Labour and Employment Law Blog

In Oostlander v Cervus Equipment Corporation, 2023 ABCA 13 the Alberta Court of Appeal (“ABCA”) confirmed that payments received under the Canada Emergency Response Benefit program (“CERB”) cannot be deducted from damages awarded for wrongful dismissal.

The ABCA was greatly persuaded by the decision in Yates v Langley Motor Sport Centre Ltd, 2022 BCCA 398^[1] [“Yates”]. Ultimately, the ABCA agreed with the British Columbia Court of Appeal, and found that broader policy considerations favour non-deductibility of CERB benefits.

Background

Mr. Oostlander was a heavy-duty mechanic at Cervus Equipment Corporation (“Cervus”) with 36 years of service. In May 2018, Cervus notified Oostlander that his employment would terminate about 16 months later on September 11, 2019. That did not happen. Cervus kept Mr. Oostlander employed, and Mr. Oostlander continued to work until June 3, 2020. At this time, Cervus attempted to rely on its earlier working notice, and gave Mr. Oostlander one month’s notice of termination to be effective July 3, 2020. Cervus also offered Mr. Oostlander a job 50km away, which Mr. Oostlander rejected.

Mr. Oostlander sued for wrongful dismissal. The trial judge held that Cervus had wrongfully terminated Mr. Oostlander on July 3, 2020, and that he was entitled to 24 months’ pay in lieu of notice. From that amount, the trial judge deducted the CERB benefits Mr. Oostlander received.

Cervus appealed the trial decision, claiming that the trial judge erred in her assessment of whether Mr. Oostlander mitigated his damages. Mr. Oostlander cross-appealed the decision on the basis that his CERB benefits should not have been deducted from his damage award.

Decision

With respect to the CERB benefits, the ABCA followed the logic in Yates exactly, despite Mr. Oostlander’s termination being unrelated to the COVID-19 pandemic.

The Court found that it seemed 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, the ABCA agreed that it go to the worker.

Furthermore, the ABCA agreed that the inquiry as to whether the CERB would eventually need to be repaid by the employee was a “fruitless exercise.” There is no certainty on this issue, and in any event, the Court confirmed that it is a matter between the employee and the authorities administering the program.

The ABCA concluded that broader policy considerations militate against the deductibility of CERB from damages for wrongful dismissal. Mr. Oostlander’s cross-appeal was allowed.

Conclusion

It is now abundantly clear in Alberta and British Columbia that CERB payments are not properly deductible from damages for wrongful dismissal. Employers will no longer be able to benefit from CERB payments received by employees during a reasonable notice period, which may increase an employer’s liability for damages for wrongful dismissal occurring during (or prior to) the COVID-19 pandemic.

Employees may be responsible for the repayment of CERB amounts, even after they receive a judgment or settlement of a wrongful dismissal claim. Section 12 of the Canada Emergency Response Benefit Act states, “If the Minister determines that a person has received an income support payment to which the person is not entitled, or an amount in excess of the amount of such a payment to which the person is entitled, the person must repay the amount.”

If you have any questions regarding employee terminations, or workplace COVID-19 matters, please contact a member of our Labour, Employment and Human Rights Group.

_{[1] Please see BC Court of Appeal Confirms that CERB Payments Cannot be Deducted from Damages for Wrongful Dismissal, authored by Lucy Williams on December 12, 2022.}