Alberta Court Subtracts CERB From Dismissal Notice

Written by Lewis Waring, Paralegal, Student-at-Law (third year), Editor, First Reference Inc.

In Oostlander v Cervus Equipment Corporation (“Oostlander”), the Alberta Court of Queen’s Bench subtracted an employee’s payments under the Canada Emergency Response Benefit (CERB) program from their entitlement to reasonable notice following their wrongful dismissal. While the 36-year employee’s entitlement to damages after receiving one month of notice was not in question, the Albertan court’s decision to subtract the amount they had received under the CERB program represents a regional answer to an evolving question throughout the country. Whether this Western approach to CERB will emerge into a national consensus, be limited to a regional approach or be eventually overturned is unclear.

Background

The employee worked for the employer as a heavy-duty mechanic in Bassano, Alberta, for 36 years, from 1984 until his dismissal in July 2020. The employee’s dismissal without cause was the result of the employer’s business decision to centralize its equipment servicing in Brooks, Alberta, a town about 50 kilometres from the location in which the employee worked. In May 2018, the employer provided the employee with written notice that his employment would terminate 16 months later, when it planned to close the servicing arm in its Bassano location in September 2019.

As September 2019 approached, the employer began delaying its timeline, pushing back its decision to close its Bassano location. The employer informed the employee that his employment would continue beyond the termination date mentioned in his original notice of dismissal. This situation continued until June 2020, when the employer provided one month’s notice of dismissal that would take effect in July 2020. When the employee disputed the employer’s ability to dismiss him in this manner, the employer offered him a job performing the same work for the same rate of pay in its Brooks location. The employee rejected this offer and launched an action for wrongful dismissal.

As the employer had decided not to dismiss the employee on the date stated in the original notice of dismissal, they had effectively cancelled their plans to dismiss the employee and had been required to begin again if they sought to dismiss him. The employer had mistakenly assumed that their original notice of dismissal given in May 2018 served as the marker for the beginning of the employee’s notice period, resulting in a 17-month notice period. As a result, the employer had assumed it was entitled to provide just one additional month of notice and dismiss the employee without cause. This mistake resulted in the employer wrongfully dismissing its employee of 36 years with only one month’s notice.

While the employer’s wrongful dismissal was thus clearly established, an issue arose as to the amount of reasonable notice the employee was entitled to. This dispute arose as a result of the fact that the employee had for a time been in receipt of payments through the Canadian Emergency Response Benefit program, also known as CERB. The Alberta Court of Queen’s Bench found that, as the employee had rightfully received payments under the CERB program and would retain those payments, they were thus deductible from the notice of dismissal the employer was required to provide.

CERB subtracted from reasonable notice

In Oostlander, the employee’s receipt of CERB payments was distinguished from other cases in which an employee had been required to repay the government. In those cases, the CERB benefits received by the employee were found to have been irrelevant to the calculation of reasonable notice in the case of wrongful dismissals. In this case, the employee had not been required to repay his CERB benefits. The Alberta Court of Queen’s Bench found that the employee’s receipt of these benefits was directly relevant to the amount of notice of dismissal he was entitled to receive.

An evolving western approach to CERB

While Oostlander clearly finds that CERB payments, when not repaid to the federal government, are to be subtracted from the reasonable notice an employer owes following a wrongful dismissal, this apparently clear approach is not at all a settled question throughout the country. Instead, how Canada’s courts will incorporate the widely used CERB program into employment law disputes has been an evolving question. One particular issue that has been addressed a number of times in the context of the COVID-19 pandemic has been the interaction between reasonable notice and CERB payments. One specific question that has been addressed is whether, when an employee has been wrongfully dismissed, the fact that they received CERB payments decrease the amount of notice the employer is required to provide them under common law.

The answer to this question at this point seems to depend upon where an employment dispute takes place. In Western Canada, for instance, courts seem to have confirmed a consistent approach that allows employers in this region to have a relatively clear answer, at least for the time being. Oostlander joins a chain of cases arising in Western Canada that altogether seem to confirm that CERB payments are to be deducted from the reasonable notice the employer is required to provide in the context of wrongful dismissal. In other words, when an employer dismisses its employee without providing them with the amount of notice required under employment standards legislation, a court determining how much notice that employee was due will subtract the amounts the employee received through the CERB program.

This Western approach to CERB and reasonable notice must be kept in context for employers operating in other parts of the country. As it stands, there is no unified approach to CERB in the context of wrongful dismissals throughout Canada. In Ontario, Quebec or the Atlantic provinces, courts could very well establish a consistent trend that finds CERB to be wholly unrelated to the employer’s duty to provide reasonable notice of dismissal. If such a trend were to develop in Eastern Canada, the inconsistency between different regions of the country may result in the need for the Supreme Court of Canada to rule on this specific issue. Given the fact that the CERB program was implemented by the federal government, the possibility of Canadians being subject to disparate protections in different parts of the country may or may not be a sustainable trend.

Employers throughout Canada are recommended to approach determining the entitlements of their employees based upon their receipt of CERB payments with extreme caution. While Oostlander and the evolving Western approach to CERB in the context of wrongful dismissals suggests a consistent trend is emerging, this trend is limited to that region at the moment and could be directly contradicted in other parts of the country. Moreover, this Western approach could ultimately be ruled to be incorrect in future disputes that could potentially rise to the highest court in Canada. Thus, while the state of the law in this area appears to be coming to a firm consensus, this consensus may be subject to a broad overhaul in the future-especially given that the CERB program was a distinct emergency measure that arose as a consequence of a once-in-a-century pandemic. When attempting to determine how the CERB program affects the rights of employees, employers in Western Canada and throughout the country are recommended to consult with counsel.