Are CERB Payments Deductible From Wrongful Dismissal Damages? Maybe.

• Published date: 21 July 2021
• Subject Matter: Employment and HR, Contract of Employment, Unfair/ Wrongful Dismissal
• Law Firm: Filion Wakely Thorup Angeletti LLP
• Author: Ms Janeta Zurakowski

Bottom Line

In a recent "win" for employers, and a decision that is the "first of its kind", a court in British Columbia deducted Canada Emergency Response Benefit ("CERB") payments from wrongful dismissal damages awarded to an employee during the COVID-19 pandemic. However, Hogan v 1187938 B.C. Ltd., 2021 BCSC 1021 ("Hogan") is an outlier from other recent cases decided by various courts across the country that contrarily suggest CERB benefits will not be deducted from wrongful dismissal damages.

Background

In 1998, Terence Hogan commenced employment with Mercedes-Benz Canada. Over the course of his tenure, Mr. Hogan was promoted several times, including to his most recent position of assistant service manager at Mercedes-Benz Vancouver (the "Dealership").

In March 2020, with the onset of the COVID-19 pandemic, and as the Dealership experienced a decline in business, Mr. Hogan and others were temporarily laid-off. By August 2020, it became apparent that the effects of the pandemic would be protracted and, as such, after 22 years of service, Mr. Hogan's employment was terminated "without cause". He was 52 years old.

Mr. Hogan commenced a lawsuit claiming he was wrongfully dismissed and seeking common law reasonable notice.

In response, the Dealership argued that Mr. Hogan failed to reasonably mitigate his damages (by declining a job as "service advisor" at another car dealership owned by his former employer) and that any CERB payments received by him during the notice period should be deducted from any wrongful dismissal damages award.

Court Deducts CERB Payments from Wrongful Dismissal Damages

At summary trial, Justice Gerow of the British Columbia Supreme Court held in favour of Mr. Hogan as follows:

First, applying the Bardal factors, the Court held that the appropriate notice period for a 52 year-old managerial employee with 22 years of service working in the automotive industry was 22 months.

Second, the Court found that Mr. Hogan did not fail to mitigate his damages. The Court considered the circumstances leading to the "service advisor" offer, noting that the offer was effectively a demotion and was only presented to him after he had commenced litigation in exchange for settling the lawsuit.

Lastly, in calculating Mr. Hogan's damages award, the Court concluded that Mr. Hogan's wrongful dismissal award should be discounted by the $14,000.00 in CERB payments he had received during the notice period.

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