Appeal Win on CERB Deduction and $25K Severance for B.C. Marketer

Yates v. Langley Motor Sport Centre Ltd. dba Langley Hyundai

Samfiru Tumarkin LLP secured $25,000 in severance for our client, Shelby Yates, after successfully arguing that employers shouldn’t be able to deduct the Canada Emergency Response Benefit (CERB) from a worker’s severance entitlements.

Yates was represented by employment lawyer Lior Samfiru, National Co-Managing Partner at Samfiru Tumarkin LLP, at the British Columbia Court of Appeal.

Yates v. Langley Motor Sport Centre Ltd. dba Langley Hyundai is the first appellate decision in Canada to address whether CERB should be deducted from an employee’s severance award for wrongful dismissal.

SEE ALSO
• Paying back CERB: What employees need to know
• Employment lawyer on wrongful dismissals and CERB payments
• Wrongful dismissal in British Columbia

Facts of the case

• On July 8, 2019, Yates began working at Langley Hyundai as the “Marketing Manager and Events Coordinator.”
• On March 24, 2020, Yates is temporarily laid off due to the COVID-19 pandemic. However, she wasn’t recalled by the dealership.
• Under British Columbia’s Employment Standards Act (ESA), the temporary layoff period expired on or about August 30, 2020. Since Yates wasn’t recalled by Langley Hyundai, the date of her termination was deemed to be the date that her temporary layoff began.
• Following her termination, the dealership refused to provide Yates with severance pay. As a result, she filed a wrongful dismissal claim and took legal action.
• At trial, Yates was awarded five months of severance pay, which totalled $25,000.
• However, because Yates received CERB, the court ruled that her severance should be reduced by the amount she received. Instead of $25,000, Langley Hyundai would only have to provide $15,000 in compensation.
• Following the trial judge’s ruling, Yates contacted Samfiru Tumarkin LLP to determine if she could appeal the decision.

The Court’s Decision

The B.C. Court of Appeal agreed with Samfiru Tumarkin LLP’s argument that CERB shouldn’t be deducted from an employee’s severance award for wrongful dismissal.

The firm further argued to a panel of three judges that CERB, similar to Employment Insurance (EI), is a matter between employees and the government. It doesn’t concern companies.

As a result, the court ruled that Langley Hyundai must provide Yates with $25,000 in severance pay.

SEE ALSO
• Paid enough? How to calculate severance pay

Breached employment contract

Chief Justice Robert Bauman, writing for a unanimous court, said “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.”

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• Employment Law Show: 5 things to know about employment contracts
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CERB doesn’t concern employers

The court also agreed with Samfiru Tumarkin LLP’s argument that CERB is a matter between the employee and the government. It doesn’t concern employers such as Langley Hyundai.

“CERB payments are akin to the unemployment insurance benefits considered in Jack Cewe Ltd. to the extent that they are a matter between the employee and the appropriate authority and do not concern the respondent company,” the court said.

Unfair scenario

The court ruled that non-unionized employees in a similar situation to Yates should be treated equally.

If CERB was deducted from a worker’s severance pay, it would result in an unfair scenario where individuals terminated during the government program would receive significantly less compensation than employees terminated after, or near the end of the program.

SEE ALSO
• Severance pay for provincially regulated employees
• Rights to severance for federally regulated employees
• Severance pay in a recession

Can employers deduct CERB from severance pay?

Employers shouldn’t be able to deduct CERB payments from an employee’s severance package after they lose their job, as determined by the B.C. Court of Appeal.

The court also agreed that the program, similar to EI, is a matter between employees and the government. It doesn’t concern companies.

Lessons for employees

• Temporary layoffs are illegal: Unless clearly addressed in your employment contract, it’s illegal for your employer to put an employee on a temporary layoff. Companies in Canada don’t have the right to make significant changes to a non-unionized employee’s job, including the elimination of their hours of work. When this happens, you can immediately interpret the move as a termination and pursue full severance. An experienced employment lawyer at Samfiru Tumarkin LLP can review your situation, enforce your rights, and help you secure the compensation you are entitled to.
• You’re entitled to severance if you’re fired without cause: Severance in Canada can be as much as 24 months’ pay. It’s calculated using several factors, including age, position at the company, length of service, and your ability to find new work. After Yates’ temporary layoff was deemed a termination under the ESA, Langley Hyundai refused to provide her with severance pay, which amounted to a wrongful dismissal. If your company refuses to provide you with severance pay, or their offer isn’t how much you are entitled to, contact an experienced employment lawyer at Samfiru Tumarkin LLP.

Lessons for employers

• Make sure you aren’t breaching your employment contract: Langley Hyundai breached its employment agreement with Yates when the dealership refused to provide her with severance pay after her temporary layoff expired. As a result, the B.C. Court of Appeal ruled that it felt “wrong” for the company to get out of providing Yates with full severance pay because she was collecting CERB when she was supposed to receive severance.
• Consult an employment lawyer before termination: Employers should always consult with an employment lawyer, like the ones at Samfiru Tumarkin LLP, before firing a non-unionized employee. Each situation is unique. A thorough review will ensure that employment laws aren’t being broken and the employee’s rights have been taken into account.

Lost your job? Speak with an employment lawyer

If you are fired or let go for any reason, contact the experienced employment law team at Samfiru Tumarkin LLP.

Our employment lawyers in B.C. can review your situation, enforce your workplace rights, and ensure that you receive the compensation you are owed.