Is a Graduate Student an Employee?
Rizak v. M.N.R., 2013 TCC 273
At issue in this case was whether a graduate student, a Ph.D. student, was an employee of the University s/he was a student at. This determination was in the context of the Employment Insurance Act.
The decision requires the University to carefully consider the structuring of its graduate programs and funding so as not to cause the graduate student to be an employee receiving a salary rather than a student receiving assistance.
The TCC referred to past decisions in relation to Post-Doctoral Fellows, and the nature of their relationship with the Universities that provided them with funding. The case law on this point was split. In Bekhor v. MNR, 2005 TCC 443, the TCC held that a postdoctoral fellow was not an employee, but that the nature of the relationship was that of advanced student and professor (thus the financial assistance was not remuneration for services rendered). Contrast this to Chabaud v. The Queen, 2011 TCC 438, where the TCC held that a postdoctoral fellow was an employee on the basis that, unlike a student, on tuition is paid or payable. The TCC here was unable to find a factual or legal basis to distinguish the two decisions and proceeded to prefer the decision in Bekhor.
In Caropreso v. The Queen, 2012 TCC 212, Justice Woods set out the test to be applied in cases of postdoctoral fellows in order to distinguish between funding as student vs compensation as employee:
The root of the difficulty is that payments to postdoctoral research fellows often have dual elements. The payments further the education of research fellows and they also provide compensation for work performed. If the payments are received by virtue of employment, this takes precedence. However, in making this determination, it is relevant to consider the dominant characteristic of the payments, whether it is compensation for work or student assistance.
The TCC held that this test is equally applicable to Doctoral Students as to Postdoctoral Fellows. However, unlike graduate students, postdoctoral fellows are not in pursuit of another degree but are obtaining further experience. This pursuit of degree purpose differentiates the two cases. In Hammell v. MNR,  TCJ No. 921, a masters student was held not to be engaged in insurable employment. The same conclusion was reached in Hospital for Sick Children v. MNR,  TCJ No. 388, a case involving a masters student, and in Nabet v. MNR,  TCJ No 79, in case of a Doctoral Student. However, in Charron v. MNR,  TCJ No. 47, the master’s student was held to be an employee but in this case the employment was prior to the period of study beginning. [see also Huang v MNR, 2012 TCC 81].
In this case, the TCC held that the dominant character of the stipend was compensation for work performed, making him an employee. Here the money was not received by virtue of being accepted as a doctoral student, or some “form of no-strings-attached bursary or scholarship”. If he would have stopped working in the lab, he would have stopped receiving the money. This was different than the cases of Hammell, Hospital for Sick Children and Nabet where the students developed their own research ideas and pursued them under the mentorship and supervision of their respective professors. The court stated that if the university “has structured its doctoral programs in such a way as to essentially require students to be employed by the university, that would not, in my view, change the fact that they are employees”.
The court considered the Income Tax implications and stated that amount received ought to have been included in income as the ITA excludes amounts received in respect of, in the course of or by virtue of employment from scholarship and fellowship payments.
Sas Ansari, BSc BEd PC JD LLM PhD (exp) CPA In-Depth Tax 1, 2 &3
If you like this website, please share it with others.