Another Canadian Appellate Court Rules CERB Payments Not To Be Deducted From Wrongful Dismissal Damages – Unfair/ Wrongful Dismissal

In a recent decision, the Alberta Court
of Appeal declared that any CERB (Canadian Emergency Response
Benefit) payments received by an employee cannot be deducted from
their wrongful dismissal damages.

The employee, a heavy-duty mechanic that serviced agricultural
equipment in Bassano, Alberta with Cervus Equipment Corporation
(“the Company”), was informed in May 2018 that his
employment would terminate in 16 months on September 11, 2019.
However, a couple days before the termination date, the employee
was informed that he would not be terminated. The employee
continued working and on June 3, 2020, he was provided with one
month notice of his termination for July 3, 2020. The Company also
offered the employee another position with similar pay structure,
but the employee declined this job because it was 50 km away.

The employee sued the Company for wrongful dismissal. The trial
judge determined that the employee was entitled to 24 months’
common law pay in lieu of notice of termination, equal to $134,904,
plus vacation pay in the amount of $14,196. However, the trial
judge deducted the CERB benefits received by the employee from the
award.

The Company appealed this decision on the basis that the
employee failed to mitigate his losses. The Company argued that
when the employee was offered another position that was 50 km away,
it was his duty to mitigate his damages by accepting the offer. The
employee cross-appealed on the basis that his CERB payments should
not be deducted from his wrongful dismissal damages.

The Court of Appeal’s Decision

The Court of Appeal agreed with the trial judge’s decision
and clarified that if the employee had accepted this job offer by
the Company, he would need to make a daily commute of 100 km.
Therefore, both the trial judge and the Court of Appeal determined
that it was reasonable for the employee to decline the new
position. Thus, the Company’s appeal was dismissed.

The employee’s cross appeal was allowed. The Court of Appeal
disagreed with the trial judge’s finding that CERB payments
should be deducted from the plaintiff’s wrongful dismissal
award.

When the employee filed his cross-appeal, the Yates v Langley
Motor Sport Centre Ltd, 2022 BCCA 398 (Yates)
decision was released. You can read more about this decision here. Yates
referenced the concept of ‘compensative advantage’ when
determining whether CERB payments should be deducted. Specifically,
the court in Yates stated the following:

Following the British Colombia Court of Appeal’s reasoning
in Yates, the Alberta Court of Appeal determined that the
purpose of awarding wrongful dismissal damages to an employee is to
place them in the same financial situation they would have been had
the wrongful dismissal not occurred. Hence, the Court in
Yates highlights that it is unjust for the employer to
‘enjoy’ a compensative advantage that was meant to assist
employees unable to work as a result of COVID-19. As a result, the
Alberta Court of Appeal concluded that the employee’s CERB
payments should not be deducted from their wrongful dismissal
award.

While employers in British Columbia and now Alberta will not be
able to deduct CERB payments from wrongful dismissal payments,
employers in the rest of Canada should view this latest decision as
a strong indication that their obligations to make common law
payments in lieu of notice of termination should not consider CERB
benefits received by the terminated employee.

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.