Canadian fishermen are expected to be at Arm Length to receive benefits!

By Adam Soliman

On June 11, the MP for Sydney-Victoria Mark Eyking presented the problem of hundreds of fishermen being cut off from their employment insurance (EI) in the House of Commons. Eyking brought to light that over “180 people living in communities north of Cape Smokey — such as Bay St. Lawrence — were denied their insurance claims after a Service Canada investigation into claims between 2007 to 2010”.[1] The investigation concluded that claimants were working for family members, which no longer satisfies the arm’s-length doctrine. Moreover, 80 people received letters saying they owe the government $5000 to $80,000 in overpayments from EI.[2] These EI repayments can cause many families to go bankrupt, which will be highly devastating for Cape Breton communities that consist of only a couple hundred people- many of whom are, of course, fishermen. At the congressional meeting, Eyking pleaded Crystal MacKinnon’s case, a widow with two children who has worked on her uncle’s fishing boat for 20 years.[3] This past winter, she was rejected from insurance benefits and is asked to pay back $45,000 of overpayment from previous years.[4] Further, her appeals for claims were also denied.

The arm’s length rule is a legal concept which is utilized in several different areas of law. The way it affects many of the fishermen in Canada, however, is through the Employment Insurance Act. Under this act, which in turn references the Income Tax Act for the definition of “arm’s length”, any employment relationship which does not meet this requirement is “excepted employment”, meaning that there is no qualification for employment insurance. Canadian jurisprudence has been moving from whether the relationship was at an “arm’s length” to the question of whether the specific employment itself was at an arm’s length.[5]

Is it not justifiable for people living in small remote communities to work for relatives in order to have employment and to keep the local economy afloat? What is more, dozens of people in Cape Breton have been cut off from EI, and 80 appeals in the Bay of St. Lawrence have been rejected by the Canada Revenue Agency, because these seasonal workers worked for relatives. It is respectable that the agency follows the arm’s length doctrine to ensure that working conditions are fair for all workers at a place of employment. However, the arm’s length relationship only implies that hours and working conditions offered by the employer to all employees be similar to conditions offered in an open labour market.[6] The government has taken deductions from boat captains and the fishing crews, but are now refusing to pay out their insurance benefits. Rather than completely cut off EI payments which fishermen depend on, the government can enforce checks and balances to ensure labour conditions are fair across the board, and that income taxes are paid. This would mitigate the financial burden placed on seasonal workers and the negative economic impact in small fishing communities across Atlantic Canada.

In practice, the arm’s length labour requirement means that the employment will be compared to what is generally available on the market for similar positions, or through the use of disinterested third parties where available.[7] This evolution of the law, however, may be difficult to apply to the small fishing communities. If all communities are largely related familial affairs, then the “market” is ostensibly the same. Conversely, it seems improper that these smaller fishing ventures should be compared to large commercial fishing ventures. It remains to be seen how this will continue to evolve in Canadian society. It cannot be doubted that there has been a lack of a friendly attitude towards smaller family ventures and recognizing them as being at arm’s length except when nearly every other avenue has been exhausted. Small-scale fisheries have continuously suffered from ill policies that are not geared towards their special circumstances, and the arm’s length doctrine is another example where laws and policies should be changed.