THE EMPLOYERS' EDGE
BRITISH COLUMBIA SUPREME COURT: CERB BENEFITS ARE DEDUCTIBLE FROM REASONABLE NOTICE AWARDS
Earlier this year, the Employers’ Edge blog wrote about the Fogelman v. IFG decision, where the Ontario Superior Court considered the impact of Canada Emergency Response Benefit (“CERB”) payments received by an employee on wrongful dismissal damage awards (among many other contentious topics). At this time, the court in Fogelman, simply opted to defer to the February 2021 decision in Iriotakis v. Peninsula Employment Services Limited, where it was found that that CERB payments should not be treated as income for purposes of mitigation.
Recently, the British Columbia Supreme Court in Yates v. Langley Motor Sport Centre Ltd, 2021 BCSC 217, were once again faced with this issue and ultimately provided a far more favorable decision for employers throughout Canada
The plaintiff employee was only employed by the defendant employer as a Marketing Manager and Events Coordinator for approximately eight (8) months before she was temporary laid off in or around March 2020, due to a reduction in business arising from the COVID-19 pandemic. Ultimately, the plaintiff was not recalled and her employment was deemed terminated on a without cause basis.
Despite extensive mitigation efforts, the plaintiff did not obtain fresh employment until February 2021. However, during this period of unemployment, she obtained CERB from the Government of Canada in the amount of $12,000. As such, the defendant submitted that a portion of the CERB benefits paid to the plaintiff during this period should be deducted from any notice award.
On the subject of reasonable notice – the Supreme Court found that under normal circumstances the plaintiff would be entitled to two (2) to three (3) months’ notice, as established by earlier jurisprudence. However, the Supreme Court took into consideration the plaintiff’s “valiant” mitigation efforts in conjunction with the considerable length of time it took her to find comparable employment (seven (7) months) due to the COVID-19 Pandemic. With these factors in mind, the Supreme Court awarded an enhanced notice period in the amount of five (5) months.
When considering the defendant’s argument surrounding the deduction of CERB benefits, the Supreme Court indicated, “I find that CERB payments would not have been payable to [the plaintiff] if she had not been terminated […] CERB payments are a benefit intended by the Government of Canada to be an indemnity for the loss of regular salary arising from [the defendant’s] breach of [the plaintiff’s] employment contract. Unlike an employee funded pension or a private disability insurance policy [the plaintiff] did not contribute to the benefit.” The Supreme Court proceeded by reducing the five (5) month notice award by the amount of CERB benefits the plaintiff had received over the same reasonable notice period.
It is important to recall that the court’s underlying objective in wrongful dismissal matters is not to provide the affected employee with a windfall – but rather, to place them in the same position that they would have been, if not for the termination. Accordingly, in this decision, the Supreme Court noted that by failing to deduct the CERB payments, the plaintiff would have actually been in a better position than she would have been, if she had not been terminated. As such, this decision not only acts as a significant win for employers but also an indicator that the courts are willing to apply a subjective and reasonable lens when assessing wrongful dismissal matters which have occurred during the COVID-19 Pandemic.