The Alberta Court of Appeal determined that Canada Emergency Response Benefit (“CERB”) payments are not deductible from wrongful dismissal damages, following an emerging trend from other jurisdictions.

In Oostlander v Cervus Equipment Corporation, 2023 ABCA 13 (“Oostlander”), the Alberta Court of Appeal (“ABCA”) held that CERB payments are not deductible from wrongful dismissal damages. In Oostlander, the ABCA adopted the reasoning of the British Columbia Court of Appeal’s (“BCCA”) recent decision in Yates v Langley Motor Sport Centre Ltd., 2022 BCCA 398 (“Yates”).

Key Facts and Trial Decision

The Plaintiff worked as a mechanic for the Defendant employer for 36 years. In May 2018, the Defendant first gave the Plaintiff sixteen months’ working notice for termination. However, a few days before the scheduled termination date in September 2019, the Defendant decided to continue the Plaintiff’s employment notwithstanding the previous termination notice.

In June 2020, the Defendant suddenly purported to rely on the prior working notice it had provided the Plaintiff, giving the Plaintiff only one month of notice until his termination. The Plaintiff’s employment ended in July 2020. The Defendant subsequently offered the Plaintiff another job fifty kilometers away, for the same pay. The Plaintiff rejected the offer and sued for wrongful dismissal.

The trial judge found when the Plaintiff worked passed his initial termination date that the first termination notice was invalidated, such that the working notice the Plaintiff had received up until September 2019 did not factor into his wrongful dismissal damages, which were to be determined based on the termination notice he received in June 2020. Accordingly, the trial judge awarded the Plaintiff twenty-four months’ pay in lieu of notice, but deducted the Plaintiff’s CERB payments from the award. The trial judge also concluded that the Plaintiff’s decision to reject an offer to work a job 50 km away was not a failure by the Plaintiff to mitigate his losses.

Appeal Decision

The Defendant appealed on the issue of mitigation. The Plaintiff cross-appealed on the deduction of CERB from damages.

The ABCA upheld the trial judge’s decision on mitigation. However, the ABCA overturned the trial judge’s decision to deduct CERB from damages.

The ABCA adopted the reasoning of the BCCA in Yates. We recently explained the Yates decision in a blog post here. The BCCA examined the issue of whether there was a “compensating advantage” with respect to CERB. Such an issue arises when the benefit received results in compensation beyond the employee’s actual loss and either (a) the employee would not have received the benefit but for the employer’s breach, or (b) the benefit is intended to be an indemnity for the sort of loss resulting from the employer’s breach. The BCCA concluded that while CERB payments were benefits intended to be an indemnity for the loss resulting from the employer’s breach, the CERB payments were nonetheless not deductible for various public policy reasons, such as avoiding a defendant employer, who breached the employment contract, receiving a windfall from an income support program designed to benefit workers impacted by the COVID-19 pandemic.

The ABCA in Oostlander briefly touched on the “compensating advantage” analysis. Unlike in Yates, the Plaintiff in Oostlander was not dismissed because of the pandemic. Regardless, the ABCA held that the BCCA’s conclusions were compelling and broader public policy concerns weighed against deducting CERB from wrongful dismissal damages.

Takeaways for Employers

Oostlander is the second Canadian appellate decision on the issue of CERB deductibility from wrongful dismissal damages. As described in our previous blog on Yates, this decision will be persuasive authority in other jurisdictions because courts in Saskatchewan and Nova Scotia have also ruled CERB payments are not deductible. Ontario has competing authorities on this issue.

Employers in Alberta should take note of this decision, as it may impact outstanding claims by former employees terminated during the pandemic.

The authors would like to acknowledge the assistance of Cameron Penn, articling student, in the preparation of this blog.