Appellate Court Finds that CERB is Not Deductible from Wrongful Dismissal Damages

On November 29, 2022, the British Columbia Court of Appeal released its decision in Yates v. Langley Motor Sport Centre Ltd., 2022 BCCA 398, in which it held that payment received by an employee under the Canada Emergency Response Benefit (CERB) should not be deducted from wrongful dismissal damages. 

Background

The plaintiff employee, Yates, was hired by the Defendant Company for the position of Marketing Manager and Event Coordinator. After a little over eight (8) months of employment, Yates was temporarily laid off in March 2020 at the start of the COVID-19 pandemic. Yates was not recalled to work and in August 2020, her temporary layoff became a permanent termination of employment on a without cause basis. In accordance with the provisions of the British Columbia Employment Standards Act, Yate’s termination was deemed to be retroactive to the start of the layoff period. 

Yates sued the employer for pay in lieu of notice (also known as “wrongful dismissal damages”). While Yates argued she was entitled to eight (8) months of notice, the employer’s position was that two to three (2 - 3) months was appropriate in the circumstances. Yates was ultimately awarded five (5) months of pay in lieu of notice, however, the lower court deducted $10,000 from her damages on account of the CERB payments she received during her layoff. 

Yates appealed the trial judge’s decision, and she was partially successful on appeal when the BC Court of Appeal held that CERB payments are not deductible from wrongful dismissal damages. 

Takeaways 

Until now, there has been conflicting case law across Canada about whether CERB payments are deductible from damages in a wrongful dismissal case. 

The Yates decision has now established that, due to “broader policy considerations”, these benefits should not be deducted from wrongful dismissal damages. In other words, an employer cannot rely on an employee’s receipt of CERB payments to subsidize amounts owing for its breach of contract. The Court of Appeal emphasized the CERB program was designed to help workers during the COVID-19 pandemic and, as such, should not now be used to lessen an employee’s entitlements at common law. 

While notice periods for short service employees continue to trend upwards, it is important that employers have written employment contracts with a properly drafted termination clause as a strong employment contract could have avoided this entire wrongful dismissal claim. 

If you have any questions about Employment Law, reach out to the SV Law Employment Law team and we will be happy to assist you.