The Ontario Superior Court recently held that a dismissed employee who received Canada Emergency Response Benefit (CERB) payments immediately following his dismissal should not receive less in wrongful dismissal damages on account of the fact he received the emergency benefit.
The decision underscores the point that CERB does not affect an employer's post-termination obligations.
In Iriotakis v Peninsula Employment Services Limited, the Court ordered an employer to pay its former employee damages in lieu of three months' reasonable notice.
The employee had been dismissed without cause in March of 2020. Shortly thereafter, he began receiving CERB.
The employer urged the Court to consider the employee's receipt of CERB payments when calculating the employee's damages award. However, the Court rejected this argument, holding that the calculation of the employee's wrongful dismissal damages should not be reduced because the employee received CERB payments.
In coming to this conclusion, the Court stated:
"CERB was an ad hoc programme and neither employer nor employee can be said to have paid into the program or "earned" an entitlement over time beyond their general status as taxpayers of Canada."
The Ontario Labour Relations Board (OLRB) came to a similar conclusion in Gray v Safecross. In that case, the OLRB held that an employee's damages award should not be reduced because she had received CERB payments during the period for which she was awarded damages. The OLRB commented that it was up to the Canada Revenue Agency—not the OLRB—to determine if the employee had received a double recovery.
No requirement for withholding or remitting amounts due to receipt of CERB
On a related point, employers should also be aware that they do not have a duty to withhold or pay back CERB amounts on behalf of employees who receive CERB and are also set to be paid damages in lieu of notice.
Ordinarily, when an employer has to pay an employee damages in lieu of notice, the employer has a statutory obligation to withhold amounts from that payment if the employee received Employment Insurance benefits during the notice period. The employer then has to remit any such "overpayment" amounts to the Receiver General (note that this statutory obligation is currently suspended).
Importantly, an employer has no similar obligation with respect to CERB. Rather, it will be the CERB recipient's duty (i.e., the employee's duty) to repay any overpayment amount—not the employer's.
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