The deductibility of Employment Insurance (EI) benefits in the calculation of an income replacement benefit (IRB) was revisited with the recent decision of the Licence Appeal Tribunal (LAT) in the matter of CM and Aviva General Insurance (Aviva) (Tribunal File Number: 17-005910/AABS).
Facts of the case
At the time of the motor vehicle accident , which occurred on February 11, 2016, the applicant, CM, was unemployed and receiving EI benefits. Due to the seasonal nature of the applicant's employment as a labourer for a construction and contracting company, CM was laid off in November 2015, at which time they applied for and received regular EI benefits. CM continued to receive EI benefits until June 5, 2016, almost four months into the post-accident period.
Calculating the IRB
Although the issues in dispute do not specifically include the quantum of the applicant's IRB, in the decision by the LAT the observation is made that the deductibility of the EI benefits CM received following the accident did “cause some confusion about how to properly calculate the IRB.”
Initially, Aviva paid CM a weekly IRB of $24.10 for the post-accident period, February 18 to May 24, 2016, during which the applicant was in receipt of EI benefits. The amount “was based on CM's "pre and post-accident earnings (including Employment Insurance)" and was made in accordance with Sections 4(1) and 7(3)(a) of the Schedule.”
Subsequently, Aviva conceded that “it wrongly calculated CM's IRB and reduced the quantum based on the EI payments CM received.” Aviva revised the weekly IRB from $24.10 to $400.00, relying on s.4(1)(a)(i), which “excludes, not includes, deducting post-accident EI income from an IRB. Thus, EI payments are not deductible.” However, s.4(1)(a)(i) is with reference to “other income replacement assistance” and does not address s.7(3)(a).
Aviva's revised calculation of an IRB is somewhat inconsistent with the finding of the Financial Services Commission of Ontario in the matter of Antoinette Nelson and State Farm Mutual Automobile Insurance Company (State Farm) (FSCO A14 000848).
In Nelson and State Farm, the applicant was receiving EI maternity benefits at the time of the accident, which she continued to receive following the accident, and which the Arbitrator found to be deductible as post-accident income from employment. The Arbitrator addressed s.4(1) of the Statutory Accident Benefits Schedule (SABS ), which contains a definition of "gross employment income", which “means salary, wages, and other remuneration from employment…and any benefits received under the [EI] Act (Canada) [emphasis added].” The term "gross employment income" is then used in s.4(2) to determine pre-accident income from employment, as well as in s.7(3)(a), which authorizes the deduction in the calculation of the IRB of “70 per cent of any gross employment income [emphasis added] received by the insured person as a result of being employed after the accident.”
The Arbitrator in Nelson and State Farm found exclusively with respect to EI maternity benefits. It was the position of the Arbitrator that at all relevant times Ms. Nelson was employed [emphasis added] after the accident while receiving EI maternity benefits. These conditions differ from those of an individual who is no longer employed due to a lay-off and receiving EI regular benefits, consistent with the facts in matter at the LAT between AD and Aviva (Tribunal File Number: 17-004156).
In AD and Aviva, the applicant received EI regular benefits for the post-accident period as a result of a lay-off that occurred prior to the accident, which the Adjudicator found were not deductible in the calculation of the IRB. This approach to the calculation of an IRB is consistent with the revised weekly IRB paid by Aviva to CM.
It would therefore appear that EI regular benefits received by a claimant following an accident are not deductible in the calculation of their IRB.