THE EMPLOYERS' EDGE
Another Canadian Appellate Court Rules CERB Payments Not to be Deducted from Wrongful Dismissal Damages
In a recent decision, the Alberta Court of Appeal declared that any CERB (Canadian Emergency Response Benefit) payments received by an employee cannot be deducted from their wrongful dismissal damages.
The employee, a heavy-duty mechanic that serviced agricultural equipment in Bassano, Alberta with Cervus Equipment Corporation (“the Company”), was informed in May 2018 that his employment would terminate in 16 months on September 11, 2019. However, a couple days before the termination date, the employee was informed that he would not be terminated. The employee continued working and on June 3, 2020, he was provided with one month notice of his termination for July 3, 2020. The Company also offered the employee another position with similar pay structure, but the employee declined this job because it was 50 km away.
The employee sued the Company for wrongful dismissal. The trial judge determined that the employee was entitled to 24 months’ common law pay in lieu of notice of termination, equal to $134,904, plus vacation pay in the amount of $14,196. However, the trial judge deducted the CERB benefits received by the employee from the award.
The Company appealed this decision on the basis that the employee failed to mitigate his losses. The Company argued that when the employee was offered another position that was 50 km away, it was his duty to mitigate his damages by accepting the offer. The employee cross-appealed on the basis that his CERB payments should not be deducted from his wrongful dismissal damages.
The Court of Appeal’s Decision
The Court of Appeal agreed with the trial judge’s decision and clarified that if the employee had accepted this job offer by the Company, he would need to make a daily commute of 100 km. Therefore, both the trial judge and the Court of Appeal determined that it was reasonable for the employee to decline the new position. Thus, the Company’s appeal was dismissed.
The employee’s cross appeal was allowed. The Court of Appeal disagreed with the trial judge’s finding that CERB payments should be deducted from the plaintiff’s wrongful dismissal award.
When the employee filed his cross-appeal, the Yates v Langley Motor Sport Centre Ltd, 2022 BCCA 398 (Yates) decision was released. You can read more about this decision here. Yates referenced the concept of ‘compensative advantage’ when determining whether CERB payments should be deducted. Specifically, the court in Yates stated the following:
Para. [48]: “it seems wrong for a defendant employer who has breached the employment contract with the plaintiff to enjoy, effectively, a windfall from an income support program designed to benefit workers impacted by the COVID-19 pandemic. If a windfall is to result, it seems to better reflect the intention of Parliament that it go to the worker.”
Following the British Colombia Court of Appeal’s reasoning in Yates, the Alberta Court of Appeal determined that the purpose of awarding wrongful dismissal damages to an employee is to place them in the same financial situation they would have been had the wrongful dismissal not occurred. Hence, the Court in Yates highlights that it is unjust for the employer to ‘enjoy’ a compensative advantage that was meant to assist employees unable to work as a result of COVID-19. As a result, the Alberta Court of Appeal concluded that the employee’s CERB payments should not be deducted from their wrongful dismissal award.
While employers in British Columbia and now Alberta will not be able to deduct CERB payments from wrongful dismissal payments, employers in the rest of Canada should view this latest decision as a strong indication that their obligations to make common law payments in lieu of notice of termination should not consider CERB benefits received by the terminated employee.
The lawyers at CCPartners have extensive experience advising businesses on their liabilities when terminating employees and structuring severances in the most cost-efficient way available. If you need help understanding your responsibilities, contact one of our professionals.
Click here to access CCPartners’ “Lawyers for Employers” podcasts on important workplace issues and developments in labour and employment law.