Canada Emergency Response Benefit – Repayments

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If a dismissed employee receives Canada Emergency Response Benefit (CERB) and then either negotiates additional severance or obtains some through a court award, do they have to pay back the CERB amounts? According to at least one Ontario Judge, the answer is no.

Many readers will know that Employment Insurance benefits must be repaid when the recipient receives additional money, by settling or winning a wrongful dismissal claim. Since Employment Insurance benefits are income replacement, to assist during times of unemployment, they cannot be received at the same time as the individual is receiving employment income.

One might assume that CERB would be treated the same way, as it is also designed to be income replacement. However, Service Canada suggested otherwise when it wrote, on a FAQ page, as follows

Q: Does being in receipt of severance impact a person’s eligibility for the Canada Emergency Response Benefit?

A: A severance payment does not impact an individual’s eligibility for the Canada Emergency Response Benefit.

That FAQ, which is for information purposes and not law, indicates that receiving severance pay will not impact eligibility for CERB. But does CERB have to be repaid if the individual receives severance pay for the same period?

According to Mr. Justice Dunphie in Iriotakis v. Peninsula Employment Services Limited:, the CERB would not have to be repaid:

I agree with the defendant 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 time beyond their general status as taxpayers of Canada. The level of benefit paid (approximately $2,000 per month) was considerably below the base salary previously earned by the plaintiff to say nothing of his lost commission income. On balance and on these facts, I am of the view that it would not be equitable to reduce Mr. Iriotakis’ entitlements 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.  I decline to do so.

Like all aspects of the pandemic and the legislative and judicial response thereto, these issues are constantly evolving. Contact us to ensure that you get advice specific to your situation before you make any decisions.

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