB benefit calculated on the basis of his employment income received the last four weeks before the accident. His IRB benefits were thus calculated to be $294.12 per week.