Damages paid to an ex-employee who has been wrongfully dismissed without notice are income arising out of an employment if they are paid as compensation for the loss of income suffered by the employee as a result of his or her wrongful dismissal. In order for damages to be exempt from earnings, a claimant would have to establish that the monies were paid to him or her for something other than loss of wages; that is, a loss which is totally unrelated to advantages arising from employment. For example, settlements paid to address injury to one’s health or reputation or to address one’s legal fees, would not be allocated as earnings. Where there are no special circumstances, any amount paid by an employer to a laid-off or dismissed employee is paid as compensation for the loss of income.
Canada (A.G.) v. Walford, [1979] 1 F.C. 768 (F.C.A.) A-263-78
Canada (A.G.) v. Tetreault and Joyal [1986], F.C.J. No. 176 (F.C.A.) A-527-85
Canada v. Mayor, April 12, 1998, F.C.J. No. 310 (F.C.A.) A-667-88
Canada (A.G.) v. Harnett [1992], F.C.J. No. 152 (F.C.A.) A-34-91
Canada (A.G.) v. Radigan, January 31, 2001, F.C.J. No. 153 (F.C.A.) A-567-99
If a settlement encompasses both lost wages and a renunciation of a right to reinstatement, only the former constitutes earnings and only that value is to be allocated pursuant to the Regulations. It is however, open to the Commission to make sure that a settlement is not a mere sham to circumvent the employment insurance scheme by disguising lost wages as something else.
Canada v. Plasse, October 5, 2000, F.C.J. No. 1671. (F.C.A.) A-693-99
Meechan v. Canada (A.G.) , [2003] F.C.J. No. 1514 (F.C.A.) A-140-03
An amount paid by an employer to settle an action for wrongful dismissal cannot be deemed to have been paid in settlement of claims different from those asserted in the action for wrongful dismissal.
Canada (A.G.) v. St-Amand, July 4, 1994, F.C.J. No. 1311 (F.C.A.) A-582-93
A claimant who was wrongfully dismissed and who has received benefits in respect of weeks for which compensation is paid by his or her employer must repay the amount of benefits received.
Section 45 Employment Insurance Act
Lauzon v. C.E.I.C., June 26, 1998, F.C.J. No. 944 (F.C.A.) A-836-97
An employer, a trustee in bankruptcy or any other person who has reason to believe that benefits have been paid to an employee who was dismissed is required to ascertain from the Commission whether an amount would be repayable by the employee, before paying compensation to him or her. Where applicable, the employer, trustee in bankruptcy, or any other person must deduct the amount of benefits repayable by the employee from the compensation and remit that amount to the Receiver General.
Subsection 46(2) Employment Insurance Act
Lauzon v. C.E.I.C., June 26, 1998, F.C.J. No. 944 (F.C.A.) A-836-97
An employer, trustee in bankruptcy or any other person who fails to ascertain from the Commission whether an amount is payable and who accordingly does not deduct the amount of benefits which nevertheless were paid and remit that amount to the Receiver General, is in breach of its obligation under the Act, and becomes liable to pay a penalty which is not specified in the legislation, but which could very well be repayment of the amounts which the Receiver General lost due to the employer’s, trustee’s or other person’s negligence.
Lauzon v. C.E.I.C., June 26, 1998, F.C.J. No. 944 (F.C.A.) A-836-97
However, the breach of the employer’s, trustee’s or other person’s obligation under the Act to ascertain whether an amount would be repayable and to deduct the amounts in question, if necessary, does not serve to release the claimant from his obligation under the legislation to repay what he received.
Lauzon v. C.E.I.C., June 26, 1998, F.C.J. No. 944 (F.C.A.) A-836-97
When an employer, trustee or other person deducts an amount, the Receiver General must take action against the employer, trustee or other person, rather than against the claimant.
Lauzon v. C.E.I.C., June 26, 1998, F.C.J. No. 944 (F.C.A.) A-836-97
Canada (A.G.) v. Ellis [1992], F.C.J. No. 937 (F.C.A.) A-1023-91
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2009-05-05