CERB is not Deductible From Wrongful Dismissal Damages: B.C. Court of Appeal

Employees who received CERB following termination of employment will no longer have those benefits deducted from any award of wrongful dismissal damages.

In its November 29, 2022 decision, the British Columbia Court of Appeal overturned a number of prior decisions of the British Columbia Supreme Court which had deducted the value of CERB from any wrongful dismissal damages award.

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 employees, the Federal government provided a number of different programs, including the Canadian Emergency Response Benefit (“CERB”).  CERB was available to employees who, under section 6 of the Canada Emergency Response Benefit Act, S.C. 2020, c. 5, ceased working for reasons related to Covid-19 between March 15, 2020 and October 3, 2020.

In the first reported judgement concerning this issue in British Columbia, the British Columbia Supreme Court in Hogan v. 1187938 B.C. Ltd(“Hogan”) examined the deductibility of CERB from wrongful dismissal damages.   The Court concluded that CERB was deductible from wrongful dismissal damages as because there was no evidence that CERB would need to be re-paid, a windfall would result to an employee who received both CERB and wrongful dismissal damages for the same time period.  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. 

Hogan was followed in other subsequent decisions, including Yates v. Langley Motor Sport Centre Ltd., 2021 BCSC 2175 (“Yates”).  In Yates, the plaintiff received $10,000 in CERB benefits over a 5-month period.  The Supreme Court agreed with the analysis in Hogan, reasoning that CERB payments were a benefit intended to indemnify against the loss of regular salary arising from Langley Motor Sports breach of Ms. Yates’ employment agreement.  Consequently, the Court found that the $10,000 of CERB payments should be deducted from the award of damages for wrongful dismissal.

Ms. Yates appealed the decision to the British Columbia Court of Appeal and the Court ruled that CERB payments provided to Canadians throughout the COVID-19 pandemic are not to be credited to employers in wrongful dismissal actions.  The Court relied upon broader policy considerations to come to its conclusion:

First, as a matter of overall impression, 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.

Later in the decision, the Court seemed to suggest that the question of whether or not CERB benefits were deductible from wrongful dismissal damages was a futile exercise involving benefits receivers and the government, not the benefits receivers employer.  The Court wrote, at paragraph 65, that:

I consider this a bit of a fruitless exercise. … Whether the payments are in the end repayable by the plaintiff is of no concern to the defendant employer. It is a matter between the plaintiff and the authorities administering the scheme.

Accordingly, the law in British Columbia now provides that an employee who was terminated and received CERB can recover both wrongful dismissal damages and CERB.

If you have any questions about this topic, other COVID-19 related questions, or any questions relating to workplace law generally, please do not hesitate to contact a Mathews Dinsdale lawyer.

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