All Post-Accident EI Benefits are Deductible from IRBs as Employment Income

Historically, there has been uncertainty regarding the treatment of post-accident Employment Insurance (“EI”) benefits due to a perceived inconsistency in the Statutory Accident Benefits Schedule (“SABS”).

The recent Divisional Court decision, Aviva Insurance Company of Canada and Tania Spence (DC-21-2661), provides clarity by concluding that all EI benefits should be considered employment income and are deductible from income replacement benefits (“IRBs”) post-accident.

In this decision, the Applicant appealed a prior Licence Appeal Tribunal decision and reconsideration dismissal which determined that EI sickness benefits are not deductible from the Respondent’s IRBs.  These decisions related to a motor vehicle accident on March 4, 2019, beyond which the Respondent received IRBs of $400 per week up to October 26, 2019.  However, during this period, the Respondent also received EI sickness benefits of $562 per week.

It was the Applicant’s position that 70% of the Respondent’s post-accident EI sickness benefits should be deducted from her IRBs resulting in an IRB of $6.60 per week.  The Applicant relied on Section 4(1) of the SABS which defines gross employment income 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)…”

The Respondent disagreed and asserted that EI sickness benefits are specifically excluded from being deducted by Sections 4(1) and 47(3)(f) of the SABS, which define other income replacement assistance and temporary disability benefits, respectively, as follows:

“…the amount of any gross weekly payment for loss of income that is received by or available to the person as a result of the accident under the laws of any jurisdiction or under any income continuation benefit plan, other than, (i) a benefit under the Employment Insurance Act (Canada)…”

“…any other periodic temporary benefit paid under an income continuation benefit plan or law, other than, (i) benefits under the Employment Insurance Act (Canada)…”

The inclusion and exclusion of EI benefits by these sections has been the source of the uncertainty and perceived inconsistency in the SABS regarding the treatment of post-accident EI benefits.

The Divisional Court disagreed that there is any inconsistency concluding, “Excluding EI benefits from these definitions ensures that EI benefits which might otherwise meet the definitions are not deducted twice: once as gross employment income and again as either other income replacement assistance or as a temporary disability benefit.  This ensures consistency of treatment…”

“…the scheme of the Schedule is to treat all EI benefits as income, regardless of the reason for or the time at which they are received.  As Aviva correctly submits, the purpose of the Schedule is to help minimize the immediate impact of a loss of income resulting from a motor vehicle accident, prevent overcompensation, and to make the motor vehicle insurer the payor of last resort…The adjudicator’s decision had the effect of overcompensating Ms. Spence because of the nature of the EI benefits she received and making the Canada Employment Insurance Commission the payor of last resort.”

Read the decision in full detail here: Aviva Insurance Company of Canada and Tania Spence (DC-21-2661) decision