CERB Not to Be Deducted From Wrongful Dismissal Damages in Alberta
A recent decision of the Alberta Court of Appeal has confirmed that in Alberta, Canada Emergency Response Benefit (CERB) payments received by employees following the termination of their employment should not be deducted from damages for wrongful dismissal. This decision follows a recent BC Court of Appeal decision that reached the same conclusion.
Prior to the two Court of Appeal decisions, case law across the country was divided on this issue. This meant that Alberta employers litigating the amount of reasonable notice to be provided to a former employee who received CERB following termination could ask the court to reduce any damages awarded to the employee by the amount of CERB received. Such arguments weren’t always successful, but there was a chance they might be. More practically, this meant that employers negotiating severance packages with former employees who had received CERB could attempt to reduce the cost of the severance package by the amount of CERB received. As a result of these Court of Appeal decisions, in Alberta and BC this will no longer be possible.
In the Alberta trial decision, the trial judge found that the Plaintiff should have been provided with 24 months’ reasonable notice of the termination of his employment. After calculating the wages/benefits owing to the Plaintiff by his employer, the trial judge deducted from the total the value of the CERB payments the Plaintiff had received. The Plaintiff appealed this deduction.
The Court of Appeal confirmed that even though CERB was intended as a wage subsidy for the loss of employment, policy considerations militate against allowing CERB to be deducted from damages for wrongful dismissal. Those policy considerations include:
- The need for clear rules that are easy to apply;
- Encouraging socially desirable conduct like income support in a pandemic; and
The desire to treat individuals in similar situations in a similar manner (i.e., ensuring that all individuals who suffered a loss of employment due to COVID-19 received income support regardless of whether they were entitled to reasonable notice of termination or not).
It’s important to note that the question of whether CERB had to be repaid by the Plaintiff was irrelevant to the Court’s decision. As such, this decision is applicable even if the employee in question doesn’t have to repay the benefits received.
This decision is an unfortunate one for employers but does provide clarity with respect to this issue in Alberta.
McLennan Ross can provide legal advice to employers with respect to negotiating severance agreements with former employees. Please reach out to our Labour and Employment Practice Group with any question.