Canada: Alberta, Canada Court Of Appeal Decides CERB Payments Should Not Be Deducted From Damages For Wrongful Dismissal

The Alberta Court of Appeal (ABCA) recently addressed an increasingly common question-whether financial support provided under the Canadian Emergency Response Benefit (CERB) program to workers directly affected by COVID-19 should be factored into wrongful dismissal damages awards. In Oostlander v Cervus Equipment Corporation, 2023 ABCA 13, the employer , 2023 ABCA 13, the employer appealed the assessment of the Court of Queen's Bench of Alberta (ABQB) that the employee reasonably mitigated his losses following his wrongful dismissal, and the calculation of damages. The employee cross-appealed the ABQB's decision to deduct his CERB payments from his damage award. The appellate court dismissed the employer's appeal on the mitigation issue, allowed the appeal on the calculation of damages issue, and allowed the employee's cross-appeal. Of note, the ABCA held that the CERB payments should not have been deducted.

Mitigation

The employer argued that the trial judge misapplied the law pertaining to the mitigation issue, but the ABCA found that there was no basis to conclude this was the case.

Damage Calculation

The employer argued that the trial judge erred in her calculation of damages by awarding 25 months' effective notice rather than 24, and in calculating vacation pay based on the employee's 2018 salary rather than his 2019 salary. The court characterized these errors as oversights that the trial judge would have corrected had they been brought to her attention and, to this extent, allowed the appeal.

CERB Deduction

Almost ten months after the trial decision in Oostlander, the British Columbia Court of Appeal (BCCA) released its decision in Yates v Langley Motor Sport Centre Ltd, 2022 BCCA 398 (discussed here). Yates was the first appellate court decision to address whether CERB payments should be deducted from damages for wrongful dismissal. The BCCA concluded that, for a number of policy reasons ("the desirability of equal treatment of those in similar situations, the possibility of providing incentives for socially desirable conduct and the need for clear rules that are easy to apply"), CERB payments should not be deducted. The ABCA indicated in Oostlander that it found the BCCA's reasoning in Yates compelling and agreed that CERB payments should not be deducted.

Bottom Line for Employers

Following a period of inconsistency in the approach Canadian trial courts took regarding whether an employee's entitlement to damages in lieu of reasonable notice should be reduced by the amount of CERB they received,¹ two appellate courts-the BCCA in Yates and now the ABCA in Oostlander-have both decided that such a reduction should not occur. While these appellate court decisions are binding on the lower courts in their own provinces only, they will be persuasive in the Courts of Appeal in other Canadian jurisdictions.

Footnote

1 See, e.g., Rhonda B. Levy and Barry Kuretzky, British Columbia, Canada Court Decides CERB Payment Should be Deducted from Damage Award for Wrongful Dismissal, Littler ASAP (Mar. 22, 2022); Rhonda B. Levy and Barry Kuretzky, British Columbia, Canada Court Deducts CERB From Employee's Damages for Wrongful Dismissal, Littler ASAP (June 9, 2021); Rhonda B. Levy and George Vassos, Ontario, Canada: Superior Court Considers Impact of COVID-19 on Employee's Reasonable Notice Entitlement, Littler Insight (Feb. 24, 2021).

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