Recently, the Supreme Court of British Columbia decided another case that considered the impact of the Canada Emergency Response Benefit (CERB) on wrongful dismissal damage awards. In Reotech Construction Ltd. v. Snider, BCSC 317 the Court came back with a decision favorable to employers when Justice Fleming found that a trial judge erred by failing to deduct the CERB payments received by the Respondent from the damage award.
Background
This decision is an appeal by Reotech Construction Ltd ("Reotech") of a lower Provincial Court decision on wrongful dismissal damages. The Respondent, Mr. Snider, had been working with the appellant for two years and four months before he was placed on temporary layoff at the start of the pandemic and never returned to work. The trial judge issued a decision which awarded Mr. Snider 4.5 months reasonable notice and did not deduct the CERB amounts he received during that time.
When addressing the issue of whether or not to deduct the CERB payments, the trial judge found that there were conflicting authorities on the matter and there was no clear evidence to support a finding on whether Mr. Snider would have to repay his CERB benefits to the government. The trial judge determined that since EI benefits are not deducted from damage awards but are repaid, CERB payments should not be deducted from damage awards either.
The Decision
The Appellant Judge, Justice Fleming, found that trial judge erred in his decision by declining to deduct them from the damage award. He came to this conclusion after considering several factors. First, Justice Fleming turned to the collateral benefits rule that was set out in the Supreme Court of Canada (SCC) case IBM Canada Limited v Waterman. In that matter the SCC held that a collateral benefit is a compensating advantage that should be deducted from a damage award when it:
- Would not have accrued to the plaintiff if the breach had not occurred; or
- Was intended to indemnify the plaintiff for the sort of loss resulting from the breach.
The SCC further determined that charitable gifts and private insurance are exceptions to the requirement that collateral benefits be deducted from a damage award.
When applying the above test, Justice Fleming determined that the collateral benefits exception did not apply to CERB for two reasons. First, that CERB is unlike private insurance or EI because the employee does not pay part of the premium. Second, unlike EI, there is no obligation created by CERB legislation where an employee would be required to reimburse the government if they receive a damage award. As such, it would put the Respondent in a better position than had the contract not been breached. Justice Fleming allowed the appeal and ordered that the CERB payments, totaling $9,000, be deducted from the Respondent's award.
Key Takeaways
While past cases have taken the same position as Reotech, this case supports employers by further solidifying that CERB payments should be deducted from damage awards. Therefore, if you are an employer that has dismissed an employee and owe them pay in lieu of reasonable notice, you may be able to deduct the CERB payments that the employee received during the notice period.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
