CUB 35272

IN THE MATTER of an appeal to the Umpire by the Union of Public Employees represented by Mr. Peter Cassidy on behalf of 33 claimants, namely,

Jacques Critchley, Adrian Grah, Michael Ersoni, Shan Sheng, Brian Sneek, Sharine Caron, Stanley Shuye Sun, Ming Li, Kwaku Agyemang-Duah, Silviu M. Marcu, Esam Ghanem, William S. Gallichan, William Plut, Ahad Zabett, Thomas Qian, Huijun Zhong, Yongwen Gao, Ralph Ruffolo, Gordana Krsmanovic, Wen Qing Wang, Rong Dong, Christopher Horn, Eugene Tan, Tullio Panarello, Zhanghe Yin, William Gaetz, Cameron Muir, James Cotton, Mohamed Gadallah, Minya Zhang, Ed Impanis, Edouard Tcherner, Quan Sheng from decisions of a Board of Referees given at Hamilton, Ontario on July 5, 1995, July 12, 1995, July 19, 1995 August 4, 1995, August 10, 1995, August 18, 1995, September 7, 1995, and October 18, 1995 and by the Commission from decisions of Board of Referees given at Hamilton, Ontario on September 13, 1995 and November 8, 1995 and at Toronto on October 19, 1995 in respect of claims by Gonghou Wang, Wen Hua Zhou and Pramod Gupta.

These appeals were heard before me on July 8, 1996 at Hamilton, Ontario. By agreement on behalf of the claimants and on behalf of the Commission, they were heard together since the factual background to all 36 claims was essentially identical. At the close of the hearing, I reserved my decision. Having considered the material filed and the representations on behalf of the claimants, on behalf of McMaster University where all 36 claimants were graduate students in the 1994/95 academic year, and on behalf of the Commission, I now provide my reasons and my decisions.

The factual background to each of the 36 claims at issue can be briefly summarized as follows. As indicated, all of the claimants were graduate students at McMaster University in the academic year 1994/95. All held positions as teaching assistants. All also received "departmental research scholarships" (the "scholarships"). When the claimants' responsibilities as teaching assistants concluded at the end of April, 1995, and related remuneration ceased, the claimants applied for unemployment insurance benefits. Each remained entitled to monthly payments under his or her scholarship for the months of May, June, July and August, 1995. The Canada Employment and Immigration Commission (the "Commission") determined the monies received by virtue of the scholarships to be earnings from employment and allocated it in accordance with subsections 58(3) and (4) of the Unemployment Insurance Regulations.¹ From these decisions, the claimants appealed to the Board of Referees. Three claimants were successful before the Board of Referees. The Commission has appealed those decisions. The remaining 33 claimants were unsuccessful before the Board of Referees. The claimants appealed those decisions.

The relevant portion of the definition "employment" in subsection 57(1) of the Regulations reads as follows:

"Employment" means

(a) any employment, whether insurable, not insurable or excepted employment, under any express or implied contract of service or other contract of employment,

(i) whether or not services are or will be performed by the claimant for any person, and

(ii) whether or not income received by a claimant is from a person other than the person for whom services are or will be performed;

...

Subsections 58(3) and (4) of the Regulations read as follows:

(3) Earnings payable to a claimant under a contract of employment for the performance of services shall be allocated to the period in which the services were performed.

(4) Earnings payable to a claimant under a contract of employment without the performance of services or payable in consideration of a claimant returning to or commencing work with an employer, shall be allocated to the period for which they are payable.

The decisions finding against claimants were made at eight separate sittings of the Board of Referees. At the first sitting, the cases of eight claimants were dealt with. The Board of Referees concluded:

In regard to the Departmental Research Scholarships, a contract of service was entered into. Whether or not services were performed by the claimant and, if performed, who they were performed for, is irrelevant.

CUB 23520 was cited.

At the second sitting, the appeal of only one claimant was dealt with. In reviewing the facts, the Board stated:

The claimant stated that he had very little fixed obligation to McMaster University. He also... agreed that accountability did exist to his tutorial adviser. McMaster University has declared that both the scholarship and departmental employment are a total income... McMaster University has also declared that scholarships will contribute to the research necessary to fulfil the grant award... .

In its conclusion, the Board appears to have assumed the existence of a contract of employment or service; it stated:

...even when a contract of employment does not require the performance of services, any income arising from the contract is earnings.

At the third sitting, the Board of Referees dealt with the appeals of eight claimants. According to the Board's decision, the representative of the claimants had argued that CUB 23520 referred to earlier "...should be disregarded". The Board concluded in the following terms:

The Board is satisfied that jurisprudence, as established by CUB 23520, has determined that scholarships are earnings according to Sections 57(1) & (2) and that the Commission properly allocated the earnings according to Sections 58(3) & (4).

On the fourth sitting date, the Board of Referees dealt with the appeal of three claimants. Once again, the Board found that McMaster University had declared that scholarships would contribute to the research necessary to fulfil the grant award. In concluding against the claimants, the Board stated:

...it is determined that the Act and jurisprudence hold that, even when a contract of employment or an implied service does not require the performance of services and any income arising from the contract or service, implied or otherwise, are earnings, there is no doubt that with departmental scholarship there is an accountability to the department which had offered the scholarship.

At the fifth sitting, the Board of Referees again dealt with the appeals of three claimants. The same finding, that McMaster University had declared that scholarships would contribute to the research necessary to fulfil grant awards, was made. The Board reached the same conclusion as did the Board of Referees at the fourth sitting.

The same comments and conclusions made by the Board of Referees at the fourth and fifth sittings noted above, were adopted by the Board of Referees in decisions flowing from the sixth, seventh and eight sittings where the appeals of four claimants, three claimants and two claimants, respectively, were dealt with and dismissed.

The panels of the Board of Referees that found in favour of claimants sat after a number of the decisions against claimants had been taken. One of those decisions in favour of a claimant was taken at Toronto and involved board members who had not participated in previous decisions against claimants. In the other two, three board members who had previously participated in decisions that went against claimants changed their positions. Only one board member remained constant in his findings against claimants.

In the first decision to find in favour of a claimant, a majority of the three participating board members concluded in the following terms:

There is no contract of employment implied or expressed, that would establish that the scholarship was conditional on the performance of certain conditions or achievement of certain objectives, other than the same conditions or objectives that apply to any ordinary student. In my opinion, this case is distinguishable from the decision of CUB 23520 in that in this prior case, based on the record, there were contracts of employment pertaining to teaching/research assistantship and contract research, both of which would have specific performance requirements and objectives. CUB 16292 states that there was an expressed contract of employment between the University and the claimant in that case and is distinguishable in our opinion for this reason. In the present case before this Board of Appeal, there are no conditions of employment with respect to the scholarship money nor any expressed or implied contract of employment between the University and the claimant.

The dissenting board member found there to be an implied contract of employment "...in that the claimant must achieve certain standards of performance... and meet certain deadlines... ".

In the decision taken at Toronto, the Board of Referees concluded in the following terms:

The claimant performed no work nor had any responsibilities, in connection with the $5, 300. It was given to her purely as a reward for academic excellence. As such, she was not paid the $5, 300. under a contract of employment, as required by 57(1) and 58(3 and 4) of the Regulations in order to be allocated.

In the most recent of the decisions under appeal, dated November 8, 1995, the majority of the Board of Referees found in favour of the claimant and distinguished CUBs 23520 and 16292 in the following terms:

In both those previous cases, there were express contracts of employment pertaining to contract research which had specific performance requirements and objectives that were separate from their own thesis requirements.

The departmental research scholarship issued to the claimant is funded through the research grants of research supervisors. Secondly, the Ph. D. student, the claimant, receives a progress report at least once a year which is put on file. The fact that he accepts the departmental research scholarship can be construed as an implied contract of employment. Also, the claimant must achieve certain standards of performance (norms within the discipline) and meet certain deadline (calendar standard). The scholarship money was apportioned to the recipient weekly from September 1994 to August 1995... . He would not receive the scholarship monies if he withdrew or discontinued his attendance at University. The acceptance of the scholarship and its conditions and receipt of payment for a specified period of time implies there is a contract of service and/or an employee/employer relationship. The Departmental Research Scholarship represents earnings to be allocated to a period of claim.

At the opening of the hearing before me, the representative of the claimants and counsel for the Commission agreed that all of the appeals should be heard on the basis of the evidence that was presented at the later sittings of the Board of Referees, where McMaster University was sometimes represented and the evidence was more extensive than that at some of the earlier sittings. The claimants' representative and the Commission's counsel further agreed that, whatever decision I should reach, based on the commonality of facts in all of these claims, my decision in respect of each claimant should produce a common result for all.

Against this background, the issues before me can be simply stated. They are: first, whether any of the panels of the Board of Referees that considered the appeals of these claimants made a reviewable error with respect to its determination as to whether a relationship of employment existed between McMaster University and the claimant flowing out of the granting to the claimant of a department research scholarship tenable in the academic year 1994/95 and, if such an employment relationship existed, whether any reviewable error was made in determining that subsection 58(3) and/or (4) of the Regulations applied to support the Commission's allocation of the departmental research scholarship monies received by the claimant in the months of May to August, 1995, to weeks in those months.

The representative of the claimants urged that those panels of the Board of Referees that found against the claimants based their decisions on erroneous findings of fact made in a perverse or capricious manner or without regard to the material before them; they erred in law in determining that an employment relationship existed between McMaster University or any academic unit or member of the academic personnel of the University and the claimants by virtue of the departmental research scholarship offered on behalf of the University to the claimants; and they refused to exercise their jurisdiction as appellate bodies by assuming that the Commission's version of the facts and law, as presented before them, was correct. Further, the representative of the claimants took issue with the allocation of the departmental research scholarship funds acknowledged to have been paid to the claimants during the months of May to August, 1995. Finally, the representative of the claimants expressed concern that a finding in favour of the Commission would produce anomalous results and have far-reaching implications for the relationships between universities and their graduate students, implications that Parliament could not possibly have intended.

A representative of McMaster University, John A. Scime, Graduate Registrar, McMaster University School of Graduate Studies, supported the arguments of the representative of the claimants and provided information on the enrollment processes for graduate students at McMaster University.

Counsel for the Commission urged that those panels of the Board of Referees that found against the claimants properly understood and interpreted the facts before them and, on the basis of those facts, reached correct conclusions of law in determining that an employment relationship existed between McMaster University and the claimants on the basis of the offer and acceptance of the departmental research scholarships. He further argued that, in the result, the allocation of earnings arising out of that employment relationship had been made in accordance with law. He urged that those panels that found in favour of claimants had erred in law.

In CUB 23520, after quoting the relevant provisions of sections 57 and 58 of the Regulations, I noted:

From these provisions it can be noted that: "employment" extends to any employment under any express or implied contract of service or other contract of employment whether or not services are or will be performed by the claimant for any person and whether or not income received by a claimant is from a person other than the person for whom services are or will be performed; and earnings under a contract of employment are allocable as provided in subsections 58(3) and (4) depending on whether or not services are performed. I think there can be no doubt that the letter from the University to the claimant offering financial support and the acceptance of that offer, as referred to above, constituted a contract of service or other contract of employment, at least in respect of the teaching/research assistantship component and arguably in respect of the research award since the offer provided that the research awards funds carried with them the possibility that some work related to the recipient's (claimant's) research might be required as part of the award. Whether or not such work was actually required does not appear to be relevant. Equally, whether or not any such work redounded to the benefit of all or any of the claimant, the University or the faculty member whose research grant or grants were drawn on does not appear to be relevant.

I conclude that, in respect of the research award, a contract of employment was entered into between the University and the claimant. The research award represented income received by the claimant under the contract. Whether or not services were performed by the claimant, and if performed, who they were performed for, is of no consequence. The earnings of the claimant represented by income he received under the contract and arising from the research award were properly allocated by the Commission to weeks of employment.

The fact that, in these matters, amounts equivalent to what were referred to in the context of CUB 23520 as research awards are here referred to as "departmental research scholarship" does not, of itself, render the amounts received by the claimants immune from a determination that the amounts are earnings from employment if they are indeed equivalent. It is the characteristics of the relationship between the claimants and McMaster University that governs the characterization to be attributed to the amounts in question and not the terminology adopted to describe those amounts.² <fn>² See CUB 16886A, where Joyal J., sitting as Umpire, stated:</fn>

In the McMaster University School of Graduate Studies calendar 1994/95, under the heading, "Fellowships, Scholarships and Other Awards", the following appears:

8.3.7 Departmental Research Scholarships

Several hundred to be awarded by departments to students entering or continuing in a full-time graduate program, these awards are funded through the research grants of research supervisors. ...

supervisors do not obtain research grants without a concomitant obligation to produce research that is of interest to the granting body. This is consistent with the factual finding of a number of panels of the Board of Referees to the effect that:

McMaster University has also declared that scholarships would contribute to the research necessary to fulfil the grant award... .

These facts, as with the facts concerning "research awards" that were at issue in CUB 23520, create a relationship between the granting university and the recipient graduate student who is obliged to complete research in order to achieve his or her academic objectives, that, in the end result, is likely to redound to the benefit of the institution, at least in part, through its contribution to research necessary to fulfil the expectations or requirements related to the grant awards of research supervisors.

In addition, where a graduate student at McMaster University authors research results and materials, the intellectual property rights in the work involve not only the student, as author, but also the research supervisor, the University and, on occasion, the financial sponsor of the research.³ This is more indicative of an employment arrangement where the author is employed to create such a work, than a mere financial assistance grant with no concomitant obligation or responsibility on the part of the student to produce results or share rights.

In the case at bar, I find, (a) that the claimant was employed within the meaning of employment in the Act; (b) when the claimant was accepted in the graduate student program the student is paid for a full year. This, in effect, is a contract of employment. The University pays the student to be at the University. The University gains from the academic achievements of the graduate students.

For the foregoing reasons, the appeals of decisions of the Board of Referees in respect of the claimants, Jacques Critchley, Adrian Grah, Michael Ersoni, Shan Sheng, Brian Sneek, Sharine Caron, Stanley Shuye Sun, Ming Li, Kwaku Agyemang-Duah, Silviu M. Marcu, Esam Ghanem, William S. Gallichan, William Plut, Ahad Zabett, Thomas Qian, Huijun Zhong, Yongwen Gao, Ralph Ruffolo, Gordana Krsmanovic, Wen Qing Wang, Rong Dong, Christopher Horn, Eugene Tan, Tullio Panarello, Zhanghe Yin, William Gaetz, Cameron Muir, James Cotton, Mohamed Gadallah, Minya Zhang, Ed Impanis, Edouard Tcherner, Quan Sheng are dismissed.

The appeals by the Commission relating to decisions of panels of the Board of Referees in respect of claims by Gonghou Wang, Wen Hua Zhou and Pramod Gupta are allowed. The decisions of panels of the Board of Referees with respect to claims by those claimants are set aside and the decisions of the Commission with respect to their claims are restored.