Employment Insurance (EI)

Decision

[1] The appeal is dismissed with modification. This means that I partially agree with the Claimant, but not on all issues that I decided.

[2] The Claimant received earnings in the form of vacation pay and pay in lieu of notice and the Canada Employment Insurance Commission (Commission) allocated (in other words, assigned) those earnings to the right weeks.

[3] The Claimant also received a retiring allowance. However, it is not employment income and not considered earnings, so the Commission cannot allocate this amount.

Overview

[4] The Commission says that the Claimant got $56,907.24 and $56,400.08, totalling $113,307.32 from his former employer. The employer issued two separate records of employment (ROE) at different time periods.^{Footnote 1}

[5] The Commission first decided that all of the money was “earnings” under the law because it was vacation pay, pay-in-lieu of notice, retiring allowance and severance pay.^{Footnote 2} They also decided that his pension money was earnings. This resulted in an overpayment.^{Footnote 3}

[6] The law says that all earnings have to be allocated to certain weeks. What weeks earnings are allocated to depends on why you received the earnings.^{Footnote 4}

[7] The Commission allocated the total earnings starting the week of November 25, 2018 because he separated from his employment.^{Footnote 5} The pension earnings were allocated from March 3, 2019. This allocation period was then shortened from December 2, 2018 to the week of March 10, 2019.^{Footnote 6}

[8] The Claimant disagrees with the Commission because some of the money he received was not considered income as it was invested. He argues that he was entitled to all of the benefits he received and it was the Commission’s error for paying him.^{Footnote 7} He also has health issues and paying back the overpayment would create financial hardship.

Matter I have to consider first

I asked for a Canada Revenue Agency (CRA) ruling

[9] The Claimant told the Commission that he disagrees with the amounts of separation payments on the ROE.^{Footnote 8} He also wrote that the amounts were incorrect.^{Footnote 9}

[10] As the Claimant and Commission dispute the amount that was paid to him, I  asked the Commission to obtain a CRA ruling to determine the amount of the Claimant’s insurable earnings.^{Footnote 10} The Commission asked for an extension to provide this information and their request was granted.^{Footnote 11}

[11] At the hearing, I asked the Claimant if the amounts paid as listed on the ROE’s were correct. He said that they were correct to the best of his knowledge. I put the file in abeyance (paused) as the CRA ruling was already in-progress.^{Footnote 12}

CRA Ruling issued April 20, 2022

[12] The Commission sent the Tribunal a copy of the CRA ruling on April 27, 2022.^{Footnote 13} It says the following:

• We found that, for the period under review [Start Date (02/12/2018) End Date (26/12/2020)], the vacation pay and pay in lieu of notice totalling $14,890.24 was insurable under paragraph 2(1)(a) of the Insurable Earnings and Collection of Premiums.”
• We have also ruled that, after your employment ended with (Employer X), you received a retiring allowance of $98,417.08.^{Footnote 14} It is not employment income. It is not included in insurable earnings under paragraph 2(3)(b) of the Insurable Earnings and Collection of Premiums Regulation.

Issues

[13] I have to decide the following two issues:

1. a) Is the money that the Claimant received earnings?
2. b) If the money is earnings, did the Commission allocate the earnings correctly?

Analysis

Is the money that the Claimant received earnings?

[14] The law says that earnings are the entire income that you get from any employment.^{Footnote 15} The law defines both “income” and “employment.”

[15] Income can be anything that you got or will get from an employer or any other person. It doesn’t have to be money, but it often is.^{Footnote 16} Case law says that severance pay is earnings.^{Footnote 17}

[16] Employment is any work that you did or will do under any kind of service or work agreement.^{Footnote 18}

[17] The Claimant has to prove that the money is not earnings. The Claimant has to prove this on a balance of probabilities. This means that he has to show that it is more likely than not that the money is not earnings. There are some exceptions in law for sources that would not be considered earnings.^{Footnote 19}

The Commission suggests a modification to their initial decision

[18] I find that the Claimant’s employer paid him a total of $113,307.32. This is consistent with the evidence in the file, such as the record of employment and CRA ruling.

[19] The Commission first decided that the money was a combination of vacation pay, pay in lieu of notice and a retiring allowance.^{Footnote 20} They said that all of the money was earnings under the law, including a pension he started receiving in March 2019.

[20] The Commission changed their position after the hearing took place and once they reviewed the CRA ruling.^{Footnote 21} They submit that their original decision needs to be modified because only $14,890.24 is earnings and income arising out of his employment. They agree with the CRA ruling that the remainder of $98,417.08 was not employment income and not insurable earnings.^{Footnote 22}

[21] I find that the Claimant that the sum of $14,890.24, which represents vacation pay and pay in lieu of notice, is considered earnings according to the law. It is income arising out of his employment. The employer gave the Claimant that money because he separated from his job. This means that this amount must be allocated.

[22] I also find that the Claimant that the sum of $98,417.08, representing a retiring allowance is not earnings.^{Footnote 23} I was persuaded by the CRA ruling that said this amount was not employment income and not insurable earnings.^{Footnote 24} This means that this amount will not be allocated.

Did the Commission allocate the earnings correctly?

[23] The law says that earnings have to be allocated to certain weeks. What weeks earnings are allocated to depend on why you received the earnings.^{Footnote 25}

[24] The law says that the earnings you get for being separated from your job have to be allocated starting the week you were separated from your job. It does not matter when you actually receive those earnings. The earnings have to be allocated starting the week your separation starts, even if you did not get those earnings at that time.^{Footnote 26}

[25] I find that the vacation pay and pay in lieu of notice totalling $14,890.24 must be allocated to the Claimant’s EI claim. The Claimant’s last day of work was November 30, 2018.

[26] I accept that the Claimants’ normal weekly earnings were $1,049.02. The allocation will run from December 2, 2018 to March 9, 2019.^{Footnote 27} The balance of $204.00 will be allocated the week of March 10, 2019.

[27] The parties do not appear to dispute that the Claimant’s pension earnings should be allocated. The pension earnings were allocated from March 3, 2019 at $138.00 per week to the end of his claim. Accordingly, I accept it as fact.

[28] As noted above, the retiring allowance of $98,417.08 will not be allocated to the Claimant’s EI claim because it was not earnings according on the CRA ruling.

Can the Commission reconsider the claim?

[29] Yes, the Commission has the authority to reconsider and recalculate a claim within 36 months after benefits have been paid or would have been payable.^{Footnote 28} The Commission’s decision to reconsider the claim was made within the 36 month period that the law allows. I am bound by the law and cannot change the law.

[30] Even if the Commission had possession of both ROE’s and made an error by paying the Claimant some benefits that he was not entitled to receive, the law still allows them to reconsider the claim and collect any debt owing.

What about writing off the overpayment?

[31] The Claimant presented compassionate circumstances, however I do not have the authority to write-off the overpayment.^{Footnote 29}  He has to make his write-off request based on financial hardship either to the Commission and/or Canada Revenue Agency directly.

[32] However, since the allocation no longer includes the $98,417.08 retiring allowance, the Claimant may choose to ask for an updated “overpayment breakdown”^{Footnote 30} chart from the Commission reflecting the new allocation and updated debt owing.

Conclusion

[33] The appeal is dismissed with modification.

[34] The Claimant received some earnings that need to be allocated (vacation and pay in lieu of notice). These earnings are allocated starting the week of December 2, 2018. The retiring allowance is not earnings, so it will not be allocated.