*This decision has been overturned, please find the blog addressing the reconsideration here: http://ztgh.com/resources/blog/reconsideration-by-the-lat-reverses-earlier-decision-and-finds-cerb-not-akin-to-ei-and-not-deductible-from-irb *
As a result of the Covid-19 pandemic, many Canadians found themselves to be out of work and accessing the Canada Emergency Response Benefit (“CERB”). CERB provided temporary income support to employed and self-employed individuals whose employment was directly affected by the pandemic. A recent decision by the License Appeal Tribunal (the “LAT”), Foster v Aviva General Insurance, 2021 ONLAT 19-014657/AABS found CERB to be akin to Employment Insurance (“EI”) benefits, and tantamount to other remuneration from employment. As a result, Adjudicator Nathan Ferguson found the CERB benefit to be deductible from Income Replacement Benefit (“IRB”) entitlement in accordance with subsection 7(3) of the Statutory Benefits Schedule (the “Schedule”).
In Foster, the applicant JF was involved in an automobile accident and sought to qualify for benefits pursuant to the Schedule. Upon finding that JF was entitled to IRBs up to 104 weeks after the accident, Adjudicator Ferguson was then faced with the determination of whether the CERB JF received was deductible from his IRBs entitlement. Subsection 7(3) of the Schedule allows insurers to deduct 70 per cent of gross employment income from the amount of IRBs entitled to.
Section7(3) The insurer may deduct from the amount of an income replacement benefit payable to an insured person,
(a) 70 per cent of any gross employment income received by the insured person as a result of being employed after the accident and during the period in which he or she is eligible to receive an income replacement benefit; and
(b) 70 per cent of any income from self-employment earned by the insured person after the accident and during the period in which he or she is eligible to receive an income replacement benefit. O. Reg. 34/10, s. 7 (3).
EI is considered deductible from IRBs pursuant to the definition of “gross employment income” in subsection 4(1) of the Schedule, which includes salary, wages, and other remuneration from employment, including fees and other remuneration for holding benefits, and any benefits received under the Employment Insurance Act, but excludes any retiring allowance within the meaning of the Income Tax Act and severance pay. Adjudicator Ferguson interpreted the Schedule to find JF’s receipt of CERB should be treated in the same manner as if he received EI benefits or “other remuneration of employment,” pursuant to the definition in subsection 4(1). He classified CERB to be essentially akin to EI in the context of the Schedule, despite the distinction that recipients of CERB did not have to pay into the program to receive it, as is the case with EI.
In contrast, the Superior Court of Justice in a recent decision from earlier this year, Iriotakis v. Peninsula Employment Services Limited, 2021 ONSC 998, held that CERB was not deductible from damages for wrongful dismissal, as it could not be considered in the same light as EI benefits in the context of calculating such damages. Adjudicator Ferguson distinguished this from the treatment of CERB in the context of IRBs or the broader Schedule, as the entitlement to IRBs is a benefit to which an applicant is entitled to as a result of paying insurance premiums and is not designed to approximate damages.
As a significant number of Ontarians received CERB during the global pandemic, this issue will likely come up again. Foster concludes that CERB payments will have an impact on reducing IRB entitlements if received or claimed during the same period. As we know, LAT decisions have no precedential value, and thus, until and unless the Divisional Court is asked to decide this issue, this decision remains but one opinion of what may become many.
Laila Khalil is author of this blog and an Articling Student at ZTGH. If you have a question about this decision, or a similar file involving CERB, please contact Laila at email@example.com or Eric Grossman at 416-777-5222.