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Income Replacement Benefits and CERB: To Deduct or Not To Deduct?

By Kayley Richardson

Under the Statutory Accident Benefits Schedule O. Reg. 34/10 (the “SABS”), if a person is employed at the time of the accident and suffers a substantial inability to perform the essential tasks of their employment, they are entitled to receive income replacement benefits (“IRBs”). Once it has been determined that a claimant meets the eligibility requirements under s.5 of the SABS, the quantum of the benefit must then be determined.  

Section 4.(1) of the SABS provides definitions for both “gross employment income” and “other income replacement assistance” for the purposes of calculating the weekly IRB benefit.  Once the amount of weekly income replacement benefit has been calculated pursuant to s.7.(1), s.7.(3) permits an insurer to deduct post-accident income and “all other income replacement assistance” (which is defined to include “any income continuation benefit plan”) received by the claimant from the amount of an IRB payable. 

The interpretation and interaction between these two sections of the Schedule is often disputed by claimants and insurers and the LAT is continually asked to resolve disputes regarding the quantum of weekly IRBs payable to a claimant. This issue is further complicated when a claimant has received some type of income assistance or government benefit akin to disability support payments. For example, the SABS does not distinguish between the various types of employment income (EI) benefits available[1].

With the implementation of the Canada Emergency Response Benefit (“CERB”), and in the absence of any governmental regulations, insurers have had to speculate how this novel and unique benefit interacts with the SABS when determining a claimant’s entitlement to IRBs and the quantum of same.

The Government of Canada[2] has described CERB as a temporary response to support persons who have stopped working because of COVID-19 for the following reasons:

  1. their job not being available;
  2. being sick, quarantined, or in self-isolation; or
  3. having to care for a child or other family member requiring supervised care whose normal care facility was closed due to COVID or was sick with COVID-19.

The interaction between CERB and IRBs raises the following questions:

  1. Is a claimant who is receiving CERB at the time of an accident eligible to receive IRBs on the basis that they are considered employed (per s.5.(1) of the SABS)?
  2. Are CERB benefits considered post-accident income and deductible from IRBs payable?

These issues were recently addressed by the LAT in the Foster v. Aviva General Insurance[3] decision. In that case, Adjudicator Ferguson concluded that CERB was akin to other remuneration from employment and should be considered “gross employment income” as defined under s.4.(1) of the SABS as salary, wages and other remuneration from employment, including fees and other remuneration for holding office, and any benefits received under the Employment Insurance Act (Canada).

Adjudicator Ferguson’s interpretation means that CERB is paid to an individual as a result of being employed, which (for the purposes of the SABS) makes them eligible to receive IRBs under s.5.(1) of the SABS as though they were employed.

As stated by Adjudicator Ferguson, pursuant to s.7.(3), CERB is deductible from IRBs payable because the insured person is receiving the benefit “after the accident and during the period in which he or she is eligible to receive an income replacement benefit” as a result of being employed. He held:

[52] I find that CERB is tantamount to other remuneration from employment, and therefore deductible.  Although not exactly the same, it is essentially akin to Employment Insurance (“EI”) benefits in the context of the Schedule.

[55] The CERB, much like EI benefits, provides a bridge to individuals out of work.  The real difference between the CERB and EI benefits is that the CERB is not paid into.  I find that this difference does not take it out of treatment as other remuneration from employment.  Therefore, I would treat JF’s receipt of CRB/CERB in the same manner as EI benefits or “other remuneration from employment”.

Notably, this decision does not address the situation where a person is receiving CERB because of being sick. In that case, the question remains whether CERB benefits paid due to illness should be treated similar to EI sick benefits (and not deductible from IRBs).There remains some uncertainty regarding the treatment of CERB in the context of determining the eligibility and quantum of IRBs and the introduction of other types of benefits (such as CRB, CRSB and CRCB) in response to COVID-19 complicates matters further. Nevertheless, the recent decision in the Foster v. Aviva General Insurance provides some needed guidance to claimants and insurers on the interaction of CERB benefits and IRBs. 

[1] There is considerable caselaw in this area which addresses the various types of EI benefits and their treatment which could be the subject of a separate article.


[3] Foster v. Aviva General Insurance, 2021 CanLII 88064