She approached Terry Hogan, who brought an action against his former employer for wrongful dismissal after he lost his job in August 2020 during the COVID-19 pandemic. In Hogan v. 1187938 B.C. Ltd. 2021 BCSC 1021, the British Columbia Supreme Court awarded him wrongful dismissal damages but deducted CERB benefits he had received.
Moody said that Hogan declined to appeal the decision. But then she met Shelby Yates, who received a similar judgment from the provincial Supreme Court on her wrongful dismissal claim and appealed the ruling.
Lia Moody, Samfiru Tumarkin LLP
“CERB was an emergency aid program designed to support Canadian workers who lost all or a significant portion of their income due to the COVID-19 pandemic,” according to the summary of the ruling. “It is a matter between the individual and the appropriate authority and should not result in a windfall for the employer.”
In Yates v. Langley Motor Sport Centre Ltd. 2021 BCSC 2175, B.C. Supreme Court Justice Andrew Mayer concluded that Yates would not be required to repay the $10,000 in CERB payments she received, so he deducted that amount from her damages of $25,000.
Yates was temporarily laid off from her job as a marketing manager and event co-ordinator at Langley Hyundai in March 2020. But the layoff became permanent in August 2020, and since her employer allowed the 13-week period for temporary layoffs to pass without recalling her to work, Yates’s termination date was deemed to be retroactive to March.
“Whether the payments are in the end repayable by the plaintiff is of no concern to the defendant employer. It is a matter between the plaintiff and the authorities administering the scheme,” B.C. Court of Appeal Chief Justice Robert Bauman wrote in his reasons agreed to by Justices Susan Griffin and Joyce DeWitt-Van Oosten.
“It seems 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, it seems to better reflect the intention of Parliament that it go to the worker.”
Lower-court rulings have declined to deduct CERB from wrongful dismissal damages, including the Nova Scotia Supreme Court in Slater v. Halifax Herald Limited 2021 NSSC 210 and the New Brunswick Court of Queen’s Bench in Donovan v. Quincaillerie Richelieu Hardware Ltd. 2021 NBQB 189.
Last year, B.C.’s Supreme Court also did not discount a damage award to account for CERB payments in Andrews v. Allnorth Consultants Ltd. 2021 BCSC 1246.
Moody, managing partner of Samfiru Tumarkin LLP’s Vancouver office, and Western Canada practice leader of the firm’s labour and employment law group who represented Yates in the appeal, said that the B.C. Court of Appeal’s ruling in Yates reflects that “at the end of the day, whether or not the benefits are payable has absolutely no bearing on what the employer should be required to pay.”
“This is ultimately between the employee and the government, and the government will either require repayment or it won’t,” said Moody. “But either way, the employer will always have to be on the hook for what it should have paid at the outset at the time of termination and the benefits shouldn’t supplement a breach.”
She said that one issue Chief Justice Bauman raised in the court’s ruling is “the idea of incentivizing socially responsible behaviour toward employees, and allowing employers to run the clock and giving the benefit of a government program doesn’t do that.”
He wrote that “in the end, what tips the balance against deductibility in my view are the policy considerations of the desirability of equal treatment of those in similar situations, the possibility of providing incentives for socially desirable conduct and the need for clear rules that are easy to apply,” and referred to the Supreme Court of Canada’s decision in IBM Canada Ltd. v. Waterman 2013 SCC 70 in which Justice Thomas Cromwell — writing for the majority — outlined “three main policy considerations” to explain why a benefit should or should not be deducted: “punishment, deterrence, and the provision of incentives for socially responsible behaviour.”
“In general, a benefit will not be deducted if it is not an indemnity for the loss caused by the breach and the plaintiff has contributed in order to obtain entitlement to it,” said Justice Cromwell.
Moody said that B.C.’s appellate court “could have decided that it would just comment solely on this particular set of facts and not make a grand pronouncement on the deductibility of CERB. It could have just found that it shouldn’t have been deducted in Mrs. Yates’ case.”
“But Chief Justice Bauman did decide to make comments on social policies, so I think it will be really helpful, not just for government programs but for employees in the future,” said Moody, who made the broader argument during oral submissions before the court.
“An employer’s breach of contract shouldn’t be subsidized through a government program that was designed to help the worker.”
She said the case and the subsequent ruling highlights the need to examine “broader policy considerations.”
“Sometimes, a court is going to make a determination based on overall conceptions of fairness and justice versus following the strictest letter of the law, especially as employment decisions continue to roll out in the context of COVID.”
Employment lawyer Scott Payne, an associate with B.C. firm, CBM Lawyers LLP, who represented respondent Langley Motor Sport in the appeal, did not reply to a request for comment on the decision.
However, Moody doubts that the Supreme Court of Canada would hear an appeal on what has become the highest court decision on CERB benefits.
“It was a fairly niche program, and hopefully something we wouldn’t see again,” she said.