CUB 67625

GUY GOULARD, Umpire

The claimant filed an initial claim for benefits effective August 7, 2005. The reason for loss of employment indicated on the Record of Employment was abolition of a position. The claimant filed a complaint against her employer with Quebec labour standards (Commission des normes du travail), and an agreement was reached under which the claimant received $10,000. The agreement specified that the payment was broken down as follows: $2,000 as reimbursement for psychological help, and $8,000 as severance pay. The Commission determined that the $8,000 the claimant received as severance pay constituted earnings within the meaning of section 35(2) of the Employment Insurance Regulations (the Regulations), and allocated it in accordance with section 36(9) of the Regulations. This resulted in an overpayment of $4,375, which was reimbursed by the employer.

The claimant appealed from the Commission's decision with respect to the allocation of the $8,000 received as severance pay to a Board of Referees, which allowed the appeal. The Commission appealed from the Board's decision. That appeal was heard in Bécancour, Quebec, on January 24, 2006. The claimant was present.

In her appeal to the Board of Referees, the claimant submitted that the $8,000 she had received under an agreement with her employer should not have been considered earnings from employment. Although the settlement agreement between the claimant and her employer indicated that the employer undertook to pay $8,000 as severance pay, the claimant maintained that this was a payment in compensation for emotional damage resulting from psychological harassment, and wrongful dismissal.

The claimant states in Exhibit 7-2 that at the suggestion of the mediator, she requested advice from a Commission official concerning the wording to be used in the agreement to ensure that the amount she received would not affect her Employment Insurance benefits. She said that the person she consulted at the Commission told her that the only words she could use were "[Translation] lump sum or severance pay." She stressed that the amount payable was on no account to be salary or vacation pay, but compensation for the way in which her employer had treated her. The Commission's representative nevertheless insisted that the claimant had no choice but to use the words suggested. The representative stated at the time that when her case was considered, any decision would be on the basis of the fact that the agreement stated that one of the claimant's complaints indicated that it was a complaint of psychological harassment.

It should be noted that the agreement between the claimant and her employer stated that Human Resources Development Canada would calculate the amount to be paid by the employer to the Commission out of the severance pay stipulated in the agreement. The parties undertook to keep the terms of the agreement confidential.

The parties to the agreement could not agree on a definition of the nature of the amount received by the claimant that was inconsistent with the relevant legislative provisions.

It should also be pointed out that in its written representations to the Board of Referees in Exhibit 15, the Commission stated:

[Translation]

When the amounts paid or payable by reason of dismissal or termination of employment have been determined, allocation is made in every case from the week of dismissal or termination of employment, depending on the event that gave rise to the payment.

As we shall see, this was an erroneous representation by the Commission, which disregarded section 36(11) of the Regulations.

The claimant appeared before the Board of Referees, and repeated that the $8,000 she had received under an agreement with her employer as a result of complaints to Quebec labour standards had been paid in damages for emotional injury resulting from the psychological harassment she had suffered at the hands of the employer. She also stated that throughout the period of transaction and payment, she was under medical supervision and had difficulty in grasping the meaning of the wording used in the agreement.

The Board of Referees reviewed the evidence and allowed the claimant's appeal, for the following reasons:

After examining the docket and listening to the claimant's testimony, the Board of Referees found that the claimant had been misinformed and that she never would have signed the agreement had she known that the terminology used could have meant something other than emotional injury.

On appeal, the Commission submitted that the Board of Referees had erred in fact and in law in deciding that the $8,000 received by the claimant as severance pay was not to be allocated under sections 35(2) and 36(9) of the Regulations, since the terms of the agreement between the claimant and her employer had stated that this amount was severance pay.

The Commission referred to Federal Court of Appeal decisions in which the reason for payment of the amounts in question differed from the reason in the instant case. In Savarie (A-704-95), it was for accumulated sick leave on termination of employment. In Giroux (A-527-87), it was compensation for mandatory annual leave in accordance with a Decree under the Act respecting labour relations in the construction industry (R.S.Q. c. R-20). In Guilbault (A-1235-84), during a benefit period, the claimant received a sum of money under Quebec's Act respecting labour standards requiring an employer who had failed to give an employee who was laid off or dismissed the prior notice the law required to pay compensation. The Court held that such a payment was to be allocated under what is now section 36(9) of the Regulations, since it was payable when the claimant was laid off.

The passages from the Regulations that are relevant to this appeal read as follows:

36(9) Subject to subsections (10) and (11), all earnings paid or payable to a claimant by reason of a lay-off or separation from an employment shall, regardless of the nature of the earnings or the period in respect of which the earnings are purported to be paid or payable, be allocated to a number of weeks that begins with the week of the lay-off or separation in such a manner that the total earnings of the claimant from that employment are, in each consecutive week except the last, equal to the claimant's normal weekly earnings from that employment.

(10) Subject to subsection (11), where earnings are paid or payable to a claimant by reason of a lay-off or separation from an employment subsequent to an allocation under subsection (9) in respect of that lay-off or separation, the subsequent earnings shall be added to the earnings that were allocated and, regardless of the nature of the subsequent earnings or the period in respect of which they are purported to be paid or payable, a revised allocation shall be made in accordance with subsection (9) on the basis of that total.

(11) Where earnings are paid or payable in respect of an employment pursuant to a labour arbitration award or the judgment of a tribunal, or as a settlement of an issue that might otherwise have been determined by a labour arbitration award or the judgment of a tribunal, and the earnings are awarded in respect of specific weeks as a result of a finding or admission that disciplinary action was warranted, the earnings shall be allocated to a number of consecutive weeks, beginning with the first week in respect of which the earnings are awarded, in such a manner that the total earnings of the claimant from that employment are, in each week except the last week, equal to the claimant's normal weekly earnings from that employment.

The Commission thus erred in stating that when the amounts paid or payable by reason of dismissal or termination of employment had been determined, allocation is made in every case from the week of dismissal or termination of employment, since section 36(11) of the Regulations provides for an exception to this general rule where the evidence shows a finding or admission that disciplinary action was warranted.

In this case, the claimant maintained in her written statements and in her testimony before the Board that the complaints she had filed with Quebec labour standards were based on emotional injury she had suffered by reason of harassment on the part of her employer. This was stated in the agreement between the parties, which also acknowledge that a portion of the sum paid was for reimbursement of the cost of psychological help.

While the decision of the Board is not very clear on this point, it is obvious that it recognized that the claimant had demonstrated that the amounts she received had been paid as damages for emotional injury, and the claim that she had signed the agreement with that idea in mind.

In this case, there was evidence that could allow the Board of Referees--and could allow me--to determine that there was a finding or admission that disciplinary action was warranted, and that under section 36(11) of the Regulations, the $8,000 paid to the claimant could be allocated from the time at which the amount was paid or became payable under the agreement between the parties.

The Umpire is not empowered to decide a case again or to substitute his discretionary authority for the Board's authority. The jurisdiction of the Umpire is limited by section 115(2) of the Act. Unless the Board of Referees failed to observe a principle of natural justice, erred in law or based its decision on an erroneous finding of fact that it made in a perverse or capricious manner or without regard for the material before it, the Umpire must dismiss the appeal.

In Le Centre de valorisation des produits marins de Tourelle Inc. (A-547-01), Létourneau J. stated that the role of an Umpire is limited "to deciding whether the view of facts taken by the Board of Referees was reasonably open to them on the record."

I cannot find that the Board of Referees erred in that way. On the contrary, the Board's decision is entirely consistent with the evidence before it and the relevant legislative provisions as interpreted in the case law.

The appeal is accordingly dismissed.

I am bound to draw attention to what I consider sloppiness, not to say carelessness or even negligence, on the part of the Commission in the advice provided to the claimant and in the written submissions to the Board of Referees.

Guy Goulard

UMPIRE

OTTAWA, Ontario
February 5, 2007