Employment Insurance (EI)

Reasons and decision

Persons in attendance

The Appellant was present in person at the hearing. The Appellant was represented by Allan Moulton of Unifor. Also present on behalf of the Appellants was E. F. The Respondent, the Canada Employment Insurance Commission (Commission) was present in person and represented by Princelene Mitchell. Ms Mitchell both acted as a representative and a witness for the Commission. There were also present 53 of the 83 Appellants or represented by relatives.

Introduction

[1] The Appellant is appealing a reconsideration decision issued by the Commission on September 24, 2015, declaring that $15,700 received, before deductions, from the Employee Life and Trust Agreement (Trust) as a payout in lieu of future health and life benefits, should be considered earnings as per the Employment Insurance Regulations (Regulations), and that it should be allocated and applied against the Employment Insurance claim of the Appellant.

[2] The hearing was held in person, but with the possibility for the Appellant to attend by teleconference, for the following reasons:

1. The complexity of the issues under appeal.
2. The fact that the credibility is not anticipated to be a prevailing issue.
3. The fact that more than one party will be in attendance.
4. The information in the file, including the need for additional information.
5. The fact that multiple participants, such as witnesses, may be present.
6. The form of hearing respects the requirement under the Social Security Tribunal Regulations to proceed as informally and quickly as circumstances, fairness and natural justice permit.
7. This appeal is one of several appeals, 83 appellants in total, all former employees of the High Liner (Employer) plant in Burin, Newfoundland and Labrador, who appealed decisions of the Commission regarding the allocation of the sums paid out upon the payout of the remainder of monies held in a trust. Therefore, the evidence and submissions will be heard as a whole for all appellants, but those who have specific information for their respective file will have the opportunity to be heard by the Tribunal on the day assigned to each appellant.

Preliminary matters

[3] This appeal is part of a group of appeals that originate from the same issues and the same sum paid to the former employees of the High Liner Company in Burin, Newfoundland and Labrador.

[4] Two prehearing conferences were held prior to the hearing. The first one occurred on February 24, 2016. At that time, there were less than 30 employees involved. When the Tribunal member assigned to this file began to enquire about the number of people who would be at the hearing and to discuss the issues at stake, there were representative and union persons present who signified that there were many more employees, but that these employees were under the impression that the current Appellants would be representative to all former employees of the High Liner plant in Burin. As a result, the Tribunal left time to the “missing” appellants to either file their appeals, or file a request for reconsideration before the Commission in order to obtain a reconsideration decision.

[5] The Tribunal held a second prehearing conference on May 16, 2016. During this prehearing conference, the Tribunal informed parties present that it would not formally join, under section 13 of the Social Security Tribunal Regulations, the 83 appeals, but that it would hold a common hearing, as the issues and the amount paid from the Trust are the same for all appellants. Additionally, separate written decisions for each appellant would be issued by the Tribunal following the hearing since all appellants have slightly different dates or different amounts of overpayments, as the average weekly benefits may vary and there could be other specific situations such when their respective next jobs occurred.

[6] As a result, each appellant benefited from the common representations made to the points of law while still being able to present their individual appeal.

[7] The Tribunal is satisfied that the principles of natural justice have been respected: the parties received their notices of hearing either by mail, private messenger, fax or email. Confirmation have been received, hearing days were set, different choices and opportunities to choose the other date were offered to the Appellants, and some availed themselves of these choices and opportunities.

Issues

[8] Should the payment of $15,700 received from the Trust be considered as earnings as per Section 35 of the Regulations?

[9] If this amount is earnings under the Regulations, then how is the amount to be allocated under subsection 36 of the Regulations?

[10] Is the issuance of recommendation for a write-off warranted?

The law

[11] The relevant legislative provisions can be found in the Annex to this decision.

Evidence

Documentary evidence

[12] All files contain the initial application for benefits and the records of employment which contained the number of hours worked by each appellant and the end of the work period. The records of employment contained the earnings used by the Commission to calculate the rate of weekly benefits. The Employee Life and Health Agreement (Trust ) dated November 30, 2010, the Trust Payout Information in the form letter from the Employer to Appellants dated 2013 (but the date is missing as the Commission apparently left a post-it before scanning the document) informing employees that a distribution of the remainder of the capital of the Trust will be made. The same letter states that this amount of money received should be included in their tax declaration as “other income”, but in the later section regarding Employment Insurance it is referred as “employment income”. We also find in some of the files a supplementary application for benefits, the Notice of Decision from 2015, the Request for Reconsideration, the Reconsideration Decision, the Notice of Debt and an Overpayment Breakdown prepared by the Commission. We also find a note to the file, apparently from the Commission, which appears to be the record of a conversation that the Trust payout is issued in lieu of future health and life benefits (page GD3-56 of file GE-15-3240), but the same note is found in all of the files.

[13] The Appellant in file GE-15-3240 filed also the original Implementation Agreement (Implementation Agreement) between Her Majesty in right of Newfoundland and Labrador (Government) and High Liner Foods Incorporated (Employer), dated December 19, 2007; the Amending Agreement to the Implementation Agreement Amending Agreement), dated August 6, 2010; as well as the Schedules A of the Employee Life and Health Trust Agreement, which were to be annexed to the Trust. While it was originally filed in one file, all Appellants and the Commission agreed that these documents would be part of all files.

[14] As per Article 3, Section 3.1 of the Implementation Agreement, the Employer, who was purchasing the operations of Fishery Products International, undertook to process a minimum of 17.5 million pounds of produced product in each Contract Year, and if it was a partial year, this would be on prorated basis. During the first year of the agreement, called the Initial Period, the production output would be a minimum of 11.5 million pounds per year. In accordance with Section 3.4, if the minimum production could not be met, then there would be penalty payable equivalent to $0.07 per pound not processed. This production shortfall “penalty” would be payable to the Government, as per Section 3.2.

[15] In Section 3.5, there is also a commitment by the Employer to invest in capital and research and development a sum of $3 million, and if at the closure of the plant such sum or the difference between was spent and the sum of $3 million has not been spent, then this amount would be remitted to the Government. However, this specific obligation of the Employer as per the Implementation Agreement was not affected nor amended by the Amending Agreement.

[16] When the Amending Agreement was signed in 2010, it modified some provisions of the Implementation Agreement, and the modifications were retroactive to December 19, 2007. Section 3.4 of the Implementation Agreement was deleted and replaced by a new Section 3.4. These modifications changes provided that the “penalty” would be paid into the Trust, instead of to the Government. These sums in the Trust would be used to pay the premiums of the health insurance program of the employees of the Burin facility during periods of lay-off.

[17] As per subsection 3.4.8 of the Amending Agreement, if the Employer becomes bankrupts, insolvent or winds up its business or sells the plant in Burin or that the operations would cease indefinitely, then the balance left in the Trust, following the deductions of some reasonable expenses, would be paid to the Employees of record at the date of termination of operations by the Employer. Section 8 of Schedule A of the Trust mentions that the payout of the balance of the Trust shall be “as at the date of termination of operations by the Company”.

[18] The Trust sets out the trust as per the Implementation Agreement and the Amending Agreement, with the duties, rights and obligations of the trustees, their powers and reporting mechanism. As per Subsection 2.1 of the Trust, the Contributions to the Trust made by the Employer were to be deposited into the Trust. As per Section 2.4 of the Trust, the purpose of the Trust is to provide the Designated Employees Benefits as set out in the Plan (Schedule A of the Trust Agreement) for the Beneficiaries. Section 9 of the Agreement deals with the distribution of the funds, including the distribution of remainder of the Trust upon termination.

[19] Schedule A of the Trust Agreement, Section 4, provides that the Beneficiaries are responsible for co-pay for their health insurance coverage during periods of employment and are responsible for 100% of their co-pay plus the employer share of premiums for their health coverage during periods of lay-offs. Section 5 of Annex provided for the payment of those premiums from the Trust Funds, and Section 6 of Annex A provides for the reimbursements of those premiums to the Employer from the Trust.

[20] Schedule B to the Trust, Section 1, provides for the establishment of a separate bank account for the plan. Section 10 mentions that the Trust should issue T4 slips annually reflecting distributions of life-insurance premiums.

[21] Mrs. C. D. also filed documents during the hearing; all found in GD15 of file GE-15-3240. One was Chapter 20 of the Digest of Benefit Entitlement Principles (Digest) (GD15-16 to 22), one was a letter from R. F. relating his experience in dealing with the Commission (GD15-23), an exchange of emails between J. B. of the Employers Head Office and Ron Earle of the Commission, dated June 4 and 6 2013 (GD15-24 to 26). Finally, a summary of the review of the files by the Commission (GD15-30).

[22] Some documents were filed during the hearing. The Commission filed an extract of its Digest, more specifically paragraph 5.3.2.2 regarding fringe benefits. In accordance with the Digest, health care plans are given as an example as to what would be considered as a fringe benefits, as well as money paid in lieu of, upon retirement or layoffs or termination of employment and are therefore considered earnings.

[23] Other appellants filed also some documentation. In files GE-15-3454 and GE-15-3239, the Appellants received many notices of debts for amounts that vary widely, from $506 to $10,492. The Appellant in file GE-16-1026 filed a letter received from the CRA regarding the measures they will take regarding the seizure of his bank account.

[24] The Commission relied upon the Trust Agreement documents, the conversations with the Employer and its Digest to make its determination that the amount of $15,700 received from the Trust was considered earnings. To make its calculation in each file, the Commission relied upon the records of employments and the application for benefits.

[25] Following the hearing, the Commission filed copy of an email exchange between J. W. from the Employer’s office and Floyd Langille of the Commission dated August 6, 2016, regarding the extract of a section (20:01:02) of the collective agreement in force at the time of the closure of the Employer’s place of business in Burin. This provision states the cost- sharing of the Health Plan while employees are working and that when they are not working, that the employees are responsible for the full amount of the Health Plan premiums.

Oral evidence C. D.

[26] The witness testified as the main witness for the appellants, and her testimony will therefore be considered for all the appellants, as well as for herself. The witness has worked for 32 years at the Burin plant. She has also been the president for five years (2007-2012) of the local union associated with FFAW, affiliated to Unifor. She has been sitting on a committee made of Allan Moulton of Unifor, and E. F. in order to help the former workers of the Burin plant regarding this matter before Tribunal and some other matters relating to the plant closure in 2012.

[27] When the witness received her payment of $15,700, less deductions, in December 2013, she informed the Commission through their office in X. She was told that she did not have to report this as earnings on her Employment Insurance report. When she was laid-off by the plant between 2010 and 2012, she received health benefits coverage, and the premiums were paid by the Trust. When she was laid-off by the plant during the period between 2007 and 2012, she received Employment Insurance benefits. During those benefit periods, she was not asked to repay any Employment Insurance benefits as the result of her Health Plan premiums being paid by the Trust, nor her Employment Insurance benefits were reduced, as a result of the Trust paying for her health plan coverage premiums. The repayment of the overpayment, as demanded by the Canada Revenue Agency on behalf of the Commission, would be a problem and a financial strain, and this has been causing a lot of stress. As former Union president, when former co-workers received a communication from the Employer with their payment, she advised them to take this to the Commission’s local office to declare it.

[28] The Burin plant permanently closed mid-December 2012. The appellants all received payment of $15,700 on December 17, 2013. The appellants never received overpayment notices until June 2015, one and half years after they received payment of $15,700. Several appellants took their cheque stubs to Service Canada in X where they were advised the money did not have to be reported, and they advised co-workers of this. When Mrs. C. D. went to the X Service Canada office to enquire as to what to do with this money received from the Trust, another appellant, R. F. was present and advised that his wife, K. F., did report her payment received from the Trust to the Commission online the previous week. Shortly after she received a call, to the effect that she did not have to report the money and should return to EI to “unreport” it. When Mrs. K. F. did so, she was taken into another room and a call was placed to another agent elsewhere to confirm this manner of doing. Not all beneficiaries of the payment from the Trust were laid off at the time, as some were on long term disability benefits or for other reasons. There is also a letter from R. F. to this effect filed in GD15 in file GE-15-3240.

[29] Mrs. J. B. with High Liner contacted Mr. Ron Earles of the Commission regarding the payment and allocation of the money to be paid. In her correspondence to Mr. Earles, Mrs. J. B. mentions that the payments will be considered to be made as of the time of the closure of the plant.

[30] According to Mrs. C. D., this again was what prompted workers to go to Service Canada and report the money received only to be told no - they did not have to report the money received. The Commission had a list of names and the amount to be paid to the appellants in their possession by December 18, 2013.Yet, the appellants never got overpayment notices until June 2015 again one and half year later, when the money received has been long spent.

[31] As the Amending Agreement was retroactive, the Government of Newfoundland and Labrador paid back into the Trust money received by the Employer as “penalty” for the production shortfall between 2007 and 2010, and those who had incurred medical expenses between 2007 and 2010 were reimbursed.

[32] On July 14, 2015, Mr. Allan Moulton and Mrs. C. D. participated in a conference call with Mrs. Princelene Mitchell, Mrs. Mona Pafford and Mrs. Kate Klattenberg from the Commission. They were advised this money received by workers, were allocated the same as severance pay. They also requested that a Service Canada agent familiar with the file be reassigned or come to X office for a few days to meet with affected workers, but the request was declined. They also requested a full review of the claimant's files and pointed to the fact there were obvious errors made and that the claims had be not adjudicated correctly. This was agreed, see the correspondence (filed as part of GD15 in file GE-15-3240) with Service Canada on June 2013 (or before then), all these events happened six months prior to the payment being made to the workers.

The other Appellants

[33] All appellants present in person or by telephone were asked the same questions as C. D., namely: 1) - Did you report the amount received in December 2013 to the Commission? 2) - When you were laid off by the Company, did you receive the health plan coverage during that time? 3) - When you were laid-off by the Company, did you receive Employment Insurance benefits? 4) - If you will have to pay the overpayment, how will this affect you? Or the alternative, if you have repaid the overpayment requested by the Commission, and if so, how did it affect your financial situation? The only question not asked to the other Appellants was the question regarding the deduction of their Employment Insurance benefits because they received the Health Plan coverage while being in receipt of Employment Insurance benefits. This was due to the fact that the Commission clearly indicated that they did not allocate that amount against the Employment Insurance benefits received by the Appellants.

[34] The Appellants worked at the plant for period extending from 5 to 52 years. In the case of one couple, it was 75 years between the two of them. Most appellants worked at the plant in excess of 30 years.

[35] In answer to the first question, the majority of appellants answered that they did report to the Commission their amount received in December 2013. Some did not do it, as they were told by others that they did not have to report it. Those who reported the amount confirmed that the answer by the Commission was either “do not report it” or “go ahead and spend it”.

[36] In answer to the second question, all appellants confirmed that they receive Health Plan coverage during their layoff period.

[37] In answer to the third question, all appellants received Employment Insurance benefits while they were laid-off.

[38] In answer to the forth question, all Appellants answered that if they would have to pay the requested overpayment, it would be very difficult, or impossible, or could not see how they could do it. Those who did repay testified that it was very difficult, but also that they had no choice. The collectors from the Canada Revenue Agency (CRA) were harsh, uncompromising and blunt. They threatened to give them a bad credit reference, threatened to seize their assets and gave them no margin of discussions. In one case, Appellant A. B., did not spend his money and did pay his overpayment, as the same situation had happened to his wife with her own job. In most cases, those who paid had to dig into their savings, or borrow it or in one case to sell her home. One Appellant, asked to provide a summary of his expenses, was challenged on the amount of money being spent on food by his household, than included some of his grandchildren.

[39] Some Appellants filed series of notices of debts received, as many as 10, for amounts varying from a few dollars to several thousand, and this without explanations.

Princelene Mitchell

[40] The witness, who is also the representative of the Commission for the purpose of the hearing, is an employee of the Commission. She has been working in these files since June 2015, before then the work was handled by others. The Commission was advised by the Employer in December 2012 that a special payment under the Trust was forthcoming. However, The Commission could not do any work on it until they received a complete list of beneficiaries in December 2013, when the payment was actually made.

[41] She testified that the Commission determined as early as December 2012 that the amounts were indeed earnings as per section 35 of the Regulations. However, as they were “backlogged,” they did not begin to process the files until the spring of 2015. They had to see that it was indeed earnings under the legislation. Files were complex and they wanted to give a very detailed answer to the appellants. They were looking at the possibility of extending the benefit period if it was helpful to the appellants.

[42] The Commission was informed by some of the appellants that they had received the sum in question. She does not know what the local agents would have told the appellants, but information was given verbally, either in person or by phone. She is assuming that appellants were told to hang on to their money until a determination was made.

[43] Between 2007 and 2012, the appellants Employment Insurance benefits were not reduced as a result of the Health Insurance Plan being paid by the Trust, as these were “medical expenses”. The Tribunal then asked a more specific question as to why the premiums paid by the Trust to cover the Health Plan that were obviously not medical expenses were not considered earnings. The answer by the witness was the same.

[44] Regarding the numerous notices of debts issued by the CRA, the explanations given by the witness was that every time they do something in a file and it changes the amount due, the “system” automatically generates a new notice of debt. It would have been possible to stop those issuances of multiple notices of debt, but it would have had to be done manually, which is complicated.

Submissions

[45] The Appellant submitted that:

Earnings

1. The wording of the 2010 Amendment Agreement is very important. What was originally a penalty for a production shortfall paid to the Government became a payment to a Trust fund for payment of Health Plan premiums for laid-off workers. Paragraph 3.4.2 of the Amending Agreement of 2010 mentions that “High Liner shall establish a Trust to pay the premium payable for health insurance coverage for laid off plant workers or record employed during the term of the agreement until the date of recall of the laid off plant workers to work by High Liner”. The Implementation Agreement, dated December 19, 2007 between the Provincial Government and High Liner, under the heading Article 3 - High Liner's commitment concerning Burin, refers to articles that regarding monies High Liner would pay to the Provincial Government if there were a permanent closure of the plant. The Employer was to pay to the Government a termination fee of $12,500 for each unionized worker to be used by Government as a transition fund for the workers, as per paragraph 3.3 (a) of the Implementation Agreement. The second “penalty” payment was called a Production Short Fall Payment. It was not severance and it was not for the workers, it was really a penalty that High Liner would pay to the Provincial Government, if they fell short of the commitments they made to the Government in the initial agreement, Article 3.4.
2. The Amending Agreement dated August 6, 2010, calls for the Employer production shortfall “penalty amounts”, paid to the Government of Newfoundland and Labrador, to now being put into the Trust, and that the Government would then pay into the Trust , all monies regarding production shortfall paid to them prior to the creation of the Trust. This Trust was not a severance, and not earnings and not compensation for loss of employment but as of the Amending Agreement, it was a trust whose purpose was to pay for Health Plan premiums.
3. A payment of insurance monies does not and should not constitute earnings for the purpose of the Employment Insurance Act. As it was not earned, nor was it compensation for lost employment. The appellants found no case law and have found nowhere in the evidence whereby money paid out from an insurance fund has been considered as earning for the purpose of the Act.
4. There is case law whereby similar payments were paid to workers, as a result of agreements in place, were challenged by the Commission as earnings but the Umpire ruled in favour of the claimants, see CUBS 60715 and 67496 with several reference to Federal Court decisions to support the position of the claimants in this case. The Trust monies paid as a result of an agreement reached to pay it out should not constitute earnings for Employment Insurance; see Plasse A693-99 and Meehan A-140-03.

Allocation

5. The Appellants will defer to the Tribunal to make a finding on the allocation period. Should the Tribunal comes to the conclusion that the Trust payout does constitute earnings, then the allocation should be made under paragraph 36(19)(b) of the Regulations. The Appellants will also defer to the Tribunal to determine the date at which this earning should be allocated.

Write-off

6. Subsection 56(2) of the Regulations, the Commission’s Digest, Chapter 20 and in particular 20.6.0 - 20.6.1 - 20.6.1 deal with write offs due to delays and errors made by the Commission within a reasonable period of time, as where benefits are wrongly paid or wrongly withheld because the Commission did not action the claims properly. Paragraph 20.6.2 refers to the fact the write offs of overpayments be reviewed under other provisions, including where the Commission made an error in processing the claim. It is suggested that all three of the above are relevant and the appellants ask that a recommendation be made to the Commission to write off the overpayments.
7. In the email exchange between Mrs. J. B. from the Employer and Mr. Ron Earles of the Commission (See GD15-24 to 26 of file GE-15-3240) regarding the payment and allocation of the money to be paid. It is mentioned that the Commission had determined at that that the Trust payout will be considered earnings and allocated as of the closure of the plant and that it would result in possible overpayment that the Appellants would have to pay back. This prompted the appellants to report the money received, but were told by the Commission not to report it.
8. While it had made their determination a long time before the issuance of their decisions, the Commission took a lot of time, more than two years, to send the letter of decisions in June 2015. This time frame represents an unreasonable delay as referenced under the Write off Provisions, found in Chapter 20 of the Digest and subsection 56(2) of the Regulations.
9. As far as the review of the files was made by the Commission, a summary provided by the Commission to the union shows 5 had slight increases, 3 had their overpayment reduced to nil, and that a significant number had their overpayments reduced, many were significant reductions. One appellant had her overpayment reduced from over $10,000 to $140.00 and overall a third were reduced as clearly again errors were made by Service Canada and should be also considered under Chapter 20 of the Digest “Write of Provisions”, see this as part of GD3 in file GE-15-3240. Again on errors made on Notice of Debt to Appellants we filed in filed GE-15-3458 (10 different notices) and GE-15- 3239 (5 notices), provide the as examples of correspondence and amount owed on balance.
10. This important and complex issue is one that the appellants are at no fault, yet their lives has been turned upside down, over the past number of years, over what should have been a benefit to them, as what initially was money meant to be paid to the Provincial Government as a penalty for not providing work to the workers, eventually got put in to the Trust for the Appellants, to benefit them and their families.

Conclusion of the Appellants submission

11. The appellants are asking the Tribunal to determine that the payout of the balance of the Trust does not constitute earnings as per section 35 of the Regulations. If the Tribunal comes to the conclusion that the amount paid by the Trust does constitute earnings, then it is asked that the allocation be made as per paragraph 36(19)(b) of the Regulations. It is also asked that the Tribunal makes a recommendation to the Commission that the overpayments be written off as provided for under Chapter 20 of the Digest and subsection 56(2) of the Regulations due to the lengthy delays and errors made of, which the appellants are at no fault.

[46] The Commission submitted that:

Earnings

1. The Commission determined that the Trust payout in lieu of future health and life benefits that the claimant received constituted earnings pursuant to subsection 35(2) of the Regulations because the payment was made to compensate the claimant for those employment related benefits.
2. Sums received from an employer are presumed earnings and must therefore be allocated to a period on claim unless the amount falls within an exception in subsection 35(7) of the Regulations or does not arise from employment.
3. Earnings paid by an employer by reason of the 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.
4. According to the Employee Life and Health Trust Agreement, the Appellant as an employee of the fish processing plant in Burin, NL is a Beneficiary of the plan. The agreement states that if the Company ceases operations at its’ plant in Burin, NL, the balance of the Trust Fund will be distributed among all the Beneficiaries as at the date of termination of operations by the Company. Also, the Commissions Digest in sub-paragraph 5.3.2.2 states that such amounts are considered fringe benefits and are therefore earnings that must be allocated.
5. The Commission submits to the Tribunal that it has received the documents submitted by the Appellant in file GE-15-3240 in April, 2016; including the Employee Life and Health Trust Agreement that was finalized on 10 November, 2010. It supports the Commission’s decision to allocate the earnings and was thoroughly reviewed. The Amended Agreement dated 06 August, 2010 relates to the original agreement of 19 December, 2007 which the Commission submits come to the final agreement of 10 November, 2010. These agreements confirm that the employees are the benefactors of this agreement and that the Trust will be distributed among the employees should the employer become bankrupt, insolvent, or winds up the business or sells the plant in Burin.
6. The Commission submits that these documents provide evidence to the establishment of the agreement which supports that the employer submitted the premiums on behalf of the employees; whereas the trust was to be paid out to those designated employees when the plant closed. Therefore the Commission maintains the decision to allocate the earnings and requests the Tribunal to dismiss the Appellant’s appeal.
7. The Commission submits that the jurisprudence supports its decision. The Federal Court of Appeal reaffirmed the principle that 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, see Canada (AG) v. Boucher-Dancause, 2010 FCA 270 and Canada (AG) v. Cantin, 2008 FCA 192.
8. The Federal Court of Appeal in Attorney General of Canada v. King, A-486-95 ruled that the monies issued to employees as a result of the business closure were considered earnings to be allocated from the date the claimant’s employment was permanently severed in March as opposed to when they were previously laid off 2 months earlier. The appellants stated in their respective notices of appeal to the Tribunal that the monies should be written off due to the delay by the Commission in establishing the overpayment.
9. Regarding the extra evidence filed by the Commission following the hearing (GD20 of file GE-15-3240), the Commission submits that the information would not have much bearing right now as the Tribunal was already aware of this information.

Allocation

10. Commission further submits that the payment of $15,700 was paid by reason of the claimant’s separation from employment when the facility closed on December 21, 2012. Consequently, the payment was allocated pursuant to subsection 36(9) of the Act, in accordance with the Appellant normal weekly earnings of $1080.00 for the period of the Appellant’s benefits with the balance of $582.00 allocated to the Appellant’s last week following the full weeks of allocation.
11. In the case at hand, the payment in lieu of life and health benefits was not paid until December 17, 2013 which is several months after the Appellant had stopped receiving benefits on its claim that started; therefore the money allocated caused an overpayment of $7,178.
12. The Appellant’s benefit period was initially the 52 weeks from the beginning of her initial application for benefits filed in 2012 in accordance with subsection 10(1) and 10(2) of the Act. Pursuant to subsection 10(10)(b) of the Act, the Appellant’s benefit period is extended for any weeks she is not paid benefits due to an allocation of monies that were paid as a result of a complete severance from a former employer. In the Appellant’s case, the monies allocated resulted in a number of weeks in which the Appellant should not have been paid benefits and for which it was beneficial, if it was revealed that it would not benefit the claimant to extend its previous benefit period any more than a certain number of weeks, then only that extra number of weeks was calculated. In some files there were also adjustments, regarding the waiting period of the Appellant’s new claim, as well as other recalculation. After all these various adjustments were considered, the total overpayment due by the Appellant was $5,739.

Write off

13. The Commission reviewed the circumstances surrounding the overpayment to determine possible eligibility for write-off under subsection 56(2) of the Regulations. The reason that is does not meet the criteria is that paragraph 56(2)(b)(i) would only apply to cases in which information is received and not actioned PRIOR to benefits being paid. In the case at hand, the Appellant filed claim for benefits in 2012 and correctly commenced receiving benefits shortly after. After the plant closure, the Appellant continued to receive benefits until when its claim ended. It was not until the end of 2013, that the Commission received the information that the trust payments had been issued on December 17, 2013. Even if the information had been acted upon immediately, the monies would be allocated to a period for which benefits had already been paid; therefore it is not the delay in allocating the monies that caused the overpayment.
14. The Commission submits the Tribunal is not empowered to deal with the Commission’s refusal to write-off the claimant’s overpayment. Recourse against this issue lies with the Federal Court of Canada, see Canada (AG) v. Villeneuve, 2005 FCA 440; Canada (AG) v. Filiatrault, A-874-97 and Canada (AG) v. Mosher, 2002 FCA 355.

Hearing

15. After the hearing was held, the Commission filed extra representations. Schedule A, Section 4 of the High Liner Employee Life and Health Trust Agreement states that the Appellants are responsible for the payment of their Health Plan Premiums during periods of layoffs.
16. At the hearing, the Tribunal asked the Commission why the medical insurance premiums paid by the employer for the employee during their layoff periods were not considered earnings for Employment Insurance purposes, when the lump sum payment upon termination of the Trust was considered earnings.
17. The Commission submits that the premiums paid by the employer, as per the agreement, were for health insurance for their employees (Designated Employee Benefits) and this was regardless if the employees were working or on temporary lay-off. The intent of those premiums was to insure the employees had health coverage while they were employees with High Liner Foods and they are considered a fringe benefit for the employees and therefore not earnings.
18. The Commission submits that the employees who lost their employment due to the fish plant closure received a payment from the Trust but not under the apparent terms and conditions of the Plan. The agreement stipulated that if the company ceased operations, the balance of the Trust Fund was to be distributed among all employees as at the date of termination of operations by the company.
19. The event that triggered the payment is inconsistent with the terms of the Plan. The payment, which was distributed to employees, was made because the employment ended and so did the health insurance. These monies which were paid constitute earnings arising out of employment under subsection 35(2) of the Regulation and event that triggered the payment was the termination of the employment, and therefore the money should be allocated on separation per subsection 36(9) of the Regulation.

Analysis

[47] The Tribunal will start by determining whether the amount of $15,700 paid by the Trust in December 2013 constitutes earnings in accordance with section 35 of the Regulations. If the Tribunal concludes that these amounts are earnings, it will then determine under which subsection of section 36 these earnings must be allocated, and at what date. Lastly, the Tribunal will have to determine whether it will recommend a write-off of the overpayment that may be owed by the Appellant.

Earnings

[48] The Tribunal must determine whether the amount of $15,700 resulting from the winding- up of the Trust, received by the Appellant from the Trust, constitutes earnings according to section 35 of the Regulations. The Tribunal will first examine what these amounts represent and will then determine whether the amounts are earnings.

[49] The characterisation of these payments has been interpreted in various ways by the parties. On one hand the Commission states that this amount constitutes earnings as it is a fringe benefit paid to the Appellant as a result of their employment. The Commission also states that it is the result of a payment made in lieu of future Health Plan premiums paid by the Trust. The Appellants argue that this amount does not constitute earnings because it does not meet the definition of earnings as per the case law. Rather, the amount was just the balance present in the Trust at time of the closure of the plant, and that the provisions of the Trust only called for these funds to be distributed without a specific qualification as to what the amount was.

[50] The facts are quite clear and undisputed as far as the documentation is concerned. In 2007, the Implementation Agreement was signed between the Employer and the provincial government. Subsection 3.4 of this Implementation Agreement called for some “penalties” to be paid to the Government of Newfoundland and Labrador should there be some production shortfalls. Subsection 3.5 of the Implementation agreement called also for some “penalties” in the case of investment shortfall, including research and development costs. In 2010, the Amending Agreement was signed between the Employer and the provincial government. As a result of the Amending Agreement, subsection 3.4 of the Implementation Agreement was deleted and replaced by a new subsection 3.4. As per this new subsection 3.4, instead of being paid to the provincial government, the production shortfall “penalties” were to be deposited into the Trust, which was to be created by the Employer. Also, the “penalties” for the production shortfalls already paid by the Employer between 2007 and 2010 were to be paid into the Trust by the government. As per subsection 2.4, the purpose of the Trust was to pay Health Plan insurance premiums for the appellants while they were in periods of layoffs. The winding-up of the Trust provisions are found in Section 8 of Schedule A of the Trust. It is also found in paragraph 3.4.8 of the Amending Agreement of 2010, but as one of the conditions to be inserted in the Trust document. While these provisions define when the Trust is to be wound-up, it does not mention the nature of the payment once a payout is made further to the wind-up.

[51] The wording of the Trust never mentions that the payout of the remainder of the Trust assets upon its wind-up is made in lieu of the payment of future Health Plan coverage premiums, nor does it say that the payment is arising as the result of a layoff or separation. The only mention is that, upon a temporary layoff, premiums for the Health Plan coverage would be paid to the employees who were laid-off. The wording in the documentation of the Trust is silent, and the Tribunal cannot find any specific qualification as to what it constitutes. The December letter from High Liner to the appellants (pages GD3 54 and 55 of file GE-15-3240) mentions that regarding Employment Insurance the payout amount of $15,700 should be considered as “employment income”. This is a view expressed by the Employer, but it does not explain as how the Employer has come to that conclusion, and none of the parties has asked the Employer to come testify. Was the Employer using the expression “employment income” within the meaning of the Employment Insurance Act or within the meaning of the Income Tax Act? No explanations could be found anywhere in the evidence, except that the Employer in its letter to the employees dated from December 2013(page GD3-54 of file GE-15-3240) advises the appellants that the amount should not be reported on their tax statements as “employment income”, but rather under “other income”.

[52] The Commission’s position is that it constitutes payment in lieu of future payments of Health Plans premiums, but the Health Plan itself does not appear to have continued its existence passed the closure of the plant. The Tribunal does not agree with the Commission when it comes to the conclusion that the amount of $15,700 was made in lieu of future Health Plan premiums, or to pay for future health plans that the appellants could have adhered to after the end of their employment with the Employer. Such characterisation is found nowhere in the evidence. It is found in a document in which the Commission states that Mrs. J. B., an employee of the Employer, would have stated that. We see no evidence of that statement allegedly made by Mrs J. B. in the email exchange between the Commission and Mrs. J. B. in June 2013. It is possible that while not specifically characterising the payout amount as per the terms of the Trust, one can infer from the evidence as a whole how to characterise this amount of $15,700. But here, we have no indication of such characterisation whatsoever. The money started as penalty for productions shortfalls, continued to be paid by the Employer upon that basis, but used for something else later, being the payment of the Health Plan premiums.

[53] The Tribunal does not agree with the supplementary submission made by the Commission that the reason that the payment of Health Plan premiums by the Trust was made in violation of the Trust terms. This is not what these provisions of the various agreements mean. Paragraph 3.4.2 of the 2010 Amending Agreement is clear: the trust funds established with the production and investment shortfall were to be sued to pay for premium for the Health Plan while they were in periods of temporary layoffs. While Section 4 of the Annex A of the Trust Agreement taken in isolation could mean that the Employees paid 100% of the cost of the Health Plan premiums, Section 5 states differently and Section 6 deals with the repayment mechanism for the Employer. More importantly, this is what all the Appellants who testified confirmed: during the period of pay-off, they received Health Plan coverage, and the premiums were paid by the trust. Therefore the payments were not made in violation of the Trust Agreement. But this argument and the outcome of the analysis of the argument are not material important to the outcome of this decision. Also, the second supplementary submission made while it filed the extra evidence pertaining to the Collective Agreement is not helpful. As the Commission states in their submission, it does not bring anything new. The Collective agreement stipulates that laid-off employees were responsible for 100% of the cost of their Health Plan coverage, meaning that the Employer was not covering 54% of at it is the case when the employees are working. One can assume that this is why the Union obtained this “advantage” that when employees were laid-off the Trust would pay their premiums. This new evidence does not helping in determining the nature of the payment.

[54] Therefore, the Tribunal comes to the conclusion that the payment of $15,700 paid was only what it was, an “unqualified” cash payment made by the Trust to the Appellants. It was a one-time payment made to employees of record at the time of the winding-up of the residue of the funds that were still in the Trust.

[55] Now that the Tribunal has characterised what the payout amount of $15,700 represents, we need to analyse if this amount constitutes earnings as per Section 35 of the Regulations.

[56] According to the wording of subsection 35(1) of the Regulations, “income” is defined as “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.” Employment is defined as “any employment ... under any express or implied contract of service …” Subsection 35(2) states that “the earnings to be taken into account ... are the entire income of a claimant arising out of any employment...” Subsection 35(2) of the Regulations then goes on to specifically set out amounts that are specifically included in the definition of earnings and subsection 35(7) sets out amounts that are specifically excluded from earnings.

[57] So are the amounts in question explicitly captured by an inclusion or exclusion in subsection 35(2) or (7)? Amongst the various points raised in the Commission’ submissions, it refers to section 35 of the Regulations in general, without directly addressing whether subsection 35 (2) of the Regulations would apply, but the Commission appears to imply, at least it part, that paragraph 35(2)(c) could apply. This paragraph mentions that payments made under a group wage-loss indemnity plan, a paid sick or maternity or adoption leave plan, a leave plan in respect of the care or support of children or to care or support a family member are earnings for the purposes listed in subsection 35(2). All these types of payments are some form of income replacement benefits, which is not the situation here. As mentioned above, the amounts are unqualified and were not paid under a sick-leave plan, therefore paragraph 35 (2)(c) cannot apply.

[58] There are some exceptions found in subsection 35(7) of the Regulations which specifically exclude certain amounts from the concept of earnings as set out in section 35. However, none of these exceptions are applicable to the present situation.

[59] However, even if the amounts are not specifically captured, either as being specifically included or excluded from the concept of earnings in section 35 of the Regulations, the analysis does not end there; the jurisprudence has also examined the concept of “earnings” and what it means. In Canada (Attorney General) v. Roch, 2003 FCA 356, the Federal Court of Appeal reviewed the case law and came up with two “principles” for what constitutes earnings. The first principle is if the amounts in question that are earned by labour. That is, where there is the element of consideration for work performed. The second principle is when the amounts in question come from a situation where there is a lack of consideration for work done but where there is a “certain connection” or a “sufficient connection” between the employee’s work and the sums in question in such a way that the sums are comparable to earnings.

[60] In accordance with the first principle in Roch, supra, could it be that the amount in question was made as the result of the appellants labour? The answer is no. The money received from the Trust was not the result of the appellants labour. The amount in question was not linked in any way to the time spent at work, their seniority status or their salary level. It was one payment, the same for everyone. The sum of $15,700 did not result in earnings made from labour

[61] Therefore, the present situation cannot fall within the first principle of Roch, supra.

[62] Regarding the second principle established by Roch, supra, in order to be earnings there must be a sufficient connection between the income and the employment held. According to Canada (Attorney General) v. Lawrie Vernon (1995), 189 N.R. 308 (FCA), quoted in the Roch, supra, this means that the income must arise directly out of the employment relationship and not merely be a consequence of that relationship.

[63] The Tribunal does not think that the amount of $15,700 representing the payout of the Trust comes directly out of the employment relationship. The connection between the sum in question and the employment is not strong enough, it is actually quite tenuous. The Commission applies the simple principle that the employees received the money, they were working for the employer, and the employer provided the money. The Tribunal is of the opinion that while the employees received the sum of $15,700 as a result of monies paid by the Employer for the shortfall productions, these amounts were put into the Trust and used exclusively to pay for the Health Plan premiums during the time the Trust existed, which the Commission does not consider earnings, and comes from the winding-up of the Trust.

[64] In Roch, supra, the Federal Court of Appeal summarised the findings made in Côté v. Canada (CEIC), (1986), 69 N.R. 126 which looked at sick leave payments from a group wage loss plan and found that the amounts were earnings because there was a connection between the payments on the one hand and the work done (without which the claimant would not have benefited from the insurance) and on the other hand the salary the payments were replacing. Justice Pratte developed a test that requires the existence of a “certain connection” or a “sufficient connection” between the employee’s work and the sums in question, in such a way that these sums are comparable to earnings. In Côté, supra, it was determined that there was such a connection because the payments were replacing an income. The “certain connection” was established. But in the present case, it is different. The Health Plan premiums are not replacing an income, which the Commission did not allocate when the appellants were receiving them in periods of layoffs, and the residue of the winding up of the Trust was not income replacement either. Some employees who were still on the payroll due to long-term disability received the same amount, but this was not income replacement. Also, the payment was made irrelevant of the seniority level of the salary level. The Tribunal finds there is not a sufficient connection between the employee’s work and the amount paid. It comes only as a consequence of the Employer-employee relationship. Indeed, some former employees who were not working at the time, but still on the Designated Beneficiary list, received their sum of $15,700.

[65] The Commission filed an extract of its Digest, sub-paragraph 5.3.2.2 that states that payments of fringe benefits are considered earnings, but the Digest is not the law. The law is made of the legislation and the case law. The Digest refers to payments made in lieu of fringe benefits are to be allocated as earnings. However, the Tribunal has characterised that these payments were unqualified and therefore were not made in lieu of fringe benefits. Moreover, the Commission admitted that when the appellants were receiving Employment Insurance Benefits while being laid off and at the same time benefiting from the Trust paying the Health Plan premiums, these amounts of the health Insurance Premiums were not treated as earnings and were not allocated against their Employment Insurance Benefits. The Commission argues that fringe benefits are not earnings (Supplementary representations filed by the Commission on August 3, 2016). There is a contradiction in the Commission’s position. When the Health Plan premiums are paid, they are not considered earnings, but when the Trust is wound up, it is considered earnings by the Commission. The Tribunal has asked during the hearing to clarify that position. Supplementary arguments were received by the tribunal, which will be discussed below.

[66] The CUBS submitted by the Appellants are not relevant to this file. Both of the decisions refer to the Federal Court of Appeal decisions in HMQueen v. Plasse, A-693-99 and Meechan v. Canada (AG), 2003 FCA 368.While it is true than in those decisions the Umpire ruled in favour of an appellant on a question of earnings, these two Umpire decisions related to sums received as compensation for giving up a right to reinstatement. This is not the case here.

[67] The Tribunal comes to the conclusion that the amount of $15,700 does not within the second principles established in Roch, supra. Therefore, the Tribunal finds the amount of $15,700 paid to the Appellant resulting from the winding-up of the Trust does not constitute earnings within the meaning of section 35 of the Regulations.

Allocation

[68] While the Tribunal has determined that the sum of $15,700 received by the Appellant in December 2013 does not constitutes earnings, the Tribunal believes that it is important to make a determination on the question of allocation, should this decision be appealed to the Appeal Division of the Tribunal or, eventually, to the Federal Court of Appeal. This way the facts are linked to the law and a decision could be rendered on such basis. Had the amounts been found earnings, the Tribunal finds as follows with respect to the allocation of those amounts.

[69] Any amount that constitutes earnings must be allocated under the various possibilities listed in section 36 of the Regulations. Under subsection 36(1) of the Regulations, earnings are allocated to a given number of weeks in the manner prescribed in this section and constitute the claimant’s earnings for those weeks, for the purposes of subsection 36(2) of the Regulations.

[70] For the purposes of the analysis of section 36 of the Regulations, the Tribunal must determine why the amounts were paid in order to identify the applicable allocation provision.

[71] The Commission submits that subsection 36(9) applies because the money was a payment in lieu of payment of the Health Plan premiums and was payable on lay-off or separation of employment. The Appellants submit that subsection 36(9) does not apply and, consequently, the allocation should be done in accordance with subsection 36(19) because the earnings do not fall within the 18 situations referred to in section 36 of the Regulations.

Allocation under subsection 36 (9) of the Regulations

[72] Central to this issue, is the meaning that must be given to the wording of subsection 36(9) of the Regulations, which reads as follows:

“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.”

[73] For subsection 36(9) of the Regulations to apply, the earnings must have been paid or payable by reason of lay-off or separation from employment. In the present case, the terms of the Trust are clear. In Subsection 2.4 of the Trust, it is mentioned that the purpose of the Trust is to provide the Designated Employee Benefits set out in the Plan. The Plan is defined, as per the third “Whereas” of Schedule A of the Trust. In Sections 4, 5 and 6 of Schedule A of the Trust, the premiums for the Health Plan coverage of laid-off employees are to be paid by the Trust. In Section 8 of Schedule A of the Trust state: “if the Company becomes bankrupt, insolvent or winds ups its business or sells its plant in Burin, Newfoundland and Labrador, or if the company determines, in its sole discretion, that operations at its plan in Burin, N&L, should cease, then the balance of the Trust Fund, after all reasonable expenses are paid, shall be distributed among all the Beneficiaries as at the date of termination of operations by the Company”. (Emphasis added by the Tribunal).

[74] The proceeds of the winding-up of the Trust, which is the amount that is at issue in the present appeal, are therefore payable on the occurrence of a number of difference events, but not solely because of termination of employment or lay-offs. It is true that some of the situations found in section 8 of Schedule A of the Trust may have coincided with a loss of employment, but not all. For example, the plant could have been sold to another party and resulting in no lay-offs or loss of employment. The employment may have simply continued with a new employer. In this example, the money would have still have been distributed to beneficiaries as per the terms of the Trust. Also, some beneficiaries were not “laid-off”, as they were not working, as per the testimony of C. D. As per the testimonies of the other appellants received during the hearing, some beneficiaries were on long-term disability or not working for a reason or another.

[75] The Tribunal finds that the amounts in question were payable on the wind-up of the Trust (in accordance with the terms of the Trust) and not the result of separation or lay-off, therefore subsection 36(9) of the Regulations cannot apply.

Allocation of earnings under subsection 36(19) of the Regulations

[76] The Appellant on the other hand submits that subsection 36(19) of the Regulations is the provision under which the allocation should be done. This subsection reads as follows:

“Where a claimant has earnings to which none of subsections (1) to (18) apply, those earnings shall be allocated

1. (a) if they arise from the performance of services, to the period in which the services are performed; and
2. (b) if they arise from a transaction, to the week in which the transaction occurs.”

[77] Subsection 36(19) only applies where none of the other subsection in section 36 apply. The Tribunal has reviewed all the allocation possibilities set out in section 36 and finds that the other subsections do not apply. Consequently, the allocation of earnings must be applied under subsection 36(19) of the Regulations.

[78] The Tribunal finds that the amounts paid by the Trust, were not paid as a result of a service provided by the Designated Beneficiaries, but as a result from the wind-up of the Trust, this can only be the result of a “transaction” within the meaning of paragraph 36(19)(b) of the Regulations. Therefore, a “transaction” is involved.

[79] In the case of a transaction, paragraph 36(19)(b) provides that the entire amount is allocated to the week of the transaction. Both the Commission and the appellants have made no submissions regarding the transaction date in the case of an allocation of earnings in accordance with paragraph 36(19)(b) of the Regulations.

[80] Since the payment was made on December 17, 2013, this would normally constitute the date of the transaction. However, while the terms of the Trust do not define the nature of the payout, it does state specifically in Section 8 of Schedule A of the Trust that the payment is made “as at the date of termination of the operations by the Company”

[81] Consequently, the date of the transaction is December 12, 2012, as established by the Employer in the records of earnings and the various correspondence and testimonies, which is the date of termination of the operations of the Burin fish plant, and it is on that date and to that week that the earnings must be allocated under paragraph 36(19)(b), for the total amount, and for that week only.

Write-off

[82] The Appellants asked the Tribunal to recommend to the Commission to write off their overpayments. As the Tribunal comes to the conclusion that the amount of $15,700 does not constitute earnings, and that if it would be considered earnings, then the allocation would be made on December 12, 2012, but only for the week covering that date, this argument is moot.

[83] Write-off is covered in section 56 of the Regulations. There are various reasons as to why a debtor could ask for a write-off. The one most frequently mentioned at the hearing is that the repayment of the overpaid amounts would result in undue hardship to the Appellant. Since the appellants are only asking for a recommendation of write-off by the Tribunal, the Tribunal will not make an exhaustive analysis if it has or not the power to adjudicate on the issue of write-off. In the present case, as the Appellant has stated that he or she faces a financial hardship, but also the fact that the Commission, having determined as early as December 2012 that this amount would be earning, has made no efforts to warn the Appellants, and has also let an unreasonable amount of time lapse between the payment and the processing of the files.

[84] Therefore the Tribunal is not in a position to issue a write-of recommendation, as this is contingent on too many variables. For example, if the outcome of this after all the recourse are exhausted if that the amounts are not earnings, the argument is moot. If on the contrary it is earnings, but the allocation is to be made under paragraph 36 (19)(b) of the regulations, then the “hardship” is much diminished as the overpayment would be much lower.

Other comments from the Tribunal

[85] On the question of the time spent by the Commission to issue their decisions in 2015 while it had determined in 2012 that the amounts were considered earnings. The Appellants were quoting the Digest, but the Tribunal has stated above that the Digest does not constitute the Law and therefore could not be considered as such.

[86] The Commission had already determined in December 2012 that the amount in question was earning, had the list of employees who were receiving this amount in December 2013, but did not act upon it for another 18 months. The explanation that the Commission was “backlogged is not acceptable, but the Tribunal cannot make a write-off recommendation based on that. It is an unfortunate administrative delay that the appellants had to go through, but it does constitute supplementary ground on which to allow an appeal.

Conclusion

[87] The appeal is allowed. The amount of $15,700 received by the Appellants does not constitute earnings.

Appendix A

Applicable law

[1] Subsections 35(1), (2) and (7) of the Regulations read as follows:

35 (1) The definitions in this subsection apply in this section.

1. employment means
   1. (a) any employment, whether insurable, not insurable or excluded employment, under any express or implied contract of service or other contract of employment,
      1. (i) whether or not services are or will be provided by a claimant to any other person, and
      2. (ii) whether or not income received by the claimant is from a person other than the person to whom services are or will be provided;
   2. (b) any self-employment, whether on the claimant's own account or in partnership or co-adventure; and
   3. (c) the tenure of an office as defined in subsection 2(1) of the Canada Pension Plan. (emploi)
2. 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. (revenu)
3. pension means a retirement pension
   1. (a) arising out of employment or out of service in any armed forces or in a police force;
   2. (b) under the Canada Pension Plan; or
   3. (c) under a provincial pension plan. (pension)
4. self-employed person has the same meaning as in subsection 30(5). (travailleur indépendant)

(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

1. (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;
2. (b) workers' compensation payments received or to be received by a claimant, other than a lump sum or pension paid in full and final settlement of a claim made for workers' compensation payments;
3. (c) payments a claimant has received or, on application, is entitled to receive under
   1. (i) a group wage-loss indemnity plan,
   2. (ii) a paid sick, maternity or adoption leave plan,
   3. (iii) a leave plan providing payment in respect of the care of a child or children referred to in subsection 23(1) or 152.05(1) of the Act,
   4. (iv) a leave plan providing payment in respect of the care or support of a family member referred to in subsection 23.1(2) or 152.06(1) of the Act, or
   5. (v) a leave plan providing payment in respect of the care or support of a critically ill child;
4. (d) notwithstanding paragraph (7)(b) but subject to subsections (3) and (3.1), the payments a claimant has received or, on application, is entitled to receive from a motor vehicle accident insurance plan provided under a provincial law in respect of the actual or presumed loss of income from employment due to injury, if the benefits paid or payable under the Act are not taken into account in determining the amount that the claimant receives or is entitled to receive from the plan;
5. (e) the moneys paid or payable to a claimant on a periodic basis or in a lump sum on account of or in lieu of a pension; and
6. (f) where the benefits paid or payable under the Act are not taken into account in determining the amount that a claimant receives or is entitled to receive pursuant to a provincial law in respect of an actual or presumed loss of income from employment, the indemnity payments the claimant has received or, on application, is entitled to receive pursuant to that provincial law by reason of the fact that the claimant has ceased to work for the reason that continuation of work entailed physical dangers for
   1. (i) the claimant,
   2. (ii) the claimant's unborn child, or
   3. (iii) the child the claimant is breast-feeding.

[…]

(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):

1. (a) disability pension or a lump sum or pension paid in full and final settlement of a claim made for workers' compensation payments;
2. (b) payments under a sickness or disability wage-loss indemnity plan that is not a group plan;
3. (c) relief grants in cash or in kind;
4. (d) retroactive increases in wages or salary;
5. (e) the moneys referred to in paragraph (2)(e) if
   1. (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
   2. (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
6. (f) employment income excluded as income pursuant to subsection 6(16) of the Income Tax Act.

[2] Section 36 of the Regulations reads 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.

(2) For the purposes of this section, the earnings of a claimant shall not be allocated to weeks during which they did not constitute earnings or were not taken into account as earnings under section 35.

(3) Where the period for which earnings of a claimant are payable does not coincide with a week, the earnings shall be allocated to any week that is wholly or partly in the period in the proportion that the number of days worked in the week bears to the number of days worked in the period.

(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.

(5) Earnings that are payable to a claimant under a contract of employment without the performance of services or payable by an employer to a claimant in consideration of the claimant returning to or beginning work shall be allocated to the period for which they are payable.

(6) The earnings of a claimant who is self-employed, or the earnings of a claimant that are from participation in profits or commissions, that arise from the performance of services shall be allocated to the weeks in which those services are performed.

(6.1) The earnings of a claimant who is self-employed, or the earnings of a claimant that are from participation in profits or commissions, that arise from a transaction shall be allocated

1. (a) if the aggregate amount of earnings that arise from a transaction occurring in a week is greater than the maximum yearly insurable earnings referred to in section 4 of the Act divided by 52, to the weeks in which the work that gave rise to the transaction was performed, in a manner that is proportional to the amount of work that was performed during each of those weeks or, if no such work was performed, to the week in which the transaction occurred; or
2. (b) if the aggregate amount of earnings that arise from a transaction occurring in a week is less than or equal to the maximum yearly insurable earnings referred to in section 4 of the Act divided by 52, to the week in which the transaction occurred or, if the claimant demonstrates that the work that gave rise to the transaction occurred in more than one week, to the weeks in which the earnings were earned, in a manner that is proportional to the amount of work that was performed during each of those weeks.

(6.2) The earnings of a claimant who is self-employed, or the earnings of a claimant that are from participation in profits or commissions, that do not arise from the performance of services or from a transaction shall be allocated equally to each week falling within the period in which the earnings were earned.

(7) The earnings of a claimant who is self-employed in farming shall be allocated

1. (a) if they arose from a transaction, in accordance with subsection (6.1); and
2. (b) if they were received in the form of a subsidy, to the week in which the subsidy was paid.

(8) Where vacation pay is paid or payable to a claimant for a reason other than a lay-off or separation from an employment, it shall be allocated as follows:

1. (a) where the vacation pay is paid or payable for a specific vacation period or periods, it shall be allocated
   1. (i) to a number of weeks that begins with the first week and ends not later than the last week of the vacation period or periods, and
   2. (ii) in such a manner that the total earnings of the claimant from that employment are, in each consecutive week, equal to the claimant’s normal weekly earnings from that employment; and
2. (b) in any other case, the vacation pay shall, when paid, be allocated
   1. (i) to a number of weeks that begins with the first week for which it is payable, and
   2. (ii) in such a manner that, for each week except the last, the amount allocated under this subsection is equal to the claimant’s normal weekly earnings from that employment.

(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.

(10.1) The allocation of the earnings paid or payable to a claimant by reason of a lay-off or separation from an employment made in accordance with subsection (9) does not apply if

1. (a) the claimant’s benefit period begins in the period beginning on January 25, 2009 and ending on May 29, 2010;
2. (b) the claimant contributed at least 30% of the maximum annual employee’s premium in at least seven of the 10 years before the beginning of the claimant’s benefit period;
3. (c) the Commission paid the claimant less than 36 weeks of regular benefits in the 260 weeks before the beginning of the claimant’s benefit period; and
4. (d) during the period in which the earnings paid or payable by reason of the claimant’s lay- off or separation from an employment are allocated in accordance with subsection (9) or, if the earnings are allocated to five weeks or less, during that period of allocation or within six weeks following the notification of the allocation, the claimant is referred by the Commission, or an authority that the Commission designates, under paragraph 25(1)(a) of the Act, to a course or program of instruction or training
   1. (i) that is full-time,
   2. (ii) that has a duration of at least 10 weeks or that costs at least $5,000 or 80% of the earnings paid or payable by reason of the claimant’s lay-off or separation from employment,
   3. (iii) for which the claimant assumes the entire cost, and
   4. (iv) that begins during one of the 52 weeks following the beginning of the claimant’s benefit period.

(10.2) If any of the conditions under which the Commission may terminate the claimant’s referral under paragraph 27(1.1)(b) of the Act exists, the earnings paid or payable to the claimant by reason of a lay-off or separation from an employment shall be re-allocated under subsection (9).

(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.

(12) The following payments shall be allocated to the weeks in respect of which the payments are paid or payable:

1. (a) payments in respect of sick leave, maternity leave or adoption leave or leave for the care of a child or children referred to in subsection 23(1) or 152.05(1) of the Act;
2. (b) payments under a group sickness or disability wage-loss indemnity plan;
3. (c) payments referred to in paragraphs 35(2)(d) and (f);
4. (d) workers’ compensation payments, other than a lump sum or pension paid in full and final settlement of a claim made for workers’ compensation payments;
5. (e) payments in respect of the care or support of a family member referred to in subsection 23.1(2) or 152.06(1) of the Act; and
6. (f) payments in respect of the care or support of a critically ill child.

(13) A payment paid or payable to a claimant in respect of a holiday or non-working day that is observed as such by law, custom or agreement, or a holiday or non-working day immediately preceding or following a holiday or non-working day that occurs at the establishment of the employer or former employer from whom the claimant receives that payment, shall be allocated to the week in which that day occurs.

(14) The moneys referred to in paragraph 35(2)(e) that are paid or payable to a claimant on a periodic basis shall be allocated to the period for which they are paid or payable.

(15) The moneys referred to in paragraph 35(2)(e) that are paid or payable to a claimant in a lump sum shall be allocated beginning with the first week that those moneys are paid or payable to the claimant in such a manner that those moneys are equal in each week to the weekly amount, calculated in accordance with subsection (17), to which the claimant would have been entitled if the lump sum payment had been paid as an annuity.

(16) The moneys allocated in accordance with subsection (14) or (15) shall not be taken into account in the allocation of other earnings under this section.

(17) The weekly amount shall be calculated in accordance with the following formula, according to the claimant’s age on the day on which the lump sum payment is paid or payable:

A / B

where

A

is the lump sum payment; and

B

is the estimated actuarial present value* of $1 payable at the beginning of every week starting from the day on which the lump sum payment is paid or payable and payable for the claimant’s lifetime, as calculated each year in accordance with the following formula and effective on January 1 of the year following its calculation:

B = [Σt = 0 to infinity of (tPx/ (1+ i)t) – 0.5] × 52

where

tPx

is the probability that the claimant will survive for “t” years from the claimant’s age “x” using the latest Canadian mortality rates used in the valuation of the Canada Pension Plan prorated in equal parts between males and females,

i

is the annualized long-term Government of Canada benchmark bond yields averaged over the 12-month period beginning on the September 1 and ending on the August 30 before the January 1 on which the estimated actuarial present values are effective, expressed as a percentage and rounded to the nearest one tenth of a percentage, and

t

is the number of years that the claimant survives according to the claimant’s age for which the probablity of survival is estimated by tPx.

Note: The estimated actuarial present values are published annually on the Service Canada website.

(18) Earnings that are payable to a claimant under a government program intended to encourage re-employment and that are payable to the claimant as a supplement to earnings arising from a contract of employment shall be allocated to the period for which they are payable.

(19) Where a claimant has earnings to which none of subsections (1) to (18) apply, those earnings shall be allocated

1. (a) if they arise from the performance of services, to the period in which the services are performed; and
2. (b) if they arise from a transaction, to the week in which the transaction occurs.

(20) For the purposes of this section, a fraction of a dollar that is equal to or greater than one half shall be taken as a dollar and a fraction that is less than one half shall be disregarded.

[3] Section 56 of the Regulations reads as follows:

56 (1) A penalty owing under section 38, 39 or 65.1 of the Act or an amount payable under section 43, 45, 46, 46.1 or 65 of the Act, or the interest accrued on the penalty or amount, may be written off by the Commission if

1. (a) the total of the penalties and amounts, including the interest accrued on those penalties and amounts, owing by the debtor to Her Majesty under any program administered by the Department of Employment and Social Development does not exceed $100, a benefit period is not currently running in respect of the debtor and the debtor is not currently making regular payments on a repayment plan;
2. (b) the debtor is deceased;
3. (c) the debtor is a discharged bankrupt;
4. (d) the debtor is an undischarged bankrupt in respect of whom the final dividend has been paid and the trustee has been discharged;
5. (e) the overpayment does not arise from an error made by the debtor or as a result of a false or misleading declaration or representation made by the debtor, whether the debtor knew it to be false or misleading or not, but arises from
   1. (i) a retrospective decision or ruling made under Part IV of the Act, or
   2. (ii) a retrospective decision made under Part I or IV of the Act in relation to benefits paid under section 25 of the Act; or
6. (f) the Commission considers that, having regard to all the circumstances,
   1. (i) the penalty or amount, or the interest accrued on it, is uncollectable,
   2. (ii) the repayment of the penalty or amount, or the interest accrued on it, would result in undue hardship to the debtor, or
   3. (iii) the administrative costs of collecting the penalty or amount, or the interest accrued on it, would likely equal or exceed the penalty, amount or interest to be collected.

(2) The portion of an amount owing under section 47 or 65 of the Act in respect of benefits received more than 12 months before the Commission notifies the debtor of the overpayment, including the interest accrued on it, may be written off by the Commission if

1. (a) the overpayment does not arise from an error made by the debtor or as a result of a false or misleading declaration or representation made by the debtor, whether the debtor knew it to be false or misleading or not; and(a) the overpayment does not arise from an error made by the debtor or as a result of a false or misleading declaration or representation made by the debtor, whether the debtor knew it to be false or misleading or not; and
2. (b) the overpayment arises as a result of
   1. (i) a delay or error made by the Commission in processing a claim for benefits,
   2. (ii) retrospective control procedures or a retrospective review initiated by the Commission,
   3. (iii) an error made on the record of employment by the employer,
   4. (iv) an incorrect calculation by the employer of the debtor's insurable earnings or hours of insurable employment, or
   5. (v) an error in insuring the employment or other activity of the debtor.