Mitigation: Offsets from the Claim: Statutory

Notice & Severance

As discussed elsewhere, it is clear that the statutory payments, or the providing of statutory notice, will each reduce the claim. Ontario, as noted, is unusual as it allows for severance payment of one week per completed year of service to a cap of 26 weeks provided that the payroll exceed $2.5 million annually and the employee has 5 years of service.

These sums will not be subject to mitigation offset. ¹

Where working notice has been given, the severance sum due under the Ontario Act will still be payable on the conclusion of working notice.

Employment Insurance

Similarly, the law is clear the receipt of Employment Insurance benefits will not reduce the claim. ² In fact, the successful employee must repay E.I. sums received, but this is a topic for another moment. This issue is reviewed here.

CERB Benefits – Deducted from Wrongful Dismissal Award or Not?

Two recent appellate decisions from British Columbia and Alberta have concluded that CERB payments should not reduce the damage award for failure to provide fair notice.

BCCA

The decision in Yates v Langley Motor Sport was the first court of appeal decision to address this issue. The plaintiff in this instance was laid off due to the onset of COVID-19. The court reviewed the Supreme Court of Canada decision in IBM v Waterman which dealt with the concept of payments which represented a compensating advantage. ³ This decision is discussed below.

The B.C.C.A. in assessing these factors concluded that certain of the Waterman factors favoured a deduction. These included:

1. The CERB payments “were intended as a wage subsidy, and loss of wages was the sort of loss resulting from the respondent’s breach of the employment contract”: para 45,
2. And the plaintiff had not contributed to the benefit.

However, that being said, ultimately the court concluded that should be influenced by broader policy concerns. In doing so, it found that the employer, the party in breach, ought not to benefit from such a windfall from the program which was intended to support workers impacted by COVID-19.

The CERB payments, it determined “are a matter between the employee and the appropriate authority and do not concern the respondent company”.

The tipping point in the analysis was that policy considerations should favour “equal treatment of those in similar situations, the possibility of providing incentives for socially desirable conduct and the need for clear rules that are easy to apply”.

As to the question of whether the CERB must be repaid by the employee, the court concluded that this was a “fruitless exercise” and that there was no certainty on this issue and should not be a concern to the employer but rather a point to be resolved between the employee and the provider of the benefits.

Alberta Court of Appeal

This court, in January of 2023, agreed with the above analysis in Oostandler v Cervus. The plaintiff in this instance was not terminated due to the COVID-19 pandemic. Nonetheless, the court favoured the broad policy considerations as outlined above.

Ontario

The August 2022 decision of  Henderson v. Slavkin concluded that CERB did not reduce the wrongful dismissal damages. The reasons were as follows:

1. The Plaintiff had not ceased working for reasons related to COVID-19 ( as required by Section 6 (1) (a) of the CERB statute). The plaintiff had been terminated because her employer was retiring and shutting down his dental practice. Therefore the Judge concluded that the plaintiff might have to repay the CERB.
2. The court concluded that CERB was intended ” as an indemnity for wage loss related to COVID-19, not for wage loss arising from an employer’s breach of an employment contract. ”
3. The judge also reasoned that the allocation of risk of repayment should not fall upon the Plaintiff as she was a older and long serving employee.

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1. Brake Ontario Court of Appeal
2. Brake Ontario Court of Appeal
3. The issue in Waterman was the deductibility of earned pension benefits