CUB 67758

GUY GOULARD, Umpire

The claimant made an initial claim for benefits effective January 9, 2005. The Commission subsequently determined that the claimant had received a $3,744.00 performance bonus from her employer during her benefit period. The Commission determined that the performance bonus constituted earnings under subsection 35(2) of the Employment Insurance Regulations and allocated those earnings under subsection 36(4) of the Regulations. That decision resulted in an overpayment of $415.00.

The claimant appealed the Commission's decision to a Board of Referees, which allowed the appeal. The Commission appealed the Board's decision. This appeal was heard on February 9, 2007 at Valleyfield, Quebec. The claimant attended and was represented by her counsel, Jean-Guy Ouellet.

The claimant did not dispute the fact that the performance bonus she had received from her employer constituted earnings under section 35 of the Employment Insurance Regulations. The issue here is how those earnings had to be allocated under section 36 of the Regulations. The parties' positions are very clear. The Commission is of the view that the performance bonus must be allocated in accordance with subsection 36(4) of the Regulations, that is, to the period in which the services that gave rise to the bonus payment were performed. The claimant is of the view that the bonus was related not to the services performed by the employees but rather to the company's financial success and that, since none of subsections 36(1) to (18) of the Regulations applies, the bonus she received must be allocated under subsection 36(19) of the Regulations to the week in which the transaction occurred, that is, when she was paid the bonus.

The Board accepted the claimant's position and allowed her appeal.

On appeal, the parties stood by their respective positions.

Mr. Ouellet submitted that the Board of Referees had properly understood that the performance bonus paid by the employer was based on the company's good performance during the year preceding the payment, not on the employees' performance. He noted that, in Exhibit 4, the employer had stated that performance bonuses were paid for years in which production was particularly good and that no production bonus had been paid for the previous three or four years. The amount of the bonus was the same for all employees and was calculated as specified in the collective agreement. The only requirement for entitlement to the bonus was that an employee have worked at least 1,040 hours during the year for which the bonus was paid.

The variable compensation plan (VCP) of the employer's Chlore-alcali and Derivatives Division (CA&DD) is described as follows in Exhibit 6-4:

[Translation]

The CA&DD's VCP has three components: a strategy component, a profitability component and a local component. The plan will pay a basic amount if the business reaches the threshold for the strategy component. This component (up to $1,950) will be based on a corporate assessment of the CA&DD's performance as against the business plan. The profitability component (up to $1,170) will be based on the CA&DD's earnings before interest and taxes. The local component (up to $780) will be based on the local objectives of a plant or function. The maximum amount of the CA&DD bonus is $3,900.

A letter of agreement between the employer and the union (Exhibit 6-5) states the following, inter alia: "[Translation] The employees in the bargaining unit will receive a bonus based on the return on equity. The bonus will be payable in March of each year."

Subsection 36(4) of the Regulations provides as follows:

36(4) Earnings that are payable to a claimant under a contract of employment for the performance of services shall be allocated to the period in which the services were performed.

The Commission referred to CUB 55953, in which the claimant had received a bonus described as follows: "The bonus [was] an Incentive Bonus and a Production Bonus. It was paid to employees of TimberWest pursuant to a plan called The Honeymoon Bay Incentive Plan - 2001 to 'motivate and reward employees who assist with attainment of Operating goals and the financial success of TimberWest Forest Limited'." No other information was provided about the eligibility requirements for the production bonus in that case, such as whether the amount of the bonus was somehow related to the individual work of each employee.

In the case before me, there was no connection between payment of the bonus and the services performed by the claimant. The bonus was related solely to the company's overall performance, and the employer had complete discretion over whether to pay the bonus. I am therefore of the opinion that subsection 36(4) of the Regulations cannot apply in this case. I am also of the opinion that the other subsections between subsections 36(1) and (18) cannot apply to the allocation of the bonus in question. Subsection 36(19) must therefore apply.

The Commission has not shown that the Board of Referees erred in its decision.

Accordingly, the appeal is dismissed.

Guy Goulard

UMPIRE

OTTAWA, Ontario
February 14, 2007