A recent Court of Appeal decision has determined that CERB benefits are not deducted from the compensation that an employee is owed for a wrongful dismissal.
COVID-19 Lockdowns and Implementation of CERB
In 2020, many Canadians lost their employment as a result of widespread COVID-19 lockdowns and restrictions. A significant percentage of those terminations were done unlawfully - in breach of the employee's contractual rights - resulting in wrongful dismissal claims against their former employers.
At the same time, the federal government implemented the Canada Emergency Response Benefit ("CERB") program, which provided up to $500 per week for up to 28 weeks in total to assist Canadians unable to work. This was intended to provide temporary income replacement.
The Argument in Favour of Deducting CERB Benefits
Employers tried to argue that employees who had received CERB benefits should have their wrongful dismissal claims reduced. Since the employees had already received partial compensation through CERB for their loss of employment, these employers argued that the amount the employees were owed as compensation for their wrongful dismissals should be reduced proportionately.
At first, it appeared that the courts in BC would side with the employers on this issue. A handful of decisions from the BC Supreme Court determined that CERB benefits should be deducted from an employee's compensation for a wrongful dismissal. That appeared to be the law in BC until recently.
Court of Appeal: CERB Benefits Are Not Deductible
The BC Court of Appeal has now weighed in on the issue, and has reversed those earlier BC Supreme Court decisions which held that CERB benefits are deductible. According to the BC Court of Appeal, CERB benefits are not deducted from an employee's wrongful dismissal damages.
The fact that an employee received CERB benefits from the federal government does not reduce the amount that the employer (who bears responsibility for wrongfully dismissing the employee) must pay as compensation to the employee.
This is positive news for employees who have received CERB benefits and still have outstanding wrongful dismissal claims against their former employers. The BC Court of Appeal's decision in Yates v. Langley Motor Sport Centre Ltd., 2022 BCCA 398, is available here.
About the Author
Brendan Harvey advises and represents employees and small businesses at all stages before, during, and after the employment relationship. His primary areas of practice include wrongful dismissal, employment standards, and human rights litigation. If you would like to schedule a meeting with Brendan Harvey or any other of our lawyers, give us a call at 604-988-1000.
