On June 29, 2021, I wrote a blog post about the decision in Hogan v 1187938 BC Ltd., 2021 BCSC 1021, where the BC Supreme Court confirmed that an employee’s receipt of Canada Emergency Response Benefit (“CERB”) payments after termination should be deducted from an award of damages for wrongful dismissal. That decision was released on May 28, 2021.
On June 25, 2021, a different judge of the BC Supreme Court released a decision in the case of Andrews v. Allnorth Consultants Limited 2021 BCSC 1246, and reached the opposite conclusion regarding the deduction of CERB payments. The Andrews case also addressed a situation where an employee agreed to a temporary layoff for several weeks, but not for the entire time period proposed by the employer.
Mr. Andrew started working for the defendant, Allnorth Consultants Limited, in 2006 as a senior mechanical designer. On July 7, 2020, Allnorth proposed a temporary layoff for Mr. Andrew and Mr. Andrews agreed to it. The letter indicated the temporary layoff may be up to 24 weeks (concluding on December 22, 2020).
While he was on a temporary layoff, in August, Mr. Andrews started new employment with Wolftek Industries. In September, Allnorth applied for a variance to the Employment Standards Branch (“ESB”) to extend the maximum period of temporary layoff for Mr. Andrew to December 31, 2020. Mr. Andrews did not support this application for a variance. on October 1, 2021, the ESB granted the application.
Mr. Andrews filed a notice of civil claim on November 2, 2020. He argued that he was constructively dismissed when the temporary layoff was unilaterally extended in September without his consent. He was seeking payment in lieu of notice for 12-14 months.
Allnorth argued that Mr. Andrews agreed to the temporary layoff knowing that it may extend to December 22, 2020. As well, Allnorth argued that Mr. Andrews repudiated his employment agreement by commencing a legal action in November before the temporary layoff period ended. Allnorth also argued that its liability ended in August when Mr. Andrews started new employment with Wolftek.
The trial judge found that Allnorth constructively dismissed Mr. Andrews when he refused to agree to the variance application in September and Allnorth applied to extend the temporary layoff until December 31, 2020.
The trial judge assessed a notice period of 11 months for Mr. Andrews. The parties agreed that his earnings from Wolftek during the notice period ought to be deducted from the damages award.
The trial judge refused to deduct the CERB payments received by Mr. Andrews because “it is likely the plaintiff will have to pay these back”. There was limited analysis regarding this conclusion.
This is one example of how the courts will carefully consider the legal effect of a temporary layoff, even where the employee has initially agreed to it.
Also, there is still some uncertainty about the effect of CERB payments when calculating damages in wrongful dismissal cases. However, the decision in Hogan includes more analysis and, in my opinion, is more persuasive to rely on in future cases.