An Ontario court has ruled that the Canada Emergency Response Benefit (CERB) is not a factor when determining notice periods in wrongful dismissal cases.
The CERB, launched by Ottawa during the pandemic to ease the financial burden of Canadians, paid $2,000 a month to eligible workers who lost their jobs.
In a recent case, the Ontario Superior Court of Justice ruled that a worker who collected $16,000 in CERB payments after being terminated should not have that amount deducted from damages she was awarded.
Sonia Gracias worked full-time as a dental hygienist for Walt Dentistry. Her annual pay was $75,000. She was dismissed without cause after being on the job for a relatively short time period – five months and 21 days.
On her dismissal, Gracias was paid her entitlements under Ontario’s Employment Standards Act (ESA) of one week’s pay in lieu of notice.
Gracias proceeded to sue Walt Dentistry for $50,000 for human rights damages, $50,000 for common law dames for wrongful dismissal, and $50,000 for punitive damages.
She claimed she was fired because her chemotherapy treatments and her child-care responsibilities would reduce her availability for work.
But she later abandoned the human rights and punitive damages claims and instead sought $43,750 ($6,250 per month) as compensation for wrongful dismissal based on a notice period of seven months.
She took the position that her employment contract, which limited her notice period, was unenforcable because it unlawfully contracted out of the ESA.
The employer’s position
Walt Dentistry viewed things differently. It denied the human rights claim and said it could have fired Gracias for cause for egregious employee misconduct. It abandoned those defenses when Gracias amended her claim.
Instead, it said the court should dismiss her lawsuit because the terms of her written employment contract barred her from claiming more than what she was entitled to under the ESA.
In the alternative, it said that because Gracias received CERB to the tune of $16,000 during the COVID-19 pandemic, there are no compensatory damages required.
Further, the court had this interesting quote about the employer’s defence.
“Releasing the dogs of litigation war and going for the jugular, Walt Dentistry submits that Ms. Gracias falsified her evidence of mitigation with fabricated records of her Internet job applications,” it said.
Both parties agreed to have the dispute settled by summary judgement motion, and the court agreed.
It awarded Gracias three-months’ notice, less the already paid ESA minimum of one week, for total damages of $17,242.26 plus prejudgment interest of $344.85.
The CERB, the court said, was simply not a mitigation credit in the employer’s favour.
The CERB debate
It’s interesting to watch how courts have interpreted CERB as a factor in wrongful dismissal damages.
In one B.C. case, Shalagin v. Mercer Celgar Limited Partnership, CERB payments – line unemployment insurance benefits – were deducted from the compensation payable in lieu of notice.
In contrast, in the Ontario case of Iriotakis v. Peninsula Employment Services Limited, the Nova Scotia case of Slater v. Halifax Herald Limited, and in the British Columbia case of Snider v. Reotech Construction Ltd., CERB payments were not deducted from a wrongful dismissal reward.
“I agree with the reasons in Iriotakis, Slater, and Halifax Herald, and hold that CERB is not a mitigation credit in the immediate case,” the court said.
Why 3 months’ notice?
The court took a number of factors into account when determining that three months’ notice for an employee who had been on the job for less than six months was appropriate.
First, Gracias was looking for a replacement job several weeks before she was dismissed – “which says a great deal about how discontented both parties were about her role at Walt Dentistry.”
“She was not a valued employee, and she did not have any management responsibilities. The duration of her employment was less than six months. She is in the prime of her career with considerable work experience and her age, credentials, and experience presented competitive advantages in the job market,” the court said.
“Her evidence and Dr. Walt’s evidence reveals that the Covid-19 pandemic was not a major impediment to her finding a new position. Her efforts at mitigation were reasonable. Balancing the various factors in play in the immediate case, three months is a reasonable notice period.”
For more information see:
Gracias v. Dr. David Walt Dentistry, 2022 ONSC 2967 (CanLII)