The Alberta Court of Appeal ("ABCA") has determined that payments received under the Canada Emergency Response Benefit ("CERB") are not deductible from wrongful dismissal damages. This decision is consistent with other jurisdictions, including in British Columbia.1
Facts
The Plaintiff in Oostlander v Cervus Equipment Corporation, 2023 ABCA 13 ("Oostlander") was employed for 36 years before being terminated without cause in July 2020. Thereafter, the Plaintiff applied for and received CERB payments. Employers will recall that the federal government implemented the CERB program in response to the COVID-19 pandemic, as a form of wage replacement to assist workers who lost their employment. CERB is separate and apart from the federal government's employment insurance ("EI") regime.
One of the key issues in Oostlander was whether CERB payments should be deducted from the Plaintiff's wrongful dismissal damages. The body of case law that considers this issue is known as "compensating advantages," which generally arise where:
- an employee receives a benefit that over-compensates the employee beyond their actual loss, or
- where the benefit is intended to be an indemnity for the type of loss resulting from the employer's breach of the employment contract.
Courts typically do not allow employees to "double dip" (i.e., receive more money than they otherwise would but for the termination of their employment). Thus, the question of the deductibility of CERB payments made its way to Alberta's highest court.
Trial Decision
In the Court of King's Bench, the trial judge ordered that the Plaintiff was entitled to a 24 month notice period; however, the trial judge deducted CERB payments received by the Plaintiff after termination. The trial judge acknowledged that Canadian Courts were not consistent in their approaches to the deductibility of CERB payments, and that most trial Courts focused on whether CERB payments would ultimately need to be repaid by employees to the government (a requirement that has not been fully clarified by the authorities administering the scheme).
Appeal Decision
The ABCA overturned the trial judge's decision regarding the deductibility of CERB payments, adopting the reasoning in Yates v Langley Motor Sport Centre Ltd., 2022 BCCA 398 ("Yates").
In Yates, the British Columbia Court of Appeal ("BCCA") held that CERB payments were a "compensating advantage," in that such payments were clearly intended to be a form of income support (or indemnity) for workers who lost their job because of the employer's termination of the employment contract.
However, because of broader public policy considerations, the BCCA in Yates determined that CERB payments should not be deducted from wrongful dismissal damages. Specifically, it would be unfair for an employer, who breached the contract of employment, to effectively receive a windfall from the federal government's payments to out-of-work employees.
The ABCA in Oostlander adopted the same reasoning, also finding that CERB payments are not deductible even where an employee's receipt of CERB was not connected to the COVID-19 pandemic, and even where it is unknown whether CERB payments will ultimately need to be repaid by the employee to the federal government.
Takeaways
In light of the decisions in Yates and Oostlander, it is highly likely that CERB payments in British Columbia and Alberta will not be deducted from wrongful dismissal damages. Employers in these provinces should be mindful of Oostlander and Yates, even where an employee's termination and receipt of CERB was not connected to the COVID-19 pandemic. The issue remains unresolved in Ontario at the appellate level.
Our Labour, Employment & Human Rights group is available to assist employers in defending and navigating wrongful dismissal claims.
Footnote
1. Yates v Langley Motor Sport Centre Ltd., 2022 BCCA 398
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