Wrongful dismissal cases can take time to resolve; even the most efficient case can take six to nine months to resolve . Unfortunately, while the case winds its way through the system bills and other realities do not wait. For some the only option is to collect Employment Insurance (“E.I.”) benefits. The receipt of those benefits can create a bit of challenge when the wrongful dismissal case resolves if people’s minds are not turned to the issue.
When I act for employees, I often counsel my clients to ensure that the lights are kept on and food is kept on the table as a first priority. In some cases dismissed employees have the means to sustain themselves without applying for E.I. benefits; but not everyone is in such a position and some find themselves applying for E.I. benefits. Indeed this is exactly the situation those benefits were created to cover and towards which the worker has been contributing all those working years.
Also, given the way employment insurance benefits are calculated, employees who are unsure whether they should or will have to apply for employment insurance benefits are counselled to apply for such benefits as soon as they are dismissed.
Where the receipt of E.I. benefits creates a bit of a challenge is when the wrongful dismissal action resolves; assuming that it resolves in the employee’s favour.
Sections 45 and 46 of the Employment Insurance Act, S.C. 1996, c. 23 provides as follows
45. If a claimant receives [E.I.] benefits for a period and, under a labour arbitration award or court judgment, or for any other reason, an employer, a trustee in bankruptcy or any other person subsequently becomes liable to pay earnings, including damages for wrongful dismissal or proceeds realized from the property of a bankrupt, to the claimant for the same period and pays the earnings, the claimant shall pay to the Receiver General as repayment of an overpayment of benefits an amount equal to the benefits that would not have been paid if the earnings had been paid or payable at the time the benefits were paid.
46. (1) If under a labour arbitration award or court judgment, or for any other reason, an employer, a trustee in bankruptcy or any other person becomes liable to pay earnings, including damages for wrongful dismissal or proceeds realized from the property of a bankrupt, to a claimant for a period and has reason to believe that benefits have been paid to the claimant for that period, the employer or other person shall ascertain whether an amount would be repayable under section 45 if the earnings were paid to the claimant and if so shall deduct the amount from the earnings payable to the claimant and remit it to the Receiver General as repayment of an overpayment of benefits.
46. (2) If a claimant receives benefits for a period and under a labour arbitration award or court judgment, or for any other reason, the liability of an employer to pay the claimant earnings, including damages for wrongful dismissal, for the same period is or was reduced by the amount of the benefits or by a portion of them, the employer shall remit the amount or portion to the Receiver General as repayment of an overpayment of benefits.
Practically, what happens is that once an amount for termination pay is agreed upon, the employee has an obligation to inform Service Canada (the government agency responsible for the administration of E.I.) Service Canada will then issue the employee a “Notice of Debt” certificate for the sum of money that it requires to be repaid. The employee then provides that notice to the employer, who remits the payment directly to the Receiver General (the same party who collects taxes). Any residual amount is paid to the employee, less any applicable statutory deductions.
The failure to inform the employer at the time of settlement that the employee has collected E.I. benefits can create problems, both for the employee and for the employer. Accordingly, it is a good idea to both review the issue prior to the conclusion of settlement and to thoroughly report the receipt of all E.I. benefits.--
As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.
Sean P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP. He is also a part-time professor at Algonquin College teaching Trial Advocacy for Paralegals and Small Claims Court Practice.