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Persons in attendance
The Appellant attended the hearing by way of telephone conference on June 17, 2014. No one else was in attendance.
The hearing was adjourned to July 10, 2014. No one attended the hearing on July 10, 2014. The Member of the Social Security Tribunal, General Division, Employment Insurance Section (the “Tribunal”) was satisfied that the Appellant had received the Notice of Hearing and it proceeded in the absence of the Appellant pursuant to subsection 12(1) of the Social Security Tribunal Regulations SOR/2013-60.
Decision
Allocation
[1] With respect to the allocation, the Tribunal finds that the amounts in question should be allocated in accordance with sections 35 and 36 of the Employment Insurance Regulations, SOR /96-332 (the “Regulations”) and were allocated correctly. The Appeal with respect to this issue is, accordingly dismissed.
Introduction
[2] The Appellant filed an initial claim for benefits on November 28, 2013, (Exhibit GD3-16). The Appellant’s claim was effective October 27, 2013 (GD4-1).
[3] The Canada Employment Insurance Commission (the “Commission”) decided on December 2, 2014, that the Appellant received $48,373.00 in monies on separation from his employer and that the income before deductions is earnings, which will be allocated from October 20, 2013 to October 18, 2014. A balance of $805.00 will be allocated to the week of October 19, 2014. Due to the length of his allocation, he was able to discontinue completing his reports and to reapply in the week of October 19, 2014 if he was still unemployed (GD3-20).
[4] The Appellant filed a Request for Reconsideration with the Commission on December 16, 2013 (GD3-21). The Commission decided on February 5, 2014 to maintain its original decision (GD3-55).
[5] The Appellant filed an appeal to the Tribunal on March 3, 2014 (GD-2).
[6] During the Appellant’s telephone conference hearing on June 17, 2014, an adjournment was granted in order to provide the Appellant with additional time to file information and submissions regarding his normal weekly earnings.
Form of hearing
[7] The hearing was heard via teleconference for the reasons indicated in the Notices of Hearing dated May 27, 2014 and June 17, 2014.
Issue
Allocation
[8] Whether or not the Appellant’s earnings should be allocated pursuant to sections 35 and 36 of the Regulations?
The law
Income:
[9] Income is defined in subsection 35(1) of the Regulations as follows:
“income” means any pecuniary or non-pecuniary income that is or will be received by a claimant from an employer or any other person, including a trustee in bankruptcy.
Earnings:
[10] Subsection 35(2) of the Regulations provides as follows:
35(2) Subject to the other provisions of this section, the earnings to be taken into account for the purpose of determining whether an interruption of earnings under section 14 has occurred and the amount to be deducted from benefits payable under section 19, subsection 21(3), 22(5), 152.03(3) or 152.04(4) or section 152.18 of the Act, and to be taken into account for the purposes of sections 45 and 46 of the Act, are the entire income of a claimant arising out of any employment, including
- a) amounts payable to a claimant in respect of wages, benefits or other remuneration from the proceeds realized from the property of a bankrupt employer; [Emphasis added]
[11] Subsection 35(7) sets out certain items which are not included as income. It provides as follows:
35(7) That portion of the income of a claimant that is derived from any of the following sources does not constitute earnings for the purposes referred to in subsection (2):
- (a) disability pension or a lump sum or pension paid in full and final settlement of a claim made for workers' compensation payments;
- (b) payments under a sickness or disability wage-loss indemnity plan that is not a group plan;
- (c) relief grants in cash or in kind;
- (d) retroactive increases in wages or salary;
- (e) the moneys referred to in paragraph (2)(e) if
- (i) in the case of a self-employed person, the moneys became payable before the beginning of the period referred to in section 152.08 of the Act, and
- (ii) in the case of other claimants, the number of hours of insurable employment required by section 7 or 7.1 of the Act for the establishment of their benefit period was accumulated after the date on which those moneys became payable and during the period in respect of which they received those moneys; and
- (f) employment income excluded as income pursuant to subsection 6(16) of the Income Tax Act.
Allocation:
[12] Subsections 36(1) and (4) and (9) of the Regulations provide as follows:
36. (1) Subject to subsection (2), the earnings of a claimant as determined under section 35 shall be allocated to weeks in the manner described in this section and, for the purposes referred to in subsection 35(2), shall be the earnings of the claimant for those weeks.
[…]
(4) Earnings that are payable to a claimant under a contract of employment for the performance of services shall be allocated to the period in which the services were performed.
[…]
(9) Subject to subsections (10) to (11), all earnings paid or payable to a claimant by reason of a lay-off or separation from an employment shall, regardless of the period in respect of which the earnings are purported to be paid or payable, be allocated to a number of weeks that begins with the week of the lay-off or separation in such a manner that the total earnings of the claimant from that employment are, in each consecutive week except the last, equal to the claimant’s normal weekly earnings from that employment.
(10) Subject to subsection (11), where earnings are paid or payable to a claimant by reason of a lay-off or separation from an employment subsequent to an allocation under subsection (9) in respect of that lay-off or separation, the subsequent earnings shall be added to the earnings that were allocated and, regardless of the period in respect of which the subsequent earnings are purported to be paid or payable, a revised allocation shall be made in accordance with subsection (9) on the basis of that total.
[…]
(11) Where earnings are paid or payable in respect of an employment pursuant to a labour arbitration award or the judgment of a tribunal, or as a settlement of an issue that might otherwise have been determined by a labour arbitration award or the judgment of a tribunal, and the earnings are awarded in respect of specific weeks as a result of a finding or admission that disciplinary action was warranted, the earnings shall be allocated to a number of consecutive weeks, beginning with the first week in respect of which the earnings are awarded, in such a manner that the total earnings of the claimant from that employment are, in each week except the last week, equal to the claimant's normal weekly earnings from that employment.
Evidence
[13] The Appellant filed an initial claim for benefits on November 28, 2013 (GD3-16).
[14] The Appellant stated in his application for benefits as follows: His highest completed level of education was college; He was not a member of a union or professional association; He worked from October 1, 2000 to October 29, 2013 for the employer, “HP” (the “Employer”) as a “computer field service technician” (GD3-2 to GD3-16).
[15] According to the record of employment (“ROE”) dated November 11, 2013, the Appellant worked as a “Field Technical Spt Rep I” at the Employer from April 1, 2013 to October 25, 2013; The reason for issuing the ROE was “K” for “other”. He was paid vacation pay of $1,843.20 because he was no longer working; He was paid $7,373.60 for pay in lieu of notice; and he was paid $39,156.69 as severance pay. A note in the comments provides: “payroll provider changed from Ceridian to ADP effective April 1, 2013 with no interruption of earnings (GD3-19).
[16] By letter dated October 7, 2013, the Employer advised the Appellant that his position was being affected and that he was being assigned to the “WFR Redeployment Program” (GD3-23 to 26).
[17] By letter dated October 21, 2013, the Employer advised the Appellant that effective October 28, 2013, he will be transitioning into the “Workforce Reduction (WFR) Program” (GD3-27 to GD3-53). The Appellant also signed a final release and indemnity on October 25, 2013 (GD3-35).
[18] In the Notice of Appeal, the Appellant gave the following evidence: He was released on a workforce reduction program. He included a copy of his pay stub from “HP”. The pay stub is for the pay date: November 14, 2013. It is from the period from November 1, 2013 to November 15, 2013. It provides that he received gross pay of $47,708.02, which represented, $66.67 as salary, $1,843.20 as vacation pay, $7,373.60 as “payilieu” and $39,156.89 as “sevnelig” (GD2).
Testimony at the hearing:
[19] The Appellant testified under solemn affirmation.
[20] The Appellant advised that the ROE may not represent accurately his normal weekly earnings. The ROE showed that he earned $1,997.02 consistently for each pay period.
[21] The Appellant testified that did not normally work a regular work week and that his salary for the week varied from week to week on account of his overtime work.
[22] He advised that he did not have access to the information regarding his earnings and that he would have to review his bank account statements and also speak to his former Employer.
[23] He advised that he worked overtime regularly and consistently. On this basis, the Appellant submitted that the overtime amount and possibly other amounts should be included in the calculation of his normal weekly earnings.
[24] The Tribunal adjourned the hearing pursuant to the Appellant’s request.
Submissions
[25] The Appellant submitted that the amount should not be allocated in the manner proposed by the Commission for the following reasons:
- a) He is being discriminated against because of vacation and severance pay (GD2, GD3-21);
- b) He did not leave his job voluntarily. He was released on a work force reduction program(GD2, GD3-21);
- c) He received $48,373.00 and he paid over $15,000.00 in taxes (GD3-21);
- d) It is as if someone who earns $40,000.00 a year is eligible and someone who earns $80,000.00 a year is not (GD2, GD3-21); and,
- e) Amounts received on account of his overtime work and other amounts should be included in the calculation of his normal weekly earnings (Testimony).
[26] The Respondent submitted as follows:
- a) Sums received from an employer are presumed earnings and must therefore be allocated unless the amount falls within an exception in subsection 35(7) of the Regulations or does not arise from employment (GD4-2);
- b) Earnings paid by an employer by reason of separation from employment must be allocated pursuant to subsection 36(9) of the Regulations. It is the reason or motive for the payment and not the date of payment that determines the date from which the allocation must begin (GD4-2);
- c) The vacation pay ($1,843.20), the pay in lieu of notice ($7,373.60), and the severance pay ($39,156.69), constituted earnings pursuant to section 35(2) of the Regulations because the payment was made to compensate the Appellant for his job lost. The payment of $48,373.69 was paid by reason of his separation from employment. Consequently, the 3 amounts were allocated pursuant to subsection 36(9) of the Regulations, according to his normal weekly earnings from October 27, 2013 to October 18, 2014 with a balance of $805.00 allocated against the week if October 19, 2014 (GD4-3);
- d) Amounts paid because of the severance of the employment relationship constitute earnings within the meaning of section 35 of the Regulations and must be allocated in accordance with subsection 36(9) of the Regulations (Boucher Dancause 2010 FCA 270; Cantin 2008 FCA 192)(GD4-3);
- e) In accordance with the Regulations, it is improper for a claimant to receive money in addition to employment insurance benefits (CUB 76714)(GD4-3);
- f) The onus is on the claimant to establish that all or parts of the sums received as a result of his or her dismissal amounted to something other than earnings within the meaning of the Act (Bourgeois 2004 FCA 117)(GD4-3); and,
- g) The allocation of the severance package did not create an overpayment for the Appellant in this case. While the Commission is sensitive to the feelings of injustice felt by the Appellant, it cannot ignore the requirement of the legislation (GD4-4).
Analysis
[27] The Tribunal finds that the Regulations dealing with earnings and allocation have been drafted and interpreted broadly, to include the “entire income of a claimant arising out of any employment” (McLaughlin 2009 FCA 365).
[28] It is a long standing principle and consistent with the Act and Regulations that sums received from an employer are presumed to be earnings and must be allocated unless the amount falls within an exception in subsection 35(7) of the Regulations or the sums do not arise from employment (Ledzy Lam Cub 51191) (Cub 27140).
[29] The rationale for the allocation of the earnings, which a claimant received while on benefits is the avoidance of double-compensation. In Attorney General of Canada v. Walford, A-263-78, December 5, 1978, Justice Pratte stated:
“The purpose of the scheme is obviously to compensate unemployed persons for a loss; it is not to pay benefits to those who have not suffered any loss. Now, in my view, the unemployed person who has been compensated by his former employer for the loss of his wages cannot be said to suffer any loss. A loss which has been compensated no longer exists. The Act and Regulations must, therefore, in so far as possible, be interpreted so as to prevent those who have not suffered any loss of income from claiming benefits under the Act.”
[30] These dicta were repeated and relied upon in subsequent decisions, including, in Chartier 2010 FCA 150.
[31] With respect to the burden of proof, it is the Appellant who must prove, on a balance of probabilities that the amount paid or payable is not earnings within the meaning of the Act. The Appellant is also obligated to disclose all of the amounts received (Ledzy Lam CUB 51191, CUB 27140, Déry 2008 FCA 291, Cub 70735, Cub 11077, Romero, 1997 CanLII 6067 (FCA) (A-815-96).
[32] The same is true in the context of termination of employment or dismissal. The onus is on the claimant to establish that all or part of the sums received as a result of his or her dismissal amounted to something other than “earnings” within the meaning of the Act and Regulations (Bourgeois 2004 FCA 117).
[33] The Tribunal finds that the amounts in question were paid or were payable by the Employer to the Appellant. The Appellant does not dispute this fact (GD3-21, GD2).
[34] The Tribunal finds that the amounts, which the Appellant is alleged to have received by the Employer do not fit within any of the exceptions in subsection 35(7) of the Regulations.
[35] On this basis, the Tribunal finds that any amounts, which the Appellant received from the Employer as vacation pay, payment in lieu of notice, and severance pay are earnings for the purpose of section 35.
[36] Section 36 of the Regulations describes how earnings are to be allocated and in which weeks they will be considered to have been earned by the claimant (Boone 2002 FCA 257).
[37] The Tribunal finds that in deciding which subsection of section 36 should be resorted to in determining the method for the allocation, it is the reason or motive for the payment and not the date of the payment, which determines the date from which the allocation must begin (Sarrazin 2006 FCA 313, CUB 74461, 2010; CUB 77407, 2011; CUB 49309, 2000).
[38] Section 36(9) explains how earnings paid or payable by reason of separation or lay off are allocated and it provides that the allocation begins with the week of the lay-off or separation.
[39] The Tribunal finds that the amounts which were paid by the Employer to the Appellant were paid by reason of separation from employment and must, accordingly, be allocated pursuant to subsection 36(9) of the Regulations.
[40] The Tribunal finds that the Commission allocated the amount correctly because the amount was allocated in accordance with subsection 36(9). The allocation began with the week of the lay-off or separation. The total amount paid to the Appellant was also divided into amounts equal to the Appellant’s normal weekly earnings for each consecutive week save and except for the last week of the allocation (October 19, 2014), where $805.00 was allocated.
Alleged Discrimination
[41] The Tribunal notes that the Appellant complained that he feels as though he has been discriminated against because his remuneration was higher than $40,000.00 a year. Notwithstanding that the Tribunal has sympathy for the Appellant and his predicament, the Tribunal finds that the Appellant’s submission is without merit because the Act and Regulations look at the normal weekly earnings for each claimant. That factor, to a certain extent, takes into account differences in the amount of remuneration, which claimants receive. The Tribunal is also mindful that it has no discretion with respect to this question of law. It is bound by the law and cannot refuse to apply it no matter how unjust the circumstances (Granger, A-684-85) (Robinson 2013 FCA 255, leave to appeal to the SCC denied, 2014 CanLII 12483).
Normal Weekly Earnings:
[42] The Tribunal also notes that the Appellant advised in the hearing on June 17, 2014, that the amounts on his ROE did not reflect his normal weekly earnings. The Tribunal notes that the Appellant testified that did not normally work a regular work week. He advised that he worked overtime regularly and consistently and submitted that the overtime amount and possibly other amounts should be included in the calculation of his normal weekly earnings.
[43] The Tribunal granted the Appellant an adjournment to July 10, 2014 in order to provide him with the time to obtain records from his employer showing that his remuneration was not what was reflected on his ROE and to argue that his normal weekly earnings may have comprised some other amount.
[44] When no further information was provided and no one attended the hearing on July 10, 2014, the Tribunal did not have any submissions or evidence regarding the Appellant’s normal weekly earnings.
[45] In Fox A-841-96, the Federal Court of Appeal held that “the term ‘normal weekly earnings’ means the ordinary, usual earnings that a claimant receives or earns on a regular basis and does not include […] fringe benefits or extra amounts”, which are earned on an annual basis or which may appear on the T4 slip of the claimant. The Federal Court of Appeal held that some heads of earnings are better characterized as “normal yearly earnings” than “normal weekly earnings”. It added that “normal weekly earnings” do not include amounts which accrue weekly and which are not paid on a periodic basis.
[46] In that decision, the Commission conceded that the claimant’s car allowance could be included in the calculation of his normal weekly earnings and the claimant conceded that his life insurance was excluded. The Federal Court of Appeal held that Mr. Fox’s vacation pay, his annual incentive pay, and a 25 year service award were not included in the calculation of his normal weekly earnings.
[47] The jurisprudence (case law) on point has held consistently since Fox A-841-96 that a car allowance may be considered in the calculation of normal weekly earnings (Fox A-841-96, CUB 55327 (2002)) and that the following are generally excluded: life insurance (Fox A-841-96); vacation pay (Fox A-841-96 ); severance pay (Robinson 2013 FCA 255, leave to appeal to the SCC denied, 2014 CanLII 12483, CUB 27106, CUB 57564 (2003)), incentive allowances (Fox A-841-96); retention allowances designed to retain employees until an eventual closure, where there is no agreement to increase an hourly rate or salary (CUB 74351 (2010), CUB 72144(2009) CUB 59964 (2004), CUB 57342 (2003)); bonuses or awards (Fox A-841-96) (this has been the case even where the bonuses or awards were considered to have been integral to the salary of the claimant, CUB 55327 (2002), CUB 59171 (2003); and, stock options (CUB 55327)(2002).
[48] The Tribunal also notes that in exceptional circumstances, where the claimant can prove that s/he was paid overtime regularly, overtime amounts may also be factored into the normal weekly earnings calculation (CUB 4802 (1977) appeal dismissed A-857-77, (CUB 36757), CUB 63865 (2005) excluded because not paid in the last few months of employment). This is consistent with the following excerpt from Chapter 5.6.3.2. of the Commission’s Digest of Benefit Entitlement Principles: “The claimant's weekly salary may occasionally be increased by overtime, shift premiums, incentive or cost-of-living bonuses, irregular commissions, or other similar moneys. As well, the weekly salary may be reduced when the claimant works fewer hours than agreed or temporarily works shifts for which a premium is not paid. When this increased or decreased weekly salary occurs so often that it is considered "normal," it becomes the claimant's normal weekly earnings. "Normal" may be considered as what has repeatedly occurred in 85 per cent of the weeks used to calculate the benefit rate. If this increased or reduced weekly salary varies from week to week, normal weekly earnings become the average of the increased or reduced weekly salary of the weeks under study.”
[49] Absent any other information or evidence from the Appellant regarding the amount which the Appellant was normally paid on a weekly basis, and given that the Appellant did not attend the hearing or make specific or concrete submissions on this point, the Appellant did not prove on a balance of probabilities that the allocation was done incorrectly or that the amounts in the ROE provided by the Employer were not representative of his normal weekly earnings.
Conclusion
[50] For the foregoing reasons, the appeal is dismissed.