Employment Insurance (EI)

Decision

[1] The appeal is dismissed.

Overview

[2] The Respondent (Claimant) applied for Employment Insurance (EI) benefits after losing his job. The Claimant lost his job when the company he worked for restructured. The Claimant signed a notice of termination letter that gave details of a severance package. The package included severance pay in the form of continued salary, vacation pay, and benefits.

[3] The Appellant (Commission) notified the Claimant that because of the salary continuance, his benefit period (period in which benefits are paid) would start on October 10, 2021, for a period of 20 weeks. The Claimant argued that he established his claim for EI benefits while pandemic-related temporary measures were in place and that he should receive 50 weeks of EI benefits. Upon reconsideration, the Commission maintained its initial decision. The Claimant appealed the reconsideration decision to the General Division.

[4] The General Division found that the Claimant’s relationship with the employer ended on July 15, 2021. It found that the continued two weeks of group insurance benefits, or the continued extended health and dental benefits to October 7, 2021, paid by the employer, did not change the date of his interruption of earnings. The General Division concluded that the interruption of earnings occurred on July 15, 2021, and that the Claimant is entitled to 50 weeks of EI benefits.

[5] The Appeal Division granted the Commission leave to appeal of the General Division’s decision. The Commission submits that the General Division erred in law when it concluded that the Claimant had an interruption of earnings on July 15, 2021.

[6] I am dismissing the Commission’s appeal.

Issue

[7] Did the General Division make an error when it concluded that the Claimant had an interruption of earnings on July 15, 2021, and that he was entitled to the maximum 50 weeks benefits established during the temporary measures?

Analysis

Appeal Division’s mandate

[8] 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}

[9] 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}

[10] 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.

Preliminary matters

[11] I am deciding the appeal based on the evidence presented to the General Division. It is well-established that the Appeal Division powers are limited.^{Footnote 3} No exception to the general rule of inadmissibility of new evidence apply here. I am therefore not accepting in evidence the Canada Revenue Agency decision dated May 31, 2022. The Commission was offered the possibility to proceed with an application under section 66 of the DESD Act. It decided not to.^{Footnote 4}

Did the General Division make an error when it concluded that the Claimant had an interruption of earnings on July 15, 2021 and that he was entitled to the maximum 50 weeks benefits established during the temporary measures?

[12] The Commission submits that the General Division erred in law in making its decision, when it concluded that the Claimant had an interruption of earnings on July 15, 2021, and that he was entitled to 50 weeks of benefits based on the temporary measures in place.

[13] The Commission submits that the evidence before the General Division shows that the Claimant did not have an interruption of earnings on July 15, 2021, due to a severance pay in the form of continued salary including health benefits up to October 7, 2021. It submits that no benefit period could be established before October 10, 2021.

[14] As the General Division highlighted, to be eligible for EI benefits, a claimant must fulfill certain conditions. One of the conditions is that the claimant must have experienced an interruption of earnings from their employment.^{Footnote 5}

[15] A claimant experiences an interruption of earnings if they are laid off or separated from their employment and have a period of seven or more consecutive days during which no work is performed for that employer and in respect of which no earnings arise from that employment.^{Footnote 6}

[16] The evidence shows that the Claimant was dismissed from his job July 15, 2021, following a restructuring of the company. The Claimant was offered a severance package equivalent to eight (8) weeks of pay ending September 10, 2021, of which he would continue his benefits coverage. After inquiring with the Commission, he was told that he would still receive 50 weeks of benefits. He therefore countered with 10 weeks to include his car allowance.^{Footnote 7}

[17] The Human Resources representative called the Claimant to say that the company did not include car allowance to a severance package, but that they would instead add two (2) weeks to the package. He later received a final offer of 12 weeks salary and benefits. The Claimant again called the Commission to make sure he would receive 50 weeks of benefits. He was told that he would not be paid benefits until those monies ended October 7, 2021, and that he would receive 50 weeks of benefits after that. Based on that assurance, he accepted the employer’s final offer with benefits.^{Footnote 8}

[18] The final agreement between the Claimant and the employer dated and signed July 22, 2021, indicates that the Claimant will be paid twelve (12) weeks’ salary continuance at his regular rate of pay, less appropriate deductions, as per the severance agreement signed on November 9, 2020. The extended health, dental benefits, are maintained for the full severance period to October 7, 2021.^{Footnote 9}

[19] The General Division found that the Claimant experienced an interruption of earnings on July 15, 2021. This is the date that the employer identified as the effective date of the Claimant’s termination. It found that the employer paid the Claimant money by reason of his separation from his job. The General Division did not find that the continued two weeks of group insurance benefits, or the continued extended health and dental benefits to October 7, 2021, changed the date of his interruption of earnings.

[20] I note that all earnings paid or payable to a claimant by reason of a lay-off or separation from an employment are not earnings to be taken into account to determine whether an interruption of earnings occurred.^{Footnote 10}

[21] I agree with the General Division’s conclusion that the severance package received by the Claimant from his former employer constitutes earnings payable by reason of a lay-off or separation and, as such, does not prevent the Claimant from establishing an interruption of earnings.^{Footnote 11}

[22] The evidence before the General Division shows that there was no continuing employment relationship between the Claimant and his former employer. It ended effective July 15, 2021.

[23] The agreement between the Claimant and the employer was negotiated specifically for the purpose of providing the Claimant an acceptable severance package, as per the severance agreement signed on November 9, 2020. All the prepared settlement documents refer to the "termination" of employment. The Claimant also signed a release recognizing that he was terminated as of July 15, 2021.

[24] The employer limited his severance offer to weekly payments. If the Claimant had been offered his termination payment in a lump sum, there would have been no question that his employment had been terminated.

[25] I do not accept that the intent to terminate employment can be altered simply because the employer insisted on making weekly payments. In my opinion, it is inappropriate that the employee should be considered not to have suffered an interruption of earnings merely because the payments were made periodically.^{Footnote 12}

[26] I am of the view that the General Division made no error when it concluded that the Claimant experienced an interruption of earnings on July 15, 2021.

[27] As stated by the General Division, since the Claimant had an interruption of earnings on July 15, 2021, the Claimant is entitled to the maximum of 50 weeks of benefits because the benefit period starts within the dates identified in the temporary measures.

Conclusion

[28] The appeal is dismissed.