Canada: ABCA Confirms CERB Payments Are Not Deductible From Wrongful Dismissal Damages

Last month our team shared an article with what was at the time the first decision from any appeal court in Canada to consider the question of whether payments received under the Canada Emergency Response Benefit Program ("CERB") should be deducted from wrongful dismissal damages. The Alberta Court of Appeal is now the second appeal court to weigh in on the issue and has confirmed that CERB benefits are not deductible.

Trial decision

The plaintiff was employed by the defendant for 36 years as a heavy duty mechanic. At trial, the court found that the plaintiff was entitled to pay in lieu of notice equal to 24 months' pay. The court held that CERB benefits that had been received by the plaintiff while unemployed were properly deducted from his wrongful dismissal damages in large part because there was no evidence that the plaintiff would be required to repay his CERB benefits.

Court of Appeal

The Alberta Court of Appeal noted that after the appeal was filed, the British Columbia Court of Appeal's decision in Yates v. Langley Motor Sport Centre Ltd., 2022 BCCA 398 was released. It reviewed the analysis in that decision and found the reasoning compelling. Adopting the decision there, the Alberta Court of Appeal held that the plaintiff's CERB benefits should not be deducted from his wrongful dismissal damages.

What this means for employers

The decision from the Alberta Court of Appeal represents only the second decision from an appeal court in Canada to consider the deductibility of CERB benefits. While there appeared to be a divergence of views from trial courts across the country, it appears that a consensus is now forming at higher levels. The question seems settled for now in Alberta and British Columbia and employers in other provinces should seek legal counsel before attempting to deduct CERB benefits from wrongful dismissal damages payable to terminated employees.

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