Earnings
I. The Legislation
Generally, the earnings to be taken into account for the purpose of determining whether an interruption of earnings has occurred and the amount to be deducted from benefits payable under the legislation, are the entire income of a claimant arising out of any employment.
Subsection 35(2) Employment Insurance Regulations
Employment Insurance RegulationsSubsection 57(2)(a) Unemployment Insurance Regulations
Unemployment Insurance Regulations
Employment is defined in the Employment Insurance Regulations. The Regulations set out what is included in earnings as well as what is excluded from earnings.
Section 35 Employment Insurance Regulations
Employment Insurance 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.
Subsection 35(1) Employment Insurance Regulations
Employment Insurance RegulationsSubsection 57(1) Unemployment Insurance Regulations
Unemployment Insurance Regulations
II. Principles of Law
a. Purpose of the Legislation
The Act and Regulations set up an insurance scheme under which the beneficiaries are protected against the loss of income resulting from unemployment. The purpose of the scheme is to compensate unemployed persons for a loss; it is not to pay benefits to those who have not suffered any loss. An unemployed person who has been compensated by his former employer for the loss of his or her wages cannot be said to suffer any loss. A loss which has been compensated no longer exists. The Act and Regulations must be interpreted so as to prevent those who have not suffered any loss of income from claiming benefits.
Canada (A.G.) v. Walford, [1979] 1 F.C. 768 (F.C.A.)
A-263-78 Judgment Of The Federal Court Of Appeal
b. Regulation-Making Power of Commission
In accordance with the power given to it, the Commission has enacted Regulations with respect to earnings. Subsection 35(2)of the Employment Insurance Regulations sets out those sources of income to be allocated as earnings in determining whether an interruption of earnings has occurred. Subsection 35(7)of the Employment Insurance Regulations sets out those sources of income which are exempt from allocations as earnings in the determination of benefits.
Canada v. McGregor (1989), 57 D.L.R. (4th) 317 (F.C.A.)
A-777-88 Judgment Of The Federal Court Of Appeal
Borghi et al. v. C.E.I.C.,
A-184-95, March 21, 1996 (F.C.A.)
Judgment Of The Federal Court Of Appeal
c. Definition of Earnings
The definition of earnings in the Regulations is very general. It simply says that it comprises the entire income of a claimant arising out of employment. Income in turn, is defined as any pecuniary and non-pecuniary receipts from an employer or any other person.
Canada (A.G.) v. Vernon (1995), 189 N.R. 308 (F.C.A.)
A-597-94 Judgment Of The Federal Court Of Appeal
Canada (A.G.) v. King,
A-486-95, April 10, 1996 (F.C.A.)
Judgment Of The Federal Court Of Appeal
The Regulations define earnings as “the entire income of a claimant arising out of any employment”. However, these words are not used in their ordinary sense, but rather are broadly defined. Earnings in the broad sense are everything the worker derives in the form of pecuniary benefits from his work past or present. In order to constitute earnings an amount must be paid to a claimant as a result of work done, not merely because of his or her employment status.
Cote v. C.E.I.C. (1986), 69 N.R. 126 (F.C.A.)
A-178-86 Judgment Of The Federal Court Of Appeal
Canada (A.G.) v. Vernon (1995), 189 N.R. 308 (F.C.A.)
A-597-94 Judgment Of The Federal Court Of Appeal
Canada (A.G.) v. King,
A-486-95, April 10, 1996 (F.C.A.)
Judgment Of The Federal Court Of Appeal
The term normal weekly earnings means the ordinary, usual earnings that a claimant receives or earns on a regular basis. It does not include amounts which are more properly characterized as fringe benefits or extra amounts.
Canada (A.G.) v. Fox,
A-841-96, October 9, 1997 (F.C.A.)
Judgment Of The Federal Court Of Appeal
In order for an amount paid under a contract of service to constitute earnings, it is not necessary that services actually be performed under the contract. It is sufficient that a contract of employment exists.
Canada (A.G.) v. Fox,
A-841-96, October 9, 1997 (F.C.A.)
Judgment Of The Federal Court Of Appeal
d. Earnings Must be Allocated
Before an amount can be allocated under the Regulations, it must first be determined to be earnings. Once an amount is determined to be earnings it must be allocated in accordance with the Regulations.
Vennari v. Canada (C.E.I.C.), [1987] 3 F.C. 129 (F.C.A.)
A-261-86 Judgment Of The Federal Court Of Appeal
Fahey v. Canada (A.G.),
A-167-85, October 15, 1985 (F.C.A.)
Judgment Of The Federal Court Of Appeal
Ferris v. Canada,
A-1223-83, December 12, 1984 (F.C.A)
Judgment Of The Federal Court Of Appeal
Canada (A.G.) v. Bourdeau,
A-99-86,October 30, 1986 (F.C.A.)
Judgment Of The Federal Court Of Appeal
e. Damages for Wrongful Dismissal
Damages paid to an ex-employee who has been wrongfully dismissed without notice are income arising out of an employment if they are paid as compensation for the loss of income suffered by the employee as a result of his or her wrongful dismissal. In order for damages to be exempt from earnings, a claimant would have to establish that the monies were paid to him or her for something other than loss of wages; that is, a loss which is totally unrelated to advantages arising from employment. For example, settlements paid to address injury to one's health or reputation or to address one's legal fees, would not be allocated as earnings. Where there are no special circumstances, any amount paid by an employer to a laid-off or dismissed employee is paid as compensation for the loss of income.
Canada (A.G.) v. Walford, [1979] 1 F.C. 768 (F.C.A.)
A-263-78 Judgment Of The Federal Court Of Appeal
Canada (A.G.) v. Tetreault and Joyal (1986), 69 N.R. 231 (F.C.A.)
A-527-85 Judgment Of The Federal Court Of Appeal
Canada v. Mayor,
A-667-88, April 12, 1998 (F.C.A.)
Judgment Of The Federal Court Of Appeal
Canada (A.G.) v. Harnett (1992), 140 N.R. 308 (F.C.A.)
A-34-91 Judgment Of The Federal Court Of Appeal
Canada (A.G.) v. Radigan,
A-567-99, January 31, 2001 (F.C.A.)
Judgment Of The Federal Court Of Appeal
f. Disability Pension
In accordance with the Regulations disability pension payments are not earnings. A pension must involve periodic payments designed to guarantee recipients, for life, a means of livelihood that their salaries would provide them with if their condition did not permanently prevent them from working to earn that livelihood. The legal nature of an agreement or contractual clause by which such payments are made must be determined on the basis of its scheme, characteristics and actual effects, over and above the definition or title given to it by the parties. What must be defined is the nature of the payments and what must be considered is the reason they are made and the role attributed to them at the time they are made.
Pleau v. Canada (A.G.),
A-721-95, June 28, 1996 (F.C.A.)
Judgment Of The Federal Court Of Appeal
Poitras v. Canada (Employment and Immigration Commission),
A-156-95, September 20, 1996 (F.C.A.)
Judgment Of The Federal Court Of Appeal
Forget v. Canada (Employment and Immigration Commission),
A-160-95, September 20, 1996 (F.C.A.)
Judgment Of The Federal Court Of Appeal
g. Provincial Motor Vehicle Accident Insurance - Provincial No-fault Insurance Plans
The Commission is authorized to deduct from benefits payable payments which a claimant has received or is entitled to receive from motor vehicle accident insurance provided under or pursuant to 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 which the claimant received or is entitled to receive from such insurance. It is necessary to examine the applicable provincial legislation in each case in order to ascertain the precise purpose for which the no-fault payments were in fact made. If the payments are compensation for actual or presumed loss of income from employment due to injury from a motor vehicle accident, they are earnings. If the payments are made as compensation for non-income losses, they are not earnings.
Paragraph 35(2)(d) Employment Insurance Regulations
Employment Insurance Regulations
Gall v. Canada (A.G.),
A-94-94, January 26, 1995 (F.C.A.)
Judgment Of The Federal Court Of Appeal
h. Relief Grants
Paragraph 35(7)(c) of the Employment Insurance Regulations provides that relief grants in cash or in kind do not constitute earnings. The phrase “relief grant” suggests financial assistance that is given to alleviate hardship. Hardship includes, but is not limited to, circumstances of personal destitution, emergency or disaster. Hardship may also comprise the broader circumstances of financial or other adversity, not necessarily amounting to destitution, emergency or disaster.
Paragraph 35(7)(c) Employment Insurance Regulations
Employment Insurance Regulations
Canada (A.G.) v. Vernon (1995), 189 N.R. 308 (F.C.A.)
A-597-94 Judgment Of The Federal Court Of Appeal
There are three closely related aspects which are helpful in determining whether a payment constitutes a relief grant: the circumstances giving rise to the loss, the type of loss for which the compensation is being paid, and the nature of the compensatory scheme.
Canada (A.G.) v. King, A-486-95, April 10, 1996 (F.C.A.) Judgment Of The Federal Court Of Appeal
No one of these three factors is individually determinative. Rather it is their cumulative effect which leads to the conclusion of whether the payments in question constitute a relief grant.
Canada (A.G.) v. King, A-486-95, April 10, 1996 (F.C.A.) Judgment Of The Federal Court Of Appeal
i. Sickness or Disability Wage-Loss Indemnity Plan
The legislation sets up a scheme of insurance against the loss of earnings arising from unemployment. In determining the entitlement to benefit, therefore, it does not take into consideration income received by a claimant from sources other than employment. Insofar as group insurance plans are normally linked with employment it is normal to consider that payments received under those plans arise, albeit indirectly, from the claimant's employment. The same thing cannot be said of the payments received under private insurance plans. Accordingly, the provisions of the legislation which treat claimants who received payment under a wage-loss group insurance plan differently from those who receive identical payment under a private insurance plan do not contravene section 15 of the Canadian Charter of Rights and Freedoms.
Robinson v. Canada (A.G.),
A-589-86, June 17, 1987 (F.C.A.)
Judgment Of The Federal Court Of Appeal
In accordance with the legislation payments under a sickness or disability wage-loss indemnity plan that is not a group plan do not constitute earnings for benefit purposes. The circumstances under which a sickness or disability wage-loss indemnity plan is not to be considered a group plan are set out in the Regulations. All of the conditions set out in the Regulations must be satisfied, including that the plan “is completely portable”. An indemnity plan is portable only when the rights and obligations of the employee under the plan remain the same if the employee moves to the service of any other employer.
Subsections 35(8) and (9) Employment Insurance Regulations
Employment Insurance Regulations
Subsections 57(4) and (5) Unemployment Insurance Regulations
Unemployment Insurance Regulations
Canada (A.G.) v. Blanchet, [1977] 2 F.C. 590 (F.C.A.)
A-483-76 Judgment Of The Federal Court Of Appeal
Canada (A.G.) v. Brunet,
A-892-88, December 12, 1989 (F.C.A)
Judgment Of The Federal Court Of Appeal
Canada (A.G.) v. Charbonneau,
A-894-88, December 12, 1989 (F.C.A.)
Judgment Of The Federal Court Of Appeal
Canada (A.G.) v. Fowler,
A-302-95, July 4, 1996 (F.C.A.)
Judgment Of The Federal Court Of Appeal