I wrote a blog post this past August discussing the potential impact of Canada Emergency Response Benefit (CERB) payments on wrongful dismissal damages. We looked specifically at the British Columbia Supreme Court’s decision in Hogan v 1187938 B.C. Ltd (“Hogan”), where Justice Gerow decided that CERB payments were deductible from wrongful dismissal damages. The rationale was that allowing the dismissed employee to be compensated for the reasonable notice period while simultaneously retaining the CERB payments they received but would not have been entitled to had they not been termination would amount to a “compensating advantage issue”. Effectively, this would compensate the employee for income he did not lose and would place the employee in a better position than he would have been in had he not been dismissed at all.

 

A Conflicting Approach: Not Deducting CERB Payments

As it turns out, this decision has not been universally adopted. For instance, in Snider v. Reotech Construction Ltd. (“Snider”), Justice Alexander of the British Columbia Provincial Court decided not to deduct CERB payments from the awarded wrongful dismissal damages based on the premise that the employee might have to repay the CERB payments in the same way one would repay EI benefits. Furthermore, allowing CERB payments to be deducted from wrongful dismissal damages only helps employers who already have other programs in place to assist them. It is better for the employee to receive the windfall avoided in Hogan than it is for the employer to be bailed out by the taxpayer-funded CERB payments through a reduced damages award.

With such conflicting approaches to the issue, it is hard to know which, if any, is “correct”. However, a more recent decision of the British Columbia Supreme Court appears to favour the approach in Hogan and may be of some guidance moving forward.  

 

Yates v. Langley Motor Sport Centre Ltd.: Affirming Hogan

This was a case about an employee who, after only working 8.5 months with her employer, was temporarily laid off in response to the COVID-19 pandemic. After her temporary layoff expired, she was deemed to have been terminated on the day the layoff began. After considering all the facts, including the employee’s age (30) and relatively short length of service, the trial judge awarded the employee with 5 months’ compensation. 

However, the evidence showed that the employee had already received $12,000 in CERB payments after her termination. The maximum monthly amount of CERB the employee could receive was $2,000 a month. The trial judge was therefore tasked with deciding whether $10,000 (i.e. 5 months’ worth of CERB payments) should be deducted from the wrongful dismissal damages. Whether or not the amount gets deducted depends on whether the trial judge adopts the reasoning in Hogan (i.e. avoiding the compensating advantage issue) or the reasoning in Snider (i.e. not using taxpayer money to bail out employers).  

Ultimately, the trial judge opted to deduct the $10,000 in CERB payments from the award of wrongful dismissal damages. The trial judge found that the $10,000 would not have been paid to the employee had she not been terminated. Furthermore, the trial judge found that CERB payments were intended by the Government of Canada to indemnify employees for the loss of regular salary resulting from their employer’s breach of the employment contract (i.e. terminating the employee). Taken together, these two characteristics would make CERB payments “collateral benefits” as that term was described by the Supreme Court of Canada in IBM Canada Limited v. Waterman and would therefore justify their deduction from wrongful dismissal damages. Finally, contrary to what was argued in Snider, the trial judge found no basis upon which to conclude that the employee would be required to repay the CERB benefits if she obtained an award of wrongful dismissal damages. 

As a result, the $10,000 received by the employee in the form of CERB payments was deducted from the award of wrongful dismissal damages. 

 

Moving Forward

It appears as though there is not yet a consensus in the jurisprudence on the topic of CERB payments in the context of wrongful dismissal damages. Without any binding authority weighing in, we may continue to see inconsistent judgements being reached on the topic. We will have to wait and see whether the need arises for a Court of Appeal to weigh in.