IN THE MATTER of the Unemployment Insurance Act
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IN THE MATTER of a claim by
EARL McFARLAND
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IN THE MATTER of an appeal to an Umpire by the claimant
from a decision by the Board of Referees given on
January 2, 1991, at Halifax, Nova Scotia
DECISION
ROULEAU, J.
This matter came before me for hearing at Halifax, Nova Scotia, on June 21, 1993.
The claimant appeals the unanimous decision of a Board of Referees which upheld the Insurance Officer's determination that the amount of $460.00 which he receives weekly as a retirement pension is earnings to be deducted from the benefits that he would otherwise be entitled to, in accordance with regulations 57 and 58 of the Unemployment Insurance Regulations.
The claimant, a pilot, originally retired on pension from the Canadian Armed Forces in 1980. On August 28, 1988 he accepted a one year contract position at CFB Shearwater. After the termination of his first contract, two further extensions were offered and the claimant continued to work until October 26, 1990. During the first year of his contract the claimant received his pension from the Armed Forces but it was discontinued during the 18 months of extensions. During this period, his existing pension was rolled over into his pension plan and he was obligated to contribute once again to the superannuation fund. Furthermore, since it had been determined that his employment was insurable, he was required to pay unemployment insurance premiums. He filed for benefits on October 25, 1990 and was notified by letter dated November 17, 1990 of the Commission's decision to allocate his pension.
That decision was based on sections 57 and 58 of the Unemployment Insurance Regulations. The relevant subsections at that time provided as follows:
57.(1) In this section,
"pension" means any retirement pension
(a) arising out of employment, service in the Canadian Forces or in any police force
57.(2) Subject to this section, the earnings to be taken into account for the purpose of determining whether an interruption of earnings has occurred and the amount to be deducted from benefits payable under subsection 26(1) or (2), 29(4), 30(5), 32(3), 32.1(4) of the Act and for the purposes of sections 51 and 52 of the Act are
(e) the moneys paid or payable to a claimant on or after January 5, 1986, on a periodic basis or in a lump sum on account of or in lieu of a pension;
57.(3) That portion of the income of a claimant that is derived from any of the following sources is not earnings for the purposes mentioned in subsection (2);
(j) the moneys referred to in paragraph (2)(e), if the number of weeks of insurable employment required by section 17 of the Act for the establishment of the benefit period of the claimant were accumulated after the date on which those moneys became payable and during the period in respect of which the claimant received those moneys.
The Commission submits that since the claimant established his benefit period during a time when a pension was payable, his pension is not exempt under paragraph 57(3)(j) and must therefore be allocated. The Commission relies on CUB 16276, where an Umpire determined that if a claimant's pension payments are discontinued for a period of employment during which he re-qualifies for benefits under section 17 of the Act, any pension payments received during the course of a subsequent claim period must be considered as earnings according to subsection 5(1) of the Unemployment Insurance Benefit Entitlement Adjustments (Pension Payments) Act (Pension Payments Act).
The Board of Referees heard this matter on January 2, 1991; since that time it has come to the attention of the claimant that several of this co-workers, employed under the same terms as himself, who were also required to re-contribute to their pension plans, were declared eligible for full unemployment insurance benefits under paragraph 57(3)(j) of the Regulations. He submits that paragraph 57(3)(j) of the Regulations is still open to interpretation. He further submits:
I find it inconceivable that had I voluntarily left my employment one day short of a full year's continuous service I would have received full salary plus full pension for that year and still would have qualified for full U.I. benefits. Instead, I opted to continue employment until compulsory retirement age (which is surely desired) and in so doing penalized my right to U.I. benefits.
I agree. I do not favour the narrow interpretation given to subsection 5(1) of the Pension Payments Act and paragraph 57(3)(j) of the regulations as advanced by my learned colleague in CUB 16276. As Madame Justice Wilson commented in Abrahams v. A.G. Canada, [1983] 1 S.C.R. 2 at page 10:
Since the overall purpose of the Act is to make benefits available to the unemployment, I would favour a liberal interpretation of the re-entitlement provisions, I think any doubt arising from the difficulties of the language should be resolved in favour of the claimant.
In the present case I think it is legitimate to ask what the object of the legislature was in enacting those provisions relating to pensioners who return to the work force. The government recognized that there are many retirees who, by economic choice or by necessity, have decided to remain active members of the workforce. Some individuals are required to retire many years before the normal retirement age; in particular, members of the Armed Forces and the RCMP. These "retirees" are expected to find other employment after their "retirement". No doubt they will contribute to the unemployment insurance fund during this new employment. By including pensions as "earnings" under paragraph 57(2)(e), the legislation effectively made these ineligible for unemployment insurance benefits.
To correct this inequity, Parliament passed the Pension Payments Act which introduced paragraph 57(3)(j) of the Regulations. This section allows a pensioner who re-qualifies for unemployment insurance by working after retirement, to collect benefits without being penalized for collecting a pension as well.
In the present case, the claimant continued to receive his pension for the first three hundred and sixty-four days of his new employment. However, because of the Canadian Forces Superannuation Act, when the term of his employment was extended beyond one year his pension benefits were suspended for the remainder of his employment. There is no question that this did result in an increase in his pension entitlement when this employment subsequently terminated. In fact, the record indicates that his pension increased by $687.00 per month.
If I were to follow the reasons of may colleague in CUB 16276, the claimant would not be entitled to any benefits, notwithstanding the obvious intent of Parliament in enacting the provisions relating to pensioners who return to the workforce. I favour a more liberal interpretation of these provisions; one that gives effect to what Parliament actually intended.
Accordingly, I am satisfied that the Board of Referees erred in law in its interpretation of paragraph 57(3)(j) and I will substitute my decision under section 81 of the Act.
The claimant became eligible for benefits on the basis of a "second" term of employment. Pursuant to paragraph 57(3)(j), pensions arising from his first employment are not "earnings" to be considered under paragraph 57(2)(e). However, in ny view, the $687.00 monthly increase in pension resulting from this "second" employment does constitute "earnings" under this section and is to be deducted against those benefits he is otherwise entitled to.
P. ROULEAU
UMPIRE
OTTAWA, Ontario
July 16, 1993