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B.C. Supreme Court deducts CERB benefits from wrongful dismissal damages

Decision impacts employers facing litigation from former employees dismissed during COVID-19 pandemic


The statute Ivstitia (Justice) stands in front of the Supreme Court of Canada building in Ottawa. (mbruxelle/Adobe Stock)

The COVID-19 pandemic resulted in many Canadian workplaces shuttering their doors, or significantly reducing their operations.

The result, inevitably, was the considerable and unfortunate disruption of employment relationships with their employees.

To mitigate this impact on Canadians, the federal government provided a number of different programs, including an expanded employment insurance scheme, and the Canadian Emergency Response Benefit (CERB).

Left unanswered was the question of whether or not CERB would be deductible from an award of wrongful dismissal damages.

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B.C. court unveils ruling

In the first reported judgement concerning this issue in British Columbia, the British Columbia Supreme Court in Hogan v. 1187938 B.C. Ltd. (“1187938 B.C. Ltd.”) examined the impact of the receipt of CERB on a plaintiff’s entitlement to damages associated with his dismissal from employment during the pandemic.  The decision may be viewed online here.

The plaintiff in 1187938 B.C. Ltd. was the assistant manager of a car dealership whom was temporarily laid off on March 24, 2020 – shortly following COVID-19 being declared a public health emergency in British Columbia.  In August of 2020, the plaintiff was sent a letter of permanent termination from employment.

After assessing the period of reasonable notice, the court addressed whether or not the CERB payments received by the plaintiff were deductible from the award of damages in lieu of reasonable notice.

During the notice period, the plaintiff had received some alternate income, as well as EI benefits, and approximately $14,000 of CERB payments.

Applying established legal principles, the court found that the income earned from alternate employment was deductible from damages owed during the notice period, and that EI benefits were not (on the basis the Employment Insurance Act, S.C. 1996, c. 23 requires a claimant repay unemployment benefits if an employer later becomes liable to pay their earnings during the time they claim the benefit).

CERB deducted from damages

The court further found the CERB monies received were deductible from the damages award.

The court reasoned that the CERB payments were not delayed compensation or earnings, and there was no evidence that CERB would need to be re-paid due to the damages award (unlike EI benefits).

On this basis, the court determined that should the CERB payments not be deducted, they would effectively place the plaintiff in a better position than he would have been had he remained employed.

This decision is noteworthy as the first British Columbia decision to address the receipt of CERB payments on wrongful dismissal damages.

Employers facing litigation, or threats of litigation from former employees, should consider whether or not those employees received the CERB, or other similar government benefits, and the impact that may have on any potential entitlement they may have.

Paul McLean is a partner with Mathews Dinsdale in Vancouver, Calgary and Halifax. He served as counsel on this case.

 

Mark Bout is an associate with Mathews Dinsdale in Vancouver.