Iriotakis v Peninsula Employment Services Limited - The Effect of CERB Payments on Calculation of Notice Pay

Iriotakis v Peninsula Employment Services Limited - The Effect of CERB Payments on Calculation of Notice Pay

26 May, 2021

 

In response to the COVID pandemic, the Federal government introduced the Canada Emergency Response Benefit (“CERB”), which was designed to provide workers who were laid off or had their hours reduced as a result of the pandemic with financial relief. However, there has been limited commentary from the courts on how this impacts an employee’s entitlement to notice pay.

This issue was examined by the Ontario Superior Court of Justice in Iriotakis v Peninsula Employment Services Limited, 2021 ONSC 998. In this case, the 56-year-old Plaintiff had worked for the Defendant for 2.33 years, with a base salary of $60,000.00, increased by sales commissions to a total of $145,186.30. His position was Business Development Manager, but his duties were not managerial in nature.

With regard to mitigation of damages, the Defendant argued that the CERB payments received by the Plaintiff ($2,000.00 per month) should be taken into account in calculating the appropriate notice period.

In examining the unique circumstances of the CERB, Dunphy J distinguished it from Employment Insurance benefits, commenting that “…CERB cannot be considered in precisely the same light as Employment Insurance benefits when it comes to calculating damages for wrongful dismissal. CERB was an ad hoc programme and neither employer nor employee can be said to have paid into the program or “earned” an entitlement over tome beyond their general status as taxpayers of Canada.”

Dunphy J found that, “on balance and on these facts” [emphasis added by Dunphy J], I am of the view that it would not be equitable to reduce Mr. Iriotakis’ entitlement to damages from his former employer by the amount of CERB given his limited entitlements from the employer post-termination relative to his actual pre-termination earnings.” He declined to offset CERB payments from the Plaintiff’s entitlement to notice pay.

Although Dunphy J’s comments suggest that the deductibility of CERB benefits may change on a case-by-case basis, the fact that the Court declined to offset the CERB payments in this case is a welcomed sign to employees that may be in a similar circumstances. However, considering the fact that the Plaintiff was earning a healthy income of around $140,000.00/yr prior to his termination, it is certainly questionable when it would be “equitable” to offset CERB payments from notice pay.