An employee brought a civil claim against its employer for damages for wrongful dismissal and sought aggravated and punitive damages for the alleged misconduct in the dismissal process. A judge of the British Columbia Supreme Court awarded the employee five months’ salary but declined to award punitive damages.

The employee brought an appeal challenging not only the refusal to award punitive damages but – more importantly – the decision by the judge to deduct from the award the COVID-related benefit sums that the employee had previously received under the CERB framework (Canada Emergency Response Benefit).

By decision no. CA47931 of 29 November 2022, the Court of Appeal for the British Columbia upheld the employee’s challenge. The Court first considered that the case raised the issue of the so-called “compensating advantages” and their deductibility from damages awards for wrongful dismissal. Such problem usually arises when a plaintiff receives a benefit that would eventually over-compensate them beyond their actual loss. However, the Court also considered that – due to the extraordinary circumstances posed by the COVID-19 pandemic – the case at stake required unique policy considerations that the first instance judge failed to consider.

In particular, the Court found that the purpose of the CERB Act is to provide aid to Canadian workers who lost all or a significant portion of their income for reasons related to the pandemic, including sickness, self-isolation, or quarantine, caring for an elderly parent or sick family member, caring for children during school and daycare closures, or those who were furloughed or terminated because of COVID-19. The program’s goal was to mitigate harm to individuals in a moment of great uncertainty.

However, despite the aid offered by the government, many people still lost their livelihoods as a result of the pandemic. As a consequence, from a policy and factual perspective, it cannot be said that the combination of CERB and damages awards ultimately leaves individuals better off after their employment is terminated. Hence, the Court concluded that COVID-related benefits are justified on peculiar circumstances which uniquely characterize the issue surrounding compensating advantages.

Full text of the decision available at en