British Columbia, Canada Court Deducts CERB From Employee's Damages For Wrongful Dismissal

• Published date: 15 June 2021
• Subject Matter: Employment and HR, Coronavirus (COVID-19), Contract of Employment, Unfair/ Wrongful Dismissal, Employee Benefits & Compensation, Employment and Workforce Wellbeing
• Law Firm: Littler - Canada
• Author: Ms Rhonda B. Levy and Barry Kuretzky

To date, few decisions in Canada have considered whether the amount of the Canadian Emergency Response Benefit (CERB) employees receive after their job termination should be deducted from their damages in lieu of common law reasonable notice. CERB was a program, now closed, the federal government set up to provide financial support to employed and self-employed Canadians who were directly affected by COVID-19.

As previously discussed, in Iriotakis v. Peninsula Employment Services Limited, 2021 ONSC 998 (Iriotakis) the Ontario Superior Court declined to reduce the employee's entitlement to damages in lieu of reasonable notice by the amount of CERB he received. In Hogan v. 1187938 B.C. Ltd., 2021 BCSC 1021 (Hogan), the Supreme Court of British Columbia (BC) recently distinguished Iriotakis when it deducted the employee's CERB payments from his damages for wrongful dismissal.

Background

The employee was temporarily laid off from his position as assistant manager of an automotive dealership in March 2020 not long after BC declared COVID-19 a public health emergency. As a result of the economic impact of the pandemic, the employee's job was permanently terminated in August 2020 after he had worked at the dealership for 22 years. During the notice period, the employee received Employment Insurance (EI) and $14,000 in CERB.

Decision

The court determined that the appropriate reasonable notice period was 22 months. It concluded that the EI benefits should not be deducted because s. 45 of the Employment Insurance Act requires a claimant to repay any unemployment benefits if an employer becomes liable to pay their earnings. The court determined, however, that the CERB payments should be deducted from the damage award for the following reasons:

...The CERB payments raise a compensating advantage issue. If the CERB payments are not deducted the plaintiff would be in a better position than he would have been if there had been no breach of the employment contract.

But for his dismissal, the plaintiff would not have received the benefit. The nature of the benefit is an indemnity for the wage loss caused by the employer's breach of contract. There is no evidence that the plaintiff contributed to obtain the benefit by paying for it directly or indirectly. (paras. 100 and 101)

The court distinguished Iriotakis in which, as noted above, the Ontario court did not reduce the employee's entitlement to damages in lieu of reasonable notice by the amount of CERB he received...