Tuesday, 19 June 2012

Deducting WSIB from Wrongful Dismissal

One of the joys of being a “lawyer for the suddenly unemployed” is that one gets to work in the field of overlapping insurance policies and acronyms: LTD, CPP, WSIB, EI, and occasionally SABS. While issues concerning the deductibility of various payments from other entitlements is often enough to make one reconsider his career choice, a recent decision from the Ontario Superior Court does supply some clarity with respect to the issue of an employer’s right to set of WSIB (Workplace Safety & Insurance Board) benefits as against wrongful dismissal damages.

In a decision welcomed by employers’ counsel (see others’ commentary here and here) the Honourable Justice Roland Haines, in his reasons for decision in Jensen v. Schaeffler, 2011 ONSC 1342 held that an employee’s receipt of WSIB income replacement benefits was to be deducted from her common-law, but not statutory, wrongful dismissal damages.


The facts of the case are set out in a separate decision, Jensenv. Schaeffler, 2011 ONSC 781:

Ms. Jensen’s employment with the defendant commenced October 22, 1979. She was laid off on December 7, 2006 and notified on October 31, 2007 that her employment had been terminated. It was explained in that communication that because 35 weeks had passed since her layoff, that layoff was deemed permanent, and therefore, she was entitled to severance and termination pay. Ms. Jensen was 48 years old at the time. Her hourly rate was $22.40

During the course of most of her 28-year employment Ms. Jensen worked at a number of different production jobs. In January 2003 she was injured at work when she was struck and knocked to the floor by a swinging automated door. She was unable to work for a period of time as a result of the injuries she sustained and upon her return resumed her previous duties with certain accommodations. A subsequent aggravation of her injuries while working resulted in additional time off work. In September 2004 she was placed in a temporary administrative position in the purchasing department to accommodate her physical limitations and remained there until her layoff in December 2006. During that period she completed a number of internal training programs relating to her assigned duties in that department.

Ms. Jensen was one of 180 employees laid off in 2006 as a result of a decline in sales experienced by the automobile manufacturers to which the defendant supplied parts. Ms. Jensen did have substantial seniority which could have protected her from the layoff but that seniority applied to her original job classification of assembly operator which she was, at that time, physically incapable of resuming.

The defendant’s director of human resources, Mr. Beck, testified that they knew Ms. Jensen would be very upset when she was laid off so he and the chief executive officer of the defendant, drove her to her home that day and took the opportunity to discuss the Labour Market Re-entry Program that was available to her through the Workplace Safety and Insurance Board (WSIB) because of her work related injuries. Ms. Jensen subsequently enrolled in that program.

The Wrongful Dismissal Decision

With respect to Ms. Jensen’s wrongful dismissal action, Justice Haines held that Ms. Jensen was entitled to 18 months’ notice.

Interestingly, given earlier comments on this blog with respect to protecting older workers (see posts here), Justice Haines commented that with respect to Ms. Jensen’s injuries:

[19] Absent her physical limitations, I would have found that a notice period of 15 months was appropriate in the circumstances of this case but because of the additional difficulties that she would undoubtedly encounter in securing comparable employment in light of her physical limitations I have concluded that proper notice would be 18 months.

The WSIB Issue

After deciding the case in Ms. Jensen’s favour Justice Haines requested that the parties reappear so as to address the issue of the deductibility of Ms. Jensen’s receipt of WSIB Income Replacement Benefits.

In a short decision Justice Haines relied on the Alberta case of Salmi v. Greyfriar Developments Ltd., 1983 CanLII 1068 (AB QB), in which that court held that:

In determining the actual award in a wrongful dismissal case the court must take into account the earnings of the plaintiff over the period of the award in mitigation of damages. Therefore if the respondent had been fit or work and had earned $2,400.00 in wages from the Workers’ Compensation Board it would have been deducted. The reason the respondent did not attempt to locate other work was his medical condition. In lieu of wages for the period he received workers’ compensation provided by assessments paid by his employer and others in like kinds of industry. The fund is set up by legislation. The employer is the only contributor. The payment is in lieu of wages and takes away the right to sue the employer for injury resulting in his present medical condition which makes him unfit for employment for the period involved or for death.

If the money came from earnings from a complete stranger the appellant would have the advantage of it in mitigation of the loss. As a matter of policy I am quite unable to see why it ought not to be deducted where it is paid from a fund contributed to by the employer by force of law particularly where the payment is in lieu of earnings and to compensate for their loss while unable to work because of injury sustained during the course of the respondent’s employment.

Owing to mathematical calculations the fact was that Ms. Jensen had received more from the WSIB than she was entitled to for common-law wrongful dismissal damages. The court did agree that Ms. Jensen was entitled to her full statutory notice and severance and made a minor award for an accounting error, but then held that she was entitled to no more.


Although I am inclined to agree with Justice Haines’s decision, what I find odd is that His Honour resolved the case without reference to the Supreme Court’s decision in Sylvester v. British Columbia,[1997] 2 S.C.R. 315. Although I maybe slightly mixing my metaphors, in my opinion the answer to the issue would have been better addressed by looking at the issue through the lenses of disability benefits rather than mitigation.

As most employment lawyers will know, Sylvester teaches us that if an employer is responsible for the maintenance of the disability payments (or the payment of the benefits for such a plan), then the receipt of those benefits can be deducted from an award of wrongful dismissal damages.

In keeping with the logic of Sylvester , because WSIB premiums are paid by employers it would seem only natural that WSIB income replacement benefits (akin to LTD benefits) would equally be deductible.

Again, no reference was made to the Sylvester decision, which of course was decided well after Salmi and indeed referenced same, in Justice Haines’s reasons for decision, I only raise it as a point of discussion and an observation.


The takeaway for employers is clear: where an employee in receipt of WSIB benefits is terminated, an employer may deduct those benefits from its common-law notice obligations.

The takeaway for employees is slightly less clear. First, one must recall that Justice Haines still awarded the dismissed employee statutory notice and severance, meaning that she still received something. Furthermore, as I have written before, even if the employer takes the position that it is “unable to continue” employing an employee on account of a workplace injury, that decision still triggers an obligation to provide statutory notice and in appropriate cases severance.

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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.

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