Overturned trial decision deducting CERB payments; agreed that worker mitigated damages
The worker was employed as a heavy-duty mechanic servicing agricultural equipment in Bassano, Alta., for Calgary-based Cervus Equipment Corporation. He first joined Cervus in 1984.
In 2018, Cervus decided to centralize its equipment servicing business in Brooks, Alta., a town that was about 50 km away from Bassano. The Bassano location was to become a retail branch only, so there was no longer a position for the worker there. In May, the company notified the worker that his employment would terminate on Sept. 11, 2019 – which served as working notice of 16 months.
As his termination date approached, the worker asked about the status of his termination. In September 2019, a few days before the termination date, Cervus told him that it was keeping him on longer. As a result, the worker continued to work with no further discussion of when his employment with the company would end.
On June 3, 2020, Cervus informed the worker that his employment would be terminated one month later on July 3. The company asserted that no additional notice was necessary, since it had initially provided notice more than two years earlier.
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Worker rejected offer of re-employment
Subsequently, the company offered the worker a job at the Brooks location for the same pay. The worker rejected the offer and sued for wrongful dismissal.
The worker received employment insurance benefits and the Canada Emergency Response Benefit (CERB) following his dismissal. He found a casual job in September 2019 and later another job as a school caretaker with varying hours.
Cervus argued that the worker failed to mitigate his damages by not accepting the job offer and by not applying for a job advertisement at a tire store in Bassano.
The trial judge found that the worker’s refusal to accept the employment offer in Brooks was reasonable, as it would require a daily commute of 100 km total, sometimes in winter road conditions. The judge also found that relocation was unrealistic because the worker had lived in Bassano most of his life and his wife worked at a school in Bassano.
The judge also found that the fact that the worker found employment within a few months demonstrated “a reasonable level of diligence in his job search.” As for the tire store position, the judge accepted the worker’s argument that he wasn’t qualified for it. As a result, there was no failure to mitigate, the judge said.
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25 months’ notice
The trial judge ordered Cervus to pay the worker 25 months’ pay in lieu of reasonable notice, plus vacation pay based on the worker’s 2019 salary. and subject to the deduction of his earnings from alternate employment. However, she also deducted the amount of CERB payments the worker received, noting that CERB has been treated inconsistently by the courts in context of wrongful dismissal damages, with most focusing on whether the payments will ultimately be deductible.
The judge assumed, without evidence to the contrary, that the worker would retain his CERB payments, so deducting them from the pay in lieu of notice award was appropriate.
Cervus appealed the decision, arguing that the trial judge erred in her assessment that the worker mitigated his damages. It also argued that the 25-month notice award was an error, as the normal maximum notice award was 24 months, and the worker’s 2018 salary should have been used for the vacation pay calculation because it was the last complete year of employment.
The worker cross-appealed, claiming that his CERB payments should not have been deducted from his damage award.
The Court of Appeal found that it was reasonable for the trial judge to find that the worker’s rejection of Cervus’ offer of re-employment in Brooks was not a failure to mitigate. The judge properly considered the evidence and the conclusion was not outside of the range of reasonable outcomes – it is not the role of the appeal court to reweigh the evidence, the court said.
However, the appeal court agreed with Cervus that the 25-month notice award and the vacation pay calculation were mathematical errors that, had they been brought to the trial judge’s attention, would likely have been rectified.
The Court of Appeal allowed the appeal regarding the mathematical errors, but denied it in relation to the worker’s mitigation of damages.
The BC Court of Appeal overturned the deduction of CERB payments from wrongful dismissal damages.
No deduction of CERB
The appeal court also allowed the worker’s cross-appeal. It referred to the BC Court of Appeal decision Yates v. Langley Motor Sport Centre Ltd, 2022 BCCA 398, in which the court looked at the question of whether to deduct CERB payments from wrongful dismissal damages. In Yates, the BC court noted that CERB payments “were intended as a wage subsidy, and loss of wages was the sort of loss resulting from the [employer’s] breach of the employment contract” and employees didn’t contribute to the benefit.
The Alberta Court of Appeal agreed with the court in Yates in that “it seems wrong for a defendant employer who has breached the employment contract with the plaintiff to enjoy, effectively, a windfall from an income support program designed to benefit workers impacted by the COVID-19 pandemic. If a windfall is to result, it seems to better reflect the intention of Parliament that it go to the worker.”
Noting that CERB payments were “a matter between the employee and the appropriate authority and do not concern the respondent company” and there was no certainty over whether they would be repaid, the Court of Appeal found that CERB payments should not be deducted from the wrongful dismissal damages.
See Oostlander v. Cervus Equipment Corporation, 2023 ABCA 13.
A BC court reduced wrongful dismissal damages for a worker who didn’t look for employment in her industry.
