Digest of Benefit Entitlement Principles  Chapter 4 - Section 6

4.6.3.1 Engagement in a business

Self-employment means being engaged in work or labour on one's own behalf, in a partnership, or as a co-adventurer, rather than being employed by someone else under a contract of service. It involves some work or labour by the claimant, in the business (Appendix A – Type of contract).

Self-employment involves working and striving to achieve the results desired for a business. The efforts of the self-employed person are part of what makes the business run. Investment involves contributing money and capital, and as a result benefiting from the business operation through no work or effort on the investor's part, in achieving those results.

Mere ownership of a business enterprise is not sufficient to warrant a finding that the claimant is self-employed. Something more than the status of shareholder or owner of a business, is required, since merely owning a business is not cause to be disentitled from benefits under the provisions of the legislation. The issue to consider is the level of participation of the claimant, in the running of the business. For self-employment to exist, there must be involvement in activities necessary to the operation of the business, such as those designed to generate business income, or involvement in the managing of people attempting to generate that income.

4.6.3.2 A natural concern for an investment

Investors usually hold an investment and derive income from the ownership of that investment or asset, not from their labour or work. People who are not engaged in self-employment, but have only invested in a business, expect profits through the efforts of the people who are running the business, such as, a business operator, promoter or a third party who is acting on the owner's behalf. Generally, those not engaged in self-employment benefit from the results of the business operation through ownership, and not through labour, work, or effort on their part. Without a personal engagement or involvement in the operation of a business, the business is simply an investment (Digest 5.3.1.6) and the full working week provisions do not apply (EIR 30(1)).

A natural concern for an investment may include:

• activities that demonstrate care for the proper administration of the investment, that is, concern with whether or not the persons running the business are protecting the assets, or managing and reporting the results of the business accurately. It does not include supervision of the persons actually running the business, or involvement in the administration of the business
• activities that monitor the return on the moneys invested in a business, such as reviewing the financial statements to determine how much money is being made from the investment. It does not include directing the persons running the business in how to obtain a greater profit
• activities that involve some actual participation in the business itself. However, that participation should be very negligible or extraordinary. Participation in the business should be unusual, occasional and exceptional and of little consequence compared to the overall operation of the business. A natural concern for an investment does not include activities that are performed on a regular basis even if these activities are only for an hour each week because those activities cannot be considered to be unusual, occasional, and for an exceptional purpose. For example, one is not considered to be engaged in the operation of a business if the individual participates in the yearly stockholder meetings to determine the future projections of the company or the direction that the company may take. These are activities of someone showing a natural concern for an investment rather than someone engaging in the operation of a business

A natural concern for an investment should not be confused with a person who is operating a business to a minor extent (EIR 30(2); Digest 4.6.4), for example, a person who performs their business activities only a few hours per week. The fact that the extent of the person's involvement is only a few hours per week cannot be used to establish that the business is an investment only, because they are performing the very work that the business requires. This person is engaged in the operation of the business and is not just showing a natural concern for an investment; however, that involvement may be minor in extent.

When a claimant is not engaged in the operation of a business but is just showing a natural concern for an investment, there is no disentitlement for not being unemployed (EIA 9; EIA 11). Any income arising from that business is not earnings for benefit purposes (Digest 5.16.1).

When the agent determines that the claimant is self-employed or engaged in the operation of a business, the next step is to determine if the claimant is working a full working week or if the claimant is only engaged in the business to a minor extent (EIR 30(1); 30(2)).

4.6.4.1 Factors determining whether a claimant's involvement is minor in extent

The 6 factors to be considered in determining whether the claimant is employed or engaged in the operation of a business to such a minor extent they would not rely on that employment or engagement as a principal means of livelihood are the:

1. time spent
2. nature and amount of the capital and resources invested
3. financial success or failure of the employment or business
4. continuity of the employment or business
5. nature of the employment or business, and
6. claimant's intention and willingness to seek and immediately accept alternate employment

These 6 factors are stated in the text of EIR 30(3). This regulatory provision specifies that the extent of claimants' participation in self-employment, in the operation of a business, or in any other employment in which they control their working hours, should be judged in light of numerous factors rather than solely on the amount of time spent on that activity. Jurisprudence stressing consideration of all 6 circumstances should be used to support decisions under the present regulation (FCA A-418-97, CUB 35899; FCA A-58-94, CUB 23879; FCA A-614-94, CUB 25617).

All of these factors must be considered in order to:

• obtain an overview of the situation
• assess the claimant's credibility with regard to the hours spent on the employment or business
• define their role and responsibilities with regard to participation in that employment or engagement, and
• determine whether the relieving conditions set forth in EIR 30(2) have been met

If the claimant's employment-related activities are minor in extent, the claimant is considered not to have worked a full working week and therefore is unemployed. If the claimant's employment-related activities are more than minor in extent, the claimant is disentitled from benefits because they are working a full working week and therefore not unemployed.

Financial statements can assist in fact finding as they may provide information on the extent of the claimant's involvement in the business. In practical terms:

• if a quick check of the income statement reveals no salaries, this may mean the claimant is operating the business on their own, without assistance
• If there are automobile, gasoline and travel expenses, this may indicate the claimant travels for the business
• high rent, heat, and hydro expenses may indicate occupancy of a store or office, presupposing a considerable financial expenditure and the claimant's intention to work on their own account

Financial statements can also provide information about the circumstances to be considered under EIR 30(3):

• the balance sheet can show the moneys invested: the equipment owned by the business and its value, owners' equity, and debt-load, as well as continuity of the business: assets and liabilities
• the income statement can show financial success or failure in that it sets out profit or loss for a specific period

The question of unemployment must be considered on an individual basis, since each person's situation is different, and must be examined in light of these differences. Each of the 6 factors must be taken into account. Examination of the 6 factors may reveal that some of them do not necessarily apply in all cases, since some are more relevant than others in different situations. Nonetheless, the result of the examination of the 6 factors must be fully documented in order to support the Commission's decision.

4.6.4.2 Time spent

The time spent is an important consideration, but it is not the only one applied to determine whether the claimant's activities are minor in extent. All types of efforts made by claimants to set up or continue their business or other employment in which they control their working hours, must be examined. The time of day or week that claimants devote to their business or other employment is also an important element to consider. Of course, the more time a person spends on activities, the greater the likelihood that they will be considered to be engaged to more than a minor extent.

The fact that a claimant spends an amount of time on activities for approximately the same duration as a regular working week, may demonstrate that the activities are not minor in extent. This is particularly relevant if the person is obligated to keep a relatively strict schedule (EIR 30(2); CUB 37086; CUB 32849; FCA A-699-02; CUB 53297A). For example, the less time spent and the more flexible the hours, weekends or evenings, the greater possibility the activities are minor in extent. When the number of hours devoted to the activity is less than the number spent by someone following a similar activity as a principal means of livelihood, the conclusion that the claimant's engagement is more in the nature of a sideline may be supported.

Normal labour market conditions with respect to the self-employment activity or other employment in which claimants control their working hours must be considered. Whether the claimant works at it during the day, in the evenings or at night is irrelevant if it is an activity which people normally carry out at any time, as a principal means of livelihood. The claimant's time spent must be compared against those following that type of employment as a principal means of livelihood (FCA A-113-97; CUB 36744).

Slow periods or seasonal fluctuations do not automatically make the self-employment activity or other employment in which claimants control their working hours, minor in extent. A person's intentions during the period in question are often a good indicator of the claimant's unemployed status. The fact-finding should determine if the claimant is merely going through a slow period and if the activity is now a sideline, or if it is still a principal means of livelihood. Numerous businesses are seasonal in nature, so that the activities required of them cease during part of the year, or the tasks to be performed become substantially less. Claimants who pursue a seasonal activity may establish that they are working full working weeks during the on-season and are unemployed during the period in which the business ceases its activities (Digest  4.6.4.5).

4.6.4.3 Nature and amount of the capital and resources invested

The larger the financial commitment to an enterprise, the more likely it is that the business is intended to be or become the claimant's principal means of livelihood. Claimants who put practically everything they have into the endeavour reflect their intention at that time to make it a permanent, viable business (CUB 34019; Jurisprudence Index/week of unemployment/business/).

Indicators of whether or not claimants intend to make the endeavour a principal means of livelihood include but are not limited to:

• the capital and resources invested, material or equipment purchased, conversion of premises when the business is set up, or signing of a personal lease for the premises where the business is located (CUB 27866; CUB 24574)
• debt-load and line of credit, or moneys or salary from the business reinvested to ensure its continuity

It must be determined whether the moneys and securities involved are those which are normally invested to make such an endeavour profitable to the extent that it will become a person's principal means of livelihood, or alternatively whether they are normally expended for an occupation which is clearly secondary in nature.

The person's contribution will not always be in the form of a monetary contribution. When persons enter into a business, the contribution of each of the participants may or may not constitute a capital outlay. Such contributions can be very different: real or personal property, credit or money, skill, experience, contracts, reputation or work.

When the business experiences a major decline or finds itself in financial difficulties, claimants may indicate that they no longer intend to operate the business as a principal means of livelihood. The financial commitment and the efforts made to save the business can test the credibility of a claimant’s statement regarding a change in intentions. For example, substantial amounts invested to revive the business may diminish the credibility of such a statement.

4.6.4.4 Financial success or failure of the employment or business

The consequences to the claimant of the financial success or failure of the business or the other employment in which they control their working hours must be examined. The success of the business or the other employment is certainly a factor that strengthens the presumption that the claimant devoted the necessary time and effort to the endeavour. Conversely, failure to derive a return from the business or the other employment does not necessarily mean the claimant's activities are minor in extent. Nor can it be said that because profits are not satisfactory to the claimant, the business or the other employment is not the claimant's principal means of livelihood.

The gross income derived from the business or other employment may constitute an important factor when a significant number of hours are being worked, and when it accurately reflects the size of the endeavour. It may serve to indicate whether or not the claimant's activities are minor in extent.

Some claimants may reinvest all or most of their returns back into the business to strengthen it, instead of drawing a salary, then claim their involvement to be a simple investment because the business is not yet generating sufficient returns to pay their salary (Digest 4.6.3.2). The lack of financial success of a claimant’s endeavours does not prove that they are engaged in self-employment activities to a minor extent. Low profit levels are very common for a new business.

Financial return is not a decisive factor, and has no importance when claimants are engaged full time in setting up or ensuring the continuity of their business or their other employment. When claimants intend to make the business or the other employment their sole occupation or their principal means of livelihood, the amount of money derived from those activities is not an essential factor to consider in determining whether they are engaged in their employment to a minor extent (FCA A-699-02, CUB 53297).

Fluctuating sales levels are also not sufficient to establish the right to benefits. If the conditions of the business change, leading to a sufficiently large drop in sales or to the possibility of the business being forced into bankruptcy, the claimant's intentions may change as well. Facing a bankruptcy may cause the claimant to either devote more time to the business, or to devote much less time to running the business and more to actively looking for other employment. Such facts might lead the claimant to request a reconsideration of their situation. The agent will take into account the claimant's new intentions in conjunction with the circumstances mentioned in EIR 30(3), to decide whether the claimant is still working a full working week while operating the business.

4.6.4.5 Continuity of the employment or business

The continuity of the business or of other employment in which claimants control their own working hours, is relevant insofar as it demonstrates the intentions and the real nature of the claimants' participation in these employment-related activities. The fact that the business continues to operate during the period claimants are claiming benefits, is a relevant consideration because it may indicate that the business is serious enough to require more than mere minor interest on the part of the claimant.

The business' level of activity is important to consider; has it increased, decreased, or remained constant?

• An increase could mean the business is no longer a sideline or secondary occupation but a principal means of livelihood. It could also mean the claimant is simply spending a few more hours in the self-employment activities but these hours still remain less than those spent by someone following it as a principal means of livelihood
• A decrease could be because of a temporary decline in business, common at that particular time of year, because the claimant has hired someone to do their work, or due to the business activities having been permanently scaled back. Remaining constant could mean it has always been the claimant's principal means of livelihood, or may be a sign of minor in extent participation. For example, a claimant may have held a full-time job while running a business to which they devoted little time, and the time spent has not substantially changed following the termination of the full-time employment (FCA A-707-94, CUB 26138)

Claimants may hold another job at the same time as they are self-employed or engaged in the operation of their business. That other job may constitute their principal means of livelihood. The issue is to decide whether their activity within the business, for the period they are claiming benefits, is carried out to such a minor extent that a person devoting the same time and effort would not normally rely on that activity as a principal means of livelihood.

Continuity of the business can be used to substantiate that claimants are self-employed to a minor extent. This may occur when they have operated a business for many years while holding a full-time job elsewhere, and when the participation in the business is minimal and there has been no significant change in the participation following separation from full time employment (FCA A-707-94, CUB 26138). However, the continuity of the business may not be relevant when claimants use the period that they are unemployed from their full-time job, to spend significantly more time in self-employment activities.

There are many endeavours of a seasonal nature where there is an established pattern of shutdown, such as where there is no activity for the business during the summer or winter period, according to the type of business. In such a situation, a person may be considered to work a full working week during the active season and be unemployed during the period in which the business ceases its activities. However, should the person undertake activities necessary to the operation of that business during the seasonal closure, such as, marketing the services of the company, a determination as to whether or not these activities are minor in extent must be made (FCA A-614-94, CUB 25617).

4.6.4.6 Nature of the employment or business

The nature of the employment or business in which a claimant controls their working hours is used to determine if it is the same as the claimant's usual line of employment. When it is, it is more likely that the claimant intends to make it their principal means of livelihood and devote a significant amount of time and effort to it (CUB 27886; CUB 21931). The occupation practiced may tend to confirm or refute the claimant's allegations that the business is a sideline, as opposed to a principal means of livelihood.

The claimant's real intentions and time devoted must be considered. When the business or the other employment relates to or depends upon the claimant's skill or experience, then their participation becomes essential, and it is reasonable to assume that participation will be significant. Consideration must be given to the fact that claimants in this situation may become competitors of any employer who hires them, making it difficult for them to pursue their own trade anywhere but in their business. In this case, claimants may be making a principal means of livelihood out of the activity being set up, rather than relying on the remote possibility of securing work with a competitor.

When the work performed falls outside the claimant’s skill or experience, this may indicate that their participation is of only secondary importance unless of course, substantial time is devoted to the activity, or the claimant intends to make this work their principal means of livelihood.

4.6.4.7 Claimant's intention and willingness to seek and immediately accept alternate employment

The claimant’s availability serves to enhance or diminish the weight to be given to their statements as to whether or not they are primarily engaged in the operation of a business or in any other employment in which they control their working hours.

This factor makes it possible to verify a claimant’s willingness to accept another job and the genuineness of their job search efforts (FCA A-104-00, CUB 44548A). The proof of availability required of such claimants is no different from that required of claimants in other circumstances (EIA 18; Digest Chapter 10). They must be prepared to immediately accept any suitable employment they are capable of performing, they must not set conditions, which unduly limit their employment opportunities, and, finally, they must behave in a manner which demonstrates their real desire to work. In the absence of a precise definition in the act, availability is verified by analysis of these 3 elements (FCA A-56-96, CUB 30987; CUB 72138).

An intensive job search may be an indication that a claimant’s involvement in operating a business or working in employment in which they control their working hours, is to such a minor extent, that a person would not rely on it as a principal means of livelihood. Conversely, the absence of efforts to find other work, or restrictions made on availability tend to suggest the opposite.

Where the claimants' employment-related activities may appear to cause a restriction on availability, evidence that someone can take over if the claimant finds employment elsewhere, may support the claimant’s statement that they can accept employment without any restrictions.

On the other hand, claimants may restrict their availability because of their business or other employment in which they control their working hours, or may impose certain requirements with respect to acceptance of a job. For example, they may impose undue conditions on acceptance of a job because of work required in the business, by restricting their availability to a few days a week or by making no effort to find a job. When this happens, there is reason to believe that the activity is not minor in extent.

Claimants engaged in their business or in other employment in which they control their working hours, to a minor extent, can receive benefits provided they look for work on their own behalf, rather than on behalf of the business. Seeking employment and seeking contracts to work on one's own account are different. Seeking contracts for the business is not a job search within the meaning of the act. Client follow-up, marketing for the business' products or services, or searching for new clients for the business are not regarded as active job search activities under the act. The same applies during the farming period defined in EIR 30(4) or during a seasonal closure.

Claimants may take advantage of the fact that they are unemployed to devote more time to their business. However, this may affect their unemployed status and availability, particularly in terms of 3 factors: time spent, continuity of the employment or business, and claimant's intention and willingness to seek and immediately accept alternate employment (EIA 18; Digest Chapter 10).

4.6.5.1 Period defined in regulation 30(4) – Farming

Persons engaged in farming are subject to the same regulatory provisions as persons engaged in the operation of any other business on their own account or in a partnership or co-adventure (EIR 30(1); 30(2); 30(3)). Once it has been found that a person is engaged in farming as a principal means of livelihood, that person is regarded as working full working weeks and therefore not unemployed (CUB 30067; Jurisprudence Index/week of unemployment/farming/).

However, farming, because of the uniqueness of the business, has been given special considerations when determining the application of a disentitlement during the period that begins with the week in which October 1st falls, and ends with the week in which the following March 31st falls (EIR 30(4); CUB 68684) . This period is clearly defined in a regulatory provision and is not subject to any modification, regardless of the climatic conditions from one province to another.

Unlike other types of business, a person engaged in farming as a principal means of livelihood may prove entitlement to benefits during the period that begins with the week in which October 1st falls and ends with the week in which the following March 31st falls. In order to prove entitlement for this period, the person must show that at any time during this period, they will not work in farming, or will be employed to such a minor extent that it would not prevent them from accepting full-time employment (EIR 30(4); FCA A-256-07, CUB 67904A). It is the entire period, taken as a whole that must be considered. The decision remains unchanged for the entire period, unless of course the claimant's situation changes, for example the farm is sold or expanded. However, it must be kept in mind that the provision defined in EIR 30(4) only needs to be considered if the person does not meet the relieving provisions of minor extent under EIR 30(2).

The nature of the operation, seasonal activities for that type of operation, and the size of the farm are determining factors in deciding the extent of the work in farming during the period defined in EIR 30(4). The claimant's occupational history is an important indicator for determining whether the claimant is able, or has been able in the past, to accept full-time employment elsewhere during the defined period.

If the facts on file show that the off-season related to the claimant's employment in farming does not coincide with the period provided for in EIR 30(4), that regulatory period cannot be modified or extended to meet the local farming conditions of individual farmers. In such a case, the claimant is subject to the same rules as any other person engaged in the operation of a business who claims EI benefits outside the period set out in the regulation (EIR 30(1), 30(2), 30(3)).

4.6.7.1 Self-employed worker

The self-employed worker or independent worker is engaged in an occupation on their own account. Occupation means any regular activity, or trade carried out to earn a living. Self-employed workers may not own a business as such. They may offer their services to companies or individuals according to certain terms and conditions fixed in advance by contract. When these persons are party to a contract of service, they are regarded as an employee (EIR 29; EIR 31; Digest 4.3.0). When such persons are party to a contract for services, they are regarded as self-employed workers (CUB 76074, Appendix A - Type of contract).

Self-employment exists even when the payment of the contract for service is deferred until completion of the contract. The timing of the payment has no relevance as to whether or not the claimant is working (FCA A-697-95, CUB 29511).

Self-employed workers may demonstrate that, during the period for which they are claiming benefits, their engagement is to such a minor extent that a person would not normally rely on that activity as a principal means of livelihood, thus overcome the presumption of working a full working week (EIR 30(2)).

4.6.7.2 Sole proprietorship

An unincorporated proprietorship is composed of a single owner who directs all of the enterprise's activities. Such persons assume all authorities and obligations, and are personally liable for the business's debts. The sole proprietorship may hire someone to run the business. The sole proprietorship is extremely simple to create and meets the needs of small entrepreneurs who wish to operate a business without bothering with the legal worries involved in an incorporated business (Digest 4.6.7.5).

Business people who operate as a sole proprietorship are increasingly forming business corporations for their distinct business advantages. Federal and provincial legislation governing business corporations may permit the creation of companies with a single shareholder and administrator.

When considering the unemployment status of a sole proprietorship it is important to establish the exact nature of the claimant's status in the business, this is whether the claimant is engaged in the operation of their business or whether they have engaged someone to run the business (CUB 72035A).

4.6.7.3 Partnership: general or limited

A partnership is an organization that brings together 2 or more people for the purpose of carrying on a business in common, with a view to profit. There are 2 principal forms of partnership: a general partnership and a limited partnership. Both are based on a contract between 2 or more persons who pool their property, money and/or skills to operate an unincorporated business and to distribute profit from it to each partner. A partnership agreement may be written or verbal. A written contract normally sets out the responsibilities, the capital contributions and the time and energy that each partner will devote to the firm's business, as well as the respective shares of profits and losses that each partner will take.

Theoretically, each partner participates in the administration of the partnership, signs contracts, and makes commitments on its behalf. However, the control and responsibility held by each partner varies depending whether the partnership is general or limited.

In a general partnership, every partner may take part in the management of the partnership business. All partners are administrators, unless otherwise designated, and are jointly liable for the partnership's obligations, and personally liable for its debts. This form of business is preferred by persons engaged in a professional activity (accountants, lawyers, doctors, architects, engineers, etc.) and by certain commercial concerns.

Claimants may establish a limited partnership. This is a form of commercial enterprise composed of 2 kinds of partners: general partners and limited partners.

The important factor to remember is that general partners are those who set up, manage, administer and work in the business, while limited partners are those who contribute capital or property in the business, but are prohibited from taking an active role in its administration.

When considering the unemployment status of a partner it is important to establish the exact nature of the claimant's status in the partnership, that is, whether the claimant is a general or a limited partner. By definition, a limited partner cannot be involved in the administration of the business, however if the claimant is a general partner, the nature and extent of their participation in the business activities must be determined (CUB 47156).

4.6.7.4 Co-adventurer

Claimants are engaged as a co-adventurer in a business when, regardless of the legal form of the business, they have an interest in it with others and they involve themselves personally in the activities deemed necessary for its operation (CUB 50122). It makes no difference whether the business is registered or incorporated (FCA A-136-96, CUB 31814; FCA A-348-96, CUB 33274).

As long as the claimant has an interest in the business and is engaged in its operation, the question of who actually owns the business is not a decisive factor for determining whether the claimant is acting as a co-adventurer.

Co-adventurers include individuals who contribute, without pay, to various tasks in a corporation in which others may be the sole shareholders, even though the individuals have no legal relationship with it.

A claimant's interest in a business can take many forms, from money given or invested to assist the owner of the business, to the expectation of gaining from the profits or success of the business.

To determine if the claimant is a co-adventurer in the business, the agent must examine the real extent of the claimant's interest in the business, and the activity in which they are engaged (Digest 4.6.3). In the framework of this activity, the agent must ensure that the claimant controls their own hours of work and is not bound by a contract of service, or arrangements similar to a contract of service (EIR 29; EIR 31; FCA A-771-88, CUB 15420).

The agent must have an overview of the business: the owners, the shareholders, and the claimant's relationship with the owners, details about the job performed and, finally, the claimant's employment history.

The agent must bring out the elements that demonstrate the claimant's interest in the affairs of the company, as those elements distinguish between co-adventurer, and volunteering assistance to a business enterprise (Digest 4.6.9). In some cases, claimants may assert that they are merely giving the company a hand, but analysis of the facts in the file may demonstrate that the opposite is true. Claimants alleging volunteer work must prove that the assistance is provided free of charge, in a disinterested manner, and without obligation (CUB 70769).

When a claimant has been found to be acting as a person engaged in a co-adventure, the 6 factors provided for by EIR 30(3) must be considered to determine if the claimant worked a full working week (EIR 30(2); Digest 4.6.4.1).

4.6.7.5 Corporation or limited company

A business corporation is a type of enterprise usually referred to as a limited company or corporation. Ownership is divided into shares. Its legal name ends with Limited (Ltd.), Incorporated (Inc.) or Company (Co.). Throughout this chapter, rather than using the full term "corporation or limited company", "corporation" alone will be used.

A corporation is an artificial being, invisible, intangible and existing only in the eyes of the law. This definition has led legal experts to affirm that a corporation is a legal entity, separate and distinct from those who own it, the shareholders. This characteristic confers upon the corporation, all the rights and responsibilities of a person. One of the significant differences between a sole proprietorship, a partnership and a corporation is that a corporation has a separate legal existence in law and it can own property, make contracts and be responsible for debts, just like any individual. One of the advantages of a corporate structure business organization is that the shareholders are able to invest and receive a regular return, without having to take any additional risk beyond the sum invested, or take an active part in management of the corporation's business affairs.

Although shareholders are the true owners of the corporation in which they hold shares, a corporation is managed by a board of directors, which sees to its proper operation, appoints the employees it deems necessary, and determines their functions and remuneration. The board is elected by the shareholders who, in that respect, have some control over who will manage the corporation. However, the board itself is responsible for managing the corporation.

Some corporations have a few shareholders, or, even only one. In these types of situations, there may be no real distinction between the owners and managers, and between the shareholders and the board of directors. The shareholders would likely be the people who manage the corporation. However, it is possible that not all shareholders participate in the running of the corporation.

When considering the unemployment status of a shareholder it is important to determine the exact nature of the claimant's status in the corporation (FCA A-418-97, CUB 35899; Digest 4.6.8.1).

4.6.8.1 Claimants who are corporate shareholders

Claimants may hold shares in a corporation where they work as employees; they may also participate in its operation. The agent must identify the claimant's role in the corporation. The fact of being a shareholder in a corporation does not mean that the person is participating in the running of the business (Digest 4.6.7.5). When considering a matter relating to the unemployed status of claimants who are shareholders in a corporation, it is particularly important to establish the position they hold in the corporate structure and its related responsibilities, in order to determine whether they have a role in the operation of the business. The claimant could be acting as an investor (Digest 4.6.3.2), as an employee subject to a work schedule (EIR 29; EIR 31), as a person engaged in operating that corporation as a business on their own account or in a co-adventure (Digest 4.6.7.4), or a combination of these positions.

Some claimants may be both a paid employee of the corporation and perform functions for which salary or wages are not paid.

When the Canada Revenue Agency (CRA) rules that the claimant's employment is insurable, it can be concluded that, for the working hours ruled insurable, the claimant acted as an employee subject to the work schedule of the corporation, and therefore may be eligible to receive EI benefits. However, the fact that CRA ruled the claimant's employment insurable does not mean the claimant will receive EI benefits. They must first demonstrate that they are unemployed, in relation to the corporation (FCA A-247-96, CUB 32697; FCA A-999-96, CUB 35986). Though the employment may be ruled insurable, the claimant could still be considered not unemployed if they are also participating in running the business.

When the claimant continues to participate in the operation of the corporation, they will be considered to have worked a full working week unless the "minor in extent" exception is proven (EIR 30(2), 30(3)). The fact that the claimant worked in insurable employment is not relevant, nor is it a determining factor regarding the claimant's unemployed status in the period for which benefits are claimed. As well, the fact that the self-employment under review is the same employment used by the claimant to qualify to establish a claim for benefits, is irrelevant (FCA A-247-96, CUB 32697; FCA A-999-96, CUB 35986). It is the total number of hours a claimant spends in pursuing the business that must be considered, including the hours worked as an employee as well as those worked in the operation of the corporation. Consequently, when the claimant continues to participate in the operation of the corporation, the decision is made under the not unemployed provisions for self-employed workers, taking into account the number of hours worked as an employee, as well as those hours worked in the operation of the corporation (EIR 30).

There are certain documents that can assist in determining whether the person is involved in the running of the enterprise. The corporation maintains its articles, regulations, charter, list of directors, minutes of meetings, and is required to produce and archive an annual report that contains a significant amount of useful information about its activities.

When a shareholder-employee of a corporation can lay themselves off, it raises the question of voluntary lay-off (EIA 30). That issue must be resolved, giving full consideration to any circumstances that may prove just cause (Digest Chapter 6).