The Supreme Court of British Columbia has deducted CERB benefits from the notice period in a recent ruling.
Harold Frederiks was employed at Splashdown Waterparks from 2000 to 2016. A new employer, known as the Executive Group, leased the land the waterpark was on and planned to build a hotel and residences on it. Frederiks went to work for the Executive Group in October 2016 and was terminated in December 2019.
A big part of the case focused on whether or not Frederiks’ employment period for the purposes of notice began in 2000 or 2016. The Executive Group said it didn’t purchase the waterpark as a going concern, therefore its employment of Frederiks did not continue his employment with Splashdown.
The court agreed that it didn’t purchase the waterpark as a going concern, and ruled the employment period was Oct. 1, 2016, to Dec. 6, 2019.
Taking into account his age (45) and the fact he had mid- to senior-management duties, it settled on 10 months as the appropriate notice period. The court declined to reduce the award for failure of Frederiks’ duty to mitigate by finding another job, in part because he was looking for work during the pandemic in the hard-hit entertainment and recreation industry.
The CERB issue
When it came to the Canada Emergency Response Benefit (CERB), a federal government benefit that provided $2,000 a month to employees who lost their jobs during the pandemic, Frederiks argued it shouldn’t be deducted from the notice period.
He argued that he received CERB because he was ineligible for employment insurance (EI), not because he was dismissed by the Executive Group.
“He argues that he received the CERB benefits because he had recently exhausted his Employment Insurance due to a parental leave and had not built up enough insurable hours to collect Employment Insurance when he was terminated,” wrote Justice Matthews.
But the court did not accept that argument.
“While Employment Insurance was the first benefit that Mr. Frederiks would have pursued had it been available, it was a necessary precondition that Mr. Frederiks not be employed in order to obtain CERB,” wrote Justice Matthews. “The unavailability of one collateral does not disrupt the connection between CERB and his dismissal. In other words, Mr. Frederiks still received a collateral benefit in the form of CERB, regardless of the path that he took in order to receive the benefit.”
Pointing to the Supreme Court of Canada’s 2013 ruling in IBM Canada Limited v. Waterman, the court said any collateral benefit, with the exception of charitable gifts and private insurance, is to be deducted if one of two scenarios apply. When the advantage is one that:
a) would not have accrued to the plaintiff if the breach had not occurred; or
b) was intended to indemnify the plaintiff for the sort of loss resulting from the breach.
Therefore, it awarded 10 months’ salary to Frederiks minus the CERB benefits he collected during the notice period. It left it to the two parties to calculate the exact amount, and awarded costs to Frederiks.
For more information see Frederiks v Executive TFN Waterpark Limited Partnership, 2022 BCSC 1725 (CanLII).