Employment Insurance (EI)

Decision

[1] The appeal is allowed.

Overview

[2] The Respondent (Claimant) received $10,959 from his former employer. The Appellant (Commission) decided that the money is “earnings” because it is vacation pay. It allocated the earnings starting the week of December 4, 2022, at an amount of $1,692 per week. The Commission said that being separated from his job is why the Claimant received the earnings.

[3] After reconsideration, the Commission upheld its initial decision. The Claimant appealed the reconsideration decision to the General Division.

[4] The General Division found that the $10,959 the Claimant had received was earnings but that the Commission had not allocated those earnings correctly. It found that the amount needed to be allocated over seven weeks starting the week of November 27, 2022, at $1,692 per week. Any amount left over had to be allocated to the last week.

[5] The Commission was given permission to appeal. It argues that the General Division made an error of law in its interpretation of section 36(9) of the Employment Insurance Regulations (EI Regulations).

[6] I have to decide whether the General Division made an error when it found that the earnings had to be allocated from November 27, 2022.

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

Issue

[8] Did the General Division make an error in its interpretation of section 36(9) of the EI Regulations when it found that the earnings had to be allocated from November 27, 2022?

Analysis

Appeal Division’s mandate

[9] The Federal Court of Appeal has established that the Appeal Division’s mandate is conferred to it by sections 55 to 69 of the Department of Employment and Social Development Act.^{Footnote 1}

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

[11] So, unless the General Division failed to observe a principle of natural justice, made an error of law, or 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 an error in its interpretation of section 36(9) of the EI Regulations when it found that the earnings had to be allocated from November 27, 2022?

[12] The General Division found that the $10,959 the Claimant had received was earnings but that the Commission had not allocated those earnings correctly. It found that the amount needed to be allocated over seven weeks starting the week of November 27, 2022, at $1,692 per week. Any amount left over had to be allocated to the last week.

[13] The Commission argues that the General Division made an error in its interpretation of section 36(9) of the EI Regulations when it decided that the separation monies had to be allocated from November 27 rather than from December 4, 2022.

[14] I take into account that it is not disputed that the Claimant’s normal weekly earnings was $1,692 and that his last day worked was December 1, 2022.

[15] The General Division decided that $1,692 had to be allocated to each week starting the week of November 27, 2022, the week the Claimant was separated from his job.

[16] It is true that section 36(9) of the EI Regulations says that all earnings a claimant receives for being separated from their job have to be allocated starting the week of separation. However, it also says that the claimant’s total earnings from their employment are, in each consecutive week except the last, equal to the claimant’s normal weekly earnings from that employment.

[17] In other words, when a claimant has received their full salary for the week they were separated from their job, the amount received must be allocated to the following week so 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.” ^{Footnote 2}

[18] However, if a claimant only worked part of their normal work week, the amount will be allocated to the week of separation.

[19] So, I find that the General Division made an error in its interpretation of section 36(9) of the EI Regulations. It incorrectly decided that the separation monies had to be allocated starting the week of November 27 instead of the week of December 4, 2022, because the Claimant received his full salary the week he was separated from his job.

[20] This means that I am justified in intervening on this issue.

Remedy

[21] I find that the parties had the opportunity to present their case before the General Division. So, I will give the decision that the General Division should have given.

[22] The evidence shows that the Claimant’s claim for benefits, which was initially supposed to end on January 14, 2023, was extended by six (6) weeks to February 25, 2023. However, the allocation of earnings has to start the week of December 4, 2022, because the Claimant received his full salary for the week of November 27, 2022.

[23] The $10,959 has to be allocated starting the week of December 4, 2022, at $1,692 per week, with $807 being allocated to the last week, that of January 15, 2023. The Claimant has to repay $638.^{Footnote 3}

[24] The Claimant argues that he is entitled to pay back only the net amount he received, not the gross amount.

[25] EI benefits, like wages, are payable gross, less mandatory withholding tax. The Claimant can contact the appropriate tax agency about a possible refund of the tax withheld on the EI benefits he has to repay, so he can recover the difference between the gross amount and the net amount of the overpayment.

Conclusion

[26] The Commission’s appeal is allowed.

[27] The Claimant has to pay back a total of $638.