Employment Insurance (EI)

Decision

[1] The appeal is allowed.

Overview

[2] On December 21, 2018, the Respondent (Claimant) was laid off after her employer ceased operations. On April 10, 2019, she received $4,128 from the Wage Earner Protection Program (WEPP) for severance pay and wages in lieu of notice. The Appellant (Commission) decided that the money was “earnings” under the law because it was received as severance pay and wages in lieu of notice.

[3] The Commission determined that the Claimant received the earnings following separation from employment. It allocated some of the earnings in the week of December 23, 2018, and the rest of the earnings starting the week of December 30, 2018, at an amount of $930 per week. This decision resulted in an overpayment of $2,290 in EI benefits. The Commission maintained its initial decision after reconsideration. The Claimant appealed the reconsideration decision to the General Division.

[4] The General Division found that the Claimant received earnings under the law. However, it found that the Commission made an error in allocating the earnings. The General Division determined that earnings received while receiving EI benefits are to be allocated at the rate of $.50 for every dollar earned up to 90% of the Claimant’s weekly insurable earnings. Amounts above 90% of the Claimant’s weekly insurable earnings are to be allocated dollar for dollar. Based on this determination, it concluded that the Claimant’s overpayment should be $1,738 and not $2,290.

[5] The Appeal Division granted the Commission leave to appeal of the General Division’s decision. The Commission submits that the General Division made errors in law when allocating the Claimant’s earnings.

[6] I must decide whether the General Division made errors in law when it allocated the Claimant’s earnings and determined the amount of overpayment.

[7] I am allowing the Commission’s appeal.

Issue

[8] Did the General Division make errors in law when it allocated the Claimant’s earnings and determined the amount of overpayment?

Analysis

Appeal Division’s mandate

[9] The Federal Court of Appeal has determined that when the Appeal Division hears appeals pursuant to section 58(1) of the Department of Employment and Social Development Act (DESD Act), the mandate of the Appeal Division is conferred to it by sections 55 to 69 of that Act.^{Footnote 1}

[10] The Appeal Division acts as an administrative appeal tribunal for decisions rendered by the General Division and does not exercise a superintending power similar to that exercised by a higher court.^{Footnote 2}

[11] Therefore, unless the General Division failed to observe a principle of natural justice, erred in law, based its decision on an erroneous finding of fact that it made in a perverse or capricious manner or without regard for the material before it, I must dismiss the appeal.

Did the General Division make errors in law when it allocated the Claimant’s earnings and determined the amount of overpayment?

[12] The Commission submits that the General Division made errors in law when it allocated the Claimant’s earnings and determined the amount of overpayment.

[13] The Commission submits that the Claimant was laid-off on December 21, 2018 and not December 23, 2018. Therefore, the Claimant’s last week of work was from December 16 to December 22, 2018. Furthermore, it submits that a claimant is not entitled to be paid benefits until he has served a waiting period of one week of unemployment for which benefits would otherwise be payable and the waiting period earnings have to be deducted dollar for dollar (100%) from the first 3 weeks for which benefits would otherwise be payable.

[14] For the purposes of the EI Act, a week means a period of seven days beginning on and including Sunday.^{Footnote 3} The Claimant’s last day of work was Friday December 21, 2018. Therefore, the week of the lay-off is Sunday December 16 to Saturday December 22, 2018.

[15] The law indicates that all earnings paid or payable to a claimant by reason of a lay-off or separation from an employment shall be allocated to a number of weeks that begins with the week of the lay-off.^{Footnote 4}

[16] I find that the General Division erred in law when it did not consider the total earnings of the Claimant arising out of her employment during the week of the lay-off or separation and concluded that the allocation had to start the week of December 23, 2018. The General Division could not ignore that the Claimant declared earnings of $852 in her last week of December 16, 2018.^{Footnote 5}

[17] Furthermore, the Commission submits that the General Division erroneously determined that the earnings received while receiving EI had to be allocated at the rate of $0.50 for every dollar earned up to 90% of the claimant’s weekly insurable earnings before her waiting period was served.

[18] I find that the General Division made an error in law when it applied the deductions from benefits for earnings in the period of unemployment and not earnings in the waiting period that have to be deducted dollar for dollar (100%) from the first 3 weeks for which benefits would otherwise be payable.^{Footnote 6}

[19] I am therefore justified to intervene.

Remedy

[20] Considering that both parties had the opportunity to present their case before the General Division, I will render the decision that should have been given by the General Division.^{Footnote 7}

[21] First, it is necessary that I reiterate that the law waiving the allocation of severance pay in response to the COVID-19 pandemic applies only to benefit periods that begin on or after September 27, 2020.^{Footnote 8} The Claimant’s benefit period began on December 23, 2018. Unfortunately, for the Claimant, I do not have the authority to deviate from the rules Parliament established to exclude earnings during the pandemic.

[22] Therefore, the separation monies are to be allocated from December 16, 2018, in the amount of $79 for that week. The balance of the separation monies are to be allocated from December 23, 2018 to January 19, 2019 at $931 for each week and the remaining of $325 should be allocated towards the week beginning January 20, 2019.

[23] The waiting period will be served the week of January 20, 2019 and the waiting period earnings are to be deducted from the first 3 weeks for which benefits would otherwise be payable.

Conclusion

[24] The appeal is allowed.

[25] I recommend that the Commission communicate directly to the Claimant a final overpayment breakdown and the detailed calculations of the balance owing following the present decision.