Employment Insurance (EI)

Decision and reasons

Decision

[1] The appeal is allowed. I am returning the matter to the General Division for reconsideration.

Overview

[2] The Appellant, A. I. (Claimant), applied for Employment Insurance sickness benefits in January 2016. The Commission called the Claimant in June 2016 because it had not received a claim report. The Claimant told the Commission that she had worked certain hours and she described her earnings in the period from January 2016 to April 2016. In a later conversation, the Claimant confirmed her hours and earnings in the period from April 2016 to May 2016. Based on this information, the Commission paid the Claimant’s sickness benefits for the period from March 13, 2016, to the end of the week that began May 15, 2016.

[3] Early in 2019, the Commission started to investigate the Claimant’s earnings from 2016, and it obtained a breakdown of her gross earnings from her former employer. In July 2019, the Commission determined that the Claimant had not declared all of her earnings for March, April, and May 2016. It declared an overpayment of benefits. The Commission would not change its decision when the Claimant asked it to reconsider.

[4] The Claimant appealed the reconsideration decision to the General Division of the Social Security Tribunal (Tribunal), but the General Division dismissed her appeal. She is now appealing the General Division decision to the Appeal Division.

[5] The appeal is allowed. The General Division did not make certain findings of fact that it should have made. This is an error of law. I am returning the matter to the General Division for reconsideration.

What grounds of appeal may i consider?

[6] “Grounds of appeal” are the reasons for the appeal. To allow the appeal, I must find that the General Division made one of these types of errors:^{Footnote 1}

1. The General Division hearing process was not fair in some way.
2. The General Division did not decide an issue that it should have decided. Or, it decided something it did not have the power to decide.
3. The General Division based its decision on an important error of fact.
4. The General Division made an error of law when making its decision.

Issues

[7] Did the General Division make an important error of fact by ignoring the Claimant’s explanation for why the Commission used earnings information in 2016 that did not match the earnings later reported by the employer?

[8] Did the General Division make an error of law by failing to find whether the Claimant had paid a co-worker to do her work?

[9] Did the General Division make an error of law by failing to find that the Commission was reasonably satisfied that the Claimant’s statement was false or misleading?

[10] Did the General Division make an error of law by failing to explain how it found that the Claimant’s statement was false?

[11] Did the General Division fail to observe a principle of natural justice by not allowing the Claimant to call a former co-worker as a witness?

Analysis

Consideration of the Claimant’s explanation of her earnings

[12] The Claimant told the General Division that a Commission agent called her in 2016 because she had not completed her claim report. The Claimant said that she had not completed the report because she did not know how to record her earnings. She could not do the work herself so she had to pay a co-worker part of what the employer paid her. The Claimant said that she explained to the agent that she had made these arrangements because she needed to be able to show an employment income for the purpose of a personal loan. According to the Claimant, she informed the Commission agent of the total amount that she received from her employer. She said the agent also asked how much she kept for herself, so she reported this also.

[13] The Claimant argues that the General Division made a mistake when it found that the amounts paid to her by her employer were her “earnings.” She argues that the General Division ignored or misunderstood that she shared her pay with a co-worker because the co-worker performed the Claimant’s regular duties, while she only supervised.^{Footnote 2}

[14] The General Division did not ignore or misunderstand the evidence when it found that the Claimant had not shown that there was an error in the earnings reported by her employer. It relied on payroll records and a bank statement showing deposits to the Claimant’s account. These were consistent with the information the employer provided to the Commission.

No finding that the Claimant did not pay her co-worker to do her work

[15] The Claimant has consistently stated that she asked a co-worker to perform her work and that she paid the co-worker for doing so.

[16] However, the General Division did not consider whether the entire amount paid by the employer would still be earnings to the employer in these circumstances. Section 35(10)(a) of the Employment Insurance Regulations (Regulations) says that the Claimant’s income, for the purpose of calculating earnings, is the amount of income that remains after deducting the Claimant’s expenses to earn that income. The Commission’s own policy states the following:

If the claimant can establish that moneys were actually paid to someone else to perform the claimant’s duties, these moneys fall into the category of expenses directly incurred in order to earn the income and may be deducted from the claimant’s income.^{Footnote 3}

[17] The earnings information that the Commission obtained from the Claimant in 2016 could not be a “false statement” if it represented her actual earnings after applying section 35(1)(a) of the Regulations. In other words, her statement may not have been false if she properly deducted the amount that she paid her co-worker to do her work from what her employer.

[18] The General Division did not consider how such deductions might have affected the amount that could be considered earnings under section 35(2) of the Regulations and allocated under section 36. This would have been an error of law—if the General Division had accepted that the Claimant paid her co-worker and accurately reported what she kept for herself.

[19] However, the General Division made no finding about whether the Claimant did or did not pay a co-worker to do her work. The General Division said only that it had not found an error “in the earnings reported by her employer.”^{Footnote 4}

[20] As far as I can tell, the Claimant has never disputed how much the employer paid her. The Claimant’s argument was that she had to pay a co-worker to replace her and that she kept only part of those payments for herself. She believes that the Commission should have accepted that her earnings were the amounts that she kept for herself.

[21] The General Division acknowledged this argument, but it did not determine whether the Claimant paid a co-worker to do her work. The only thing it said was that the Claimant had not supported her claim with other evidence, and that her banking records did not show any payments to others for work they performed for the Claimant. If the General Division meant to reject the Claimant’s evidence that she paid her co-worker, it should have made a clear (explicit) finding of fact.

[22] Given the Claimant’s evidence and claim, and the potential effect of section 35(10)(a) of the Regulations, the General Division should have determined whether the Claimant had legitimate expenses to deduct from her earnings. By failing to make a required finding of fact, the General Division made an error of law.

Inadequate reasons as an alternate error of law

[23] If I accepted that the General Division intended to find (or found implicitly) that the Claimant did not pay her co-worker, then the General division would not have had to consider section 35(1)(a) of the Regulations.

[24] However, I would still find that the General Division made an error of law because its reasons are not adequate to support a finding that the Claimant did not pay her co-worker.

[25] The Claimant repeatedly said that she paid a co-worker to do her work. Her testimony and statements are evidence, regardless of whether she could supply additional supporting evidence. The General Division did not find that he Claimant was not credible or that her testimony was unreliable. There is no legal presumption that a claimant’s evidence should be treated as not credible or unreliable if it is not corroborated by other evidence.

[26] The decision does not tell me what weight, if any, the General Division gave to the Claimant’s statements or testimony. If the General Division meant to dismiss the Claimant’s evidence or not give it much weight, it should have clearly stated that it was rejecting her evidence, and it should have explained why it did so.^{Footnote 5}

[27] The General Division’s reasons could not support a finding that the Claimant did not pay a co-worker to do her work.

No finding that the Commission was reasonably satisfied

[28] The Claimant’s other argument was that the Commission was out of time to reconsider its decision to pay the sick benefits she had received in 2016. The Commission did not notify the Claimant of its finding that she had been overpaid benefits until more than 36 months after she received the payments.

[29] That means that the Commission may only recover the overpayment where there was a false or misleading statement in connection with the claim. If the Commission forms an opinion that there was a false or misleading statement, it may reconsider its decision within 72 months, instead of 36 months.^{Footnote 6} The courts have said that the Commission must be “reasonably satisfied” of its opinion that a false or misleading statement had been made.^{Footnote 7}

[30] The General Division made only one finding about the Commission’s ability to reconsider. It found that the Commission had reviewed the Claimant’s claim within the 72-month time limit.

[31] Before the General Division could conclude that the Commission could reconsider its decision, it also needed to find that the Commission was reasonably satisfied that a false or misleading statement had been made. The General Division made an error of law by failing to make a required finding of fact. I note that the Commission’s oral and written representations support this finding.

No justification for finding that the Claimant made false statements

[32] As I noted earlier, the General Division could not conclude that the Commission could reconsider its decision unless it first found that the Commission was reasonably satisfied when it formed its opinion. However, a finding that the Claimant’s statement was objectively false would have been important to such a decision.

[33] The Commission argued to the Appeal Division that the General Division was satisfied that the Claimant’s statement was false, even if it did not consider whether the Commission had been reasonably satisfied with its opinion.

[34] The General Division found, or presumed, the Claimant’s statement to the Commission to be false.^{Footnote 8} If this is a finding, the General Division did not support its finding with evidence. The General Division could not find that the Claimant’s information was false without first determining that she did not report her actual earnings to the Commission.

[35] I will assume for the moment that the Claimant’s earnings under the section 35(2) Regulations are equal to the gross earnings paid to her by the employer without any deduction for payments to the Claimant’s co-worker. If that is correct, the Claimant would have made a false statement if she reported only the portion of the employer payments that she kept for herself. However, the Claimant says that she did not just report the portion that she kept for herself.

[36] According to the Claimant, she gave the agent enough information that the agent could have recorded the total and correct amount of her earnings for each reporting period. She testified that a Commission agent completed her report over the phone. She said that she explained all of her circumstances to the agent, including the fact that she paid a portion of her earnings to a co-worker to perform her work. She emphasized that she also told the agent the total amount the employer paid her. The Claimant says that the agent decided what part of her pay should be recorded as her earnings. This is consistent with her response to the Commission’s investigation into her earnings. She said she gave “all of the hours of work and rate, and [the agent] is the one who make it up for me.” [sic]

[37] I find that the General Division made an error of law. Whether it found or just assumed that the Claimant made a false statement, it did not explain its reasoning or identify the evidence on which it relied. The decision does not show that it considered the Claimant’s statement that she actually disclosed all of her earnings to the Commission agent.

[38] I am not bound to follow decisions of the former Umpire.^{Footnote 9} However, I note that I am supported in my decision by the reasoning in Canadian Umpire Benefit (CUB) decision 62781. In that decision, the Umpire said that it was an error of law that the Board of Referees failed to explain how it concluded that the Commission had properly decided that the Claimant gave false information.

Natural justice

[39] At her Appeal Division hearing, the Claimant argued that it was unfair she did not have the opportunity to provide additional evidence.^{Footnote 10} She said that she informed the General Division that she could find the person who worked with her and received the money.^{Footnote 11}

[40] The Claimant testified at the General Division that she had tried to find co-workers to support her story that she had paid a co-worker to do her work. Her testimony was not as clear as it could have been. But I understand that she was looking for a certain person who had a Scotiabank account or records of a Scotiabank account. The Claimant believes that this person and/or account information could help prove that she paid a co-worker to do the work for which she was paid by the employer.^{Footnote 12} The Claimant told the General Division that she had learned that one of her co-workers from “long ago,” who had been away, was due back this weekend. She asked for the opportunity to obtain that person’s testimony to help her case.^{Footnote 13}

[41] The General Division responded that it had to decide the case based on the evidence that it already had. It said that it was up to the Claimant to appeal again if she was able to obtain additional information.

[42] I cannot find that the General Division acted unfairly by not giving the Claimant additional time to bring a witness or other evidence.

[43] The General Division generally expects parties to an appeal to have collected all of the evidence they hope to use before the hearing. The Claimant sent some evidence to the General Division on June 17, 2020, about a week before her hearing. She apparently understood that she could or should submit additional documentary evidence to the General Division before the hearing.

[44] However, I see why the Claimant might think the General Division decision was unfair. The way the General Division decision reads, it looks like it relies on the fact that the Claimant had no evidence supporting her testimony. The Claimant believes that she could have found that evidence but that the General Division did not give her the chance.

[45] Nonetheless, the Claimant had ample time to collect evidence and prepare for her hearing. The Tribunal sent the Claimant documents from the Commission’s file on June 18, 2020. The General Division notified the Claimant of the hearing date on June 26, 2020. Furthermore, the Tribunal had originally scheduled the hearing of her appeal in October 2019. The first hearing went ahead without her participation, and the General Division made a decision. However, she appealed that General Division decision to the Appeal Division, which sent it back for a new hearing. Before her first hearing date, the Tribunal had sent the Claimant the documents she needed to prepare.^{Footnote 14} Therefore, the Claimant could have identified the issues and started to look for whatever evidence she thought would help her, beginning about eight months before her July 2020 hearing.

[46] The Claimant has never complained that she did not have enough time to prepare for the July 22, 2020, hearing. On July 21, 2020, she confirmed that she had received the documents and the notice and that she would attend the hearing. However, she did not ask the Tribunal to postpone her hearing so that she could obtain additional evidence. The first time the Claimant said that she wanted to seek additional evidence was at the very end of her General Division hearing.

[47] However, the Claimant did not actually have new evidence at the time of her hearing. She did not confirm that her co-worker had agreed to help her, and she did not say when she might have the evidence that she was seeking. It does not sound like she was sure that she could find the co-worker. She said only that she had heard that this co-worker was back and that she thought she could locate her.

[48] From what the Claimant said to the General Division, it appears that she had not known that her co-worker was “back” until shortly before the General Division hearing. I understand that. However, the Claimant had already had several months to collect evidence and she was still uncertain that she could even obtain the evidence she was seeking. She made her request at the last possible moment, when the General Division member was wrapping up her hearing. I cannot find that the General Division acted unfairly by making its decision based on the evidence that it already had.

Summary

[49] I have found that the General Division made errors of law by failing to make required findings of fact. This means that I must now consider the appropriate remedy.

Remedy

Nature of remedy

[50] I have the authority to change the General Division decision or make the decision that the General Division should have made^{Footnote 15}. I could also send the matter back to the General Division for it to reconsider its decision.

[51] The Claimant says that she trusts my ability to make a fair decision. At the same time, she apparently believes that I have access to a recording of exactly what she told the Commission agent in 2016. I do not have access to any evidence that the Tribunal did not send to the Claimant. I do not have any recording of the Claimant’s 2016 calls to the Commission, and I cannot verify what the Claimant told the agent in 2016.

[52] The Commission also suggests that I make the decision that the General Division should have made. It argues that everything I need to make the decision is already on the record.

[53] The Commission submits that I should find that it had been “reasonably satisfied” when it formed the opinion that a false statement was made. This would mean that the Commission had the authority to reconsider its decision after 36 months. The Commission argues that the Claimant’s original statement about her earnings was false on its face. It says that the amounts that the employer paid the Claimant are greater than the earnings that the Claimant provided (and that it used to calculate her benefits in 2016).

Return to the General Division

[54] I do not agree that the record is complete.

[55] I have found an error of law in how the General Division presumed that the Claimant made a false statement. The General Division should have considered whether the Commission was reasonably satisfied that the Claimant made a false statement in 2016. This error relates to whether the Commission had the ability to reconsider its decision after more than 36 months.

[56] I have also found an error of law that concerns whether the Commission calculated her earnings correctly. This second error of law could be relevant in two ways. If the Claimant was entitled to deduct payments to a co-worker, then evidence is needed to determine whether the amounts the Commission collected from the Claimant in 2016 earnings were actually her earnings under the Regulations. This would be relevant to whether the Commission could be reasonably satisfied of its opinion that the Claimant made a false statement. However, adjustments to the Claimant’s earnings could also affect the decision in a second way. If the Commission is found to have the authority to reconsider its decision, then a change to the amount or timing of her earnings would change how her earnings should be allocated to weeks of benefits.

[57] There was some evidence on which the General Division could have determined whether the Commission was reasonably satisfied that earnings information it recorded in 2016 was the Claimant’s statement of her earnings. The Commission had the early notes of its agent’s conversations with the Claimant in 2016 to compare to the employer’s reported earnings. It also had the Claimant’s response to the earnings investigation, the Claimant’s documentary evidence with payroll and deposit information, and the Claimant’s testimony about what she told the Commission about her co-worker.

[58] However, I do not have enough information to determine whether the Commission was reasonably satisfied that a false statement was made.

[59] There is no information on whether and how section 35(10)(a) of the Regulations should apply to the facts. This section allows claimants to deduct from their income/earnings the expenses that are directly involved in earning that income. Based on the evidence that was before the General Division, it is possible that the Claimant paid a co-worker to do work for which the employer paid the Claimant. This means that the Claimant may have given the Commission her actual earnings, even if it were found that she only told the Commission about the amounts that it recorded in her notes. This would mean she did not make a false statement.

[60] If the section 35(10)(a) deduction applies, the Claimant’s earnings would have to be reduced by the amount she could deduct. However, her statement in 2016 would still be false if it were found that the Claimant failed to tell the Commission the total amounts paid to her by her employer, and she was mistaken about the amount of the adjusted earnings that she reported. This would mean that the Commission could reconsider its earlier decision. However, the correct amount of her earnings after deducting the correct deduction for payments to her co-worker could still affect the part of the reconsideration decision dealing with her earnings and the allocation of her earnings.

[61] There was some evidence before the General Division that the Claimant paid a co-worker, but no direct evidence about how much the Claimant actually paid the co-worker during each week that she collected benefits. I cannot make the decision that the General Division should have made without knowing more about the payments the Claimant said she made to the co-worker.

[62] In addition, neither party made submissions to the General Division on whether section 35(10)(a) of the Regulations applied in the Claimant’s circumstances. The General Division did not consider whether section 35(10)(a) applied, or whether it could potentially change her earnings. Therefore, it did not consider whether there was evidence on which it could assess the impact of section 35(10)(a). When the Claimant asked whether she could obtain additional evidence from a co-worker (that might have confirmed that she had expenses to earn income and the amount), the General Division refused. However, it might have given the Claimant the opportunity to provide additional evidence if it had turned its mind to section 35(10)(a).

[63] In my view, the parties should have the opportunity to make submissions about whether the Claimant could make proper deductions from her earnings, and they should be able to submit evidence in support of those arguments.

[64] I am sending this matter back to the General Division for reconsideration.

[65] Without restricting other issues that the General Division may need to consider, I direct the General Division to consider the following:

1. Did the Claimant pay a co-worker to do the work, or any part of the work, for which the employer paid the Claimant? If so, when and in what amounts?
2. How does section 35(10)(a) of the Regulations apply in these circumstances? If the Claimant paid her co-worker to do her work, is this a proper deduction? In its entire amount?
3. Do the amounts recorded by the Commission in 2016 as the Claimant’s earnings match or closely resemble the Claimant’s gross pay after any deductions are made for the amounts the Claimant paid her co-worker (if she did)?
4. Was the Commission “reasonably satisfied” in forming its opinion that the Claimant made a false statement, when considering the Claimant’s insistence that she also told the Commission the total amount her employer paid her?
5. If section 35(10)(a) is found to apply, was the Commission “reasonably satisfied” that the amounts it recorded as the Claimant’s earnings were not her actual earnings?
6. If the Commission was reasonably satisfied such that it was entitled to reconsider its decision, does section 35(10)(a) of the Regulations affect the earnings and allocation, and if so, how?

Conclusion

[66] The appeal is allowed. I am returning the matter to the General Division for reconsideration with the above directions.