Update: BC Court Of Appeal Confirms CERB Payments Cannot Be Deducted From Wrongful Dismissal Damages

• Published date: 25 January 2023
• Subject Matter: Employment and HR, Contract of Employment, Unfair/ Wrongful Dismissal, Employee Benefits & Compensation, Redundancy/Layoff
• Law Firm: McCarthy Tétrault LLP
• Author: Conseiller De L'Employeur and Abby Nann

In a previous blog post, we summarized Hogan v. 1187938 B.C. Ltd, 2021 BCSC 1021 (Hogan), where the British Columbia Supreme Court ("BCSC") deducted Canada Emergency Response Benefit Program ("CERB") payments received during the applicable notice period from wrongful dismissal damages claimed by a former employee. Generally, wrongful dismissal damages are reduced by the amount of new income, if any, that a former employee earns during their notice period.

As a refresher, CERB payments provided financial support to employed and self-employed Canadians who were directly affected by COVID-19. If an individual was eligible, they could have received $2,000 for a 4-week period (i.e. $500 a week). CERB was in place from March, 2020, until October 23, 2021. Although CERB payments had ended at the time, we wrote another blog post, which reviewed some of the remaining questions regarding how to treat CERB earnings, as the courts were somewhat divided on the issue.

Now, the British Columbia Court of Appeal ("BCCA") has determined, in Yates v. Langley Motor Sport Centre Ltd., 2022 BCCA 398 (Yates), that CERB payments are not deductible from damages awarded for wrongful dismissal.

Yates was the first appellate-level decision to address whether CERB payments can be deducted from wrongful dismissal damages. As such, it is the current authority on this issue in British Columbia. It has since been followed by the Court of Appeal of Alberta in Oostlander v. Cervus Equipment Corporation, 2023 ABCA 13.

Facts

Due to the impact of the COVID-19 pandemic, the employee, Ms. Yates, was placed on temporary layoff in March 2020. During her temporary layoff, Ms. Yates applied for and received $10,000 in CERB payments. Ms. Yates was not recalled to work pursuant to the extensions made by the British Columbia government to the maximum period for temporary layoff under British Columbia's Employment Standards Act, so she commenced a wrongful dismissal action. Her employer, Langley Motor Sport Center Ltd., agreed that Ms. Yates' employment was terminated without cause and without notice. Therefore, one of the main issues became the amount of damages Ms. Yates was entitled to for not receiving notice or pay lieu of such notice, and whether her CERB payments should be deducted from any damage award made.

BCSC Decision

In the absence of written terms of termination in the employment agreement, the BCSC applied the common law and found that Ms. Yates should have received 5 months' notice of...