The general conclusion of the cases referenced below is that CERB sums should not offset the wrongful dismissal claim, similar to E.I. benefits, although E.I., unlike CERB, is to be repaid from the wrongful dismissal award. This issue is reviewed here.
Deduction of CERB Benefits from Wrongful Dismissal Claims
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.
British Columbia Court of Appeal
The decision in Yates v Langley Motor Sport in November of 2022 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. In this latter decision, the Supreme Court considered these factors in determining whether the payment in question should offset the dismissal award:
(a) There is no single marker to sort which benefits fall within the private insurance exception.
(b) One widely accepted factor relates to the nature and purpose of the benefit. The more closely the benefit is, in nature and purpose, an indemnity against the type of loss caused by the defendant’s breach, the stronger the case for deduction. The converse is also true.
(c) Whether the plaintiff has contributed to the benefit remains a relevant consideration, although the basis for this is debatable.
(d) In general, a benefit will not be deducted if it is not an indemnity for the loss caused by the breach and the plaintiff has contributed in order to obtain entitlement to it.
(e) There is room in the analysis of the deduction issue for broader policy considerations such as the desirability of 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.
The B.C.C.A. in assessing these factors concluded that certain of the Waterman factors favoured a deduction. These included:
- 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,
- 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 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.
This was also repeated in a January 2024 B.C. Court of Appeal decision, reversing the motion's judge on this issue. 1
Ontario
A decision by the Ontario Supreme Court in August of 2022 had come to the same decision. 2 Justice Carole Brown held that in this particular case, CERB did not reduce the wrongful dismissal damages for the following reasons:
First, the Plaintiff had not ceased working for reasons related to COVID-19 ( as required by Section 6 (1) (a) of the CERB act , rather she was let go because her employer was retiring and shutting down his dental practice. Therefore the Judge concluded that the plaintiff might have to repay the CERB.
Second, the Judge somehow determined 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. ”
Third, justice dictated that the allocation of risk of repayment should not fall upon the Plaintiff as she was a older and long serving employee.
E.I.
A similar conclusion was reached by the Federal Court, holding that the Social Security Tribunal General Division made a reasonable conclusion in denying E.I. benefits to an employee who had refused to comply with his employer's vaccination policy. This was tantamount to "misconduct". 3