EI Sickness Benefits are Not Deductible when Calculating IRBs

In the recent Licence Appeal Tribunal decision, Tania Spence and Aviva Insurance Company of Canada (19-013457/AABS), Adjudicator Boyce ruled that Employment Insurance (“EI”) sickness benefits are not deductible as “gross employment income” when calculating income replacement benefits (“IRB”) payable.

The applicant argued that EI sickness benefits should not be deducible from an IRB payable and submits the Statutory Accident Benefits Schedule (“SABS”) must be interpreted as a whole as opposed to a plain reading of wording in one narrow section.  First, the applicant concludes that the SABS specifically excludes benefits received under the Employment Insurance Act as “other income replacement assistance”. Further, the applicant states that while Section 7(3)(a) of the SABS includes benefits under the Employment Insurance Act, the wording of the section is clear that it is only “gross employment income as a result of being employed” that is deductible from an IRB payment. Accordingly, the applicant argues this differentiates EI maternity benefits and other EI benefits that are received as a result of employment, from EI sickness benefits, which are received not as a result of being employed but rather as a result of the impairment sustained in the motor vehicle accident.

Aviva argues that Section 4(1) of the SABS clearly states “any benefits” received from EI are included in the definition of “gross employment income” and therefore, EI sickness benefits should be deducted when calculating an IRB payable.  Aviva also submits that the sections of the SABS dealing with EI benefits work harmoniously together to ensure that benefits received pre and post-accident are treated consistently.

Adjudicator Boyce disagrees with Aviva’s submission that the sections of the SABS dealing with EI benefits operate without conflict.  Specifically, Adjudicator Boyce references Section 7(3)(a) and finds insurers can deduct 70% of “gross employment income” from an IRB, including all EI benefits.  However, the Section 4(1) definitions of “gross employment income” (which includes benefits received under the Employment Insurance Act) contradicts the definition of “other income replacement assistance” (which excludes benefits under the Employment Insurance Act).  This is further confused by the direction of Section 47(3)(a)(f)(i) which explicitly excludes benefits under the Employment Insurance Act as temporary disability benefits that can be deducted from an IRB payable.

Under Section 47(3) of the SABS, Adjudicator Boyce finds that the legislature intended EI sickness benefits to be treated differently from EI maternity or unemployment benefits.  Specifically, he submits that the applicant’s EI sickness benefits are not considered “employment income” as the applicant was unable to work as a result of the accident.  However, Adjudicator Boyce suggests that since EI regular and EI maternity benefits are received as a result of employment they may be deductible when calculating an IRB payable.

To conclude, Adjudicator Boyce, states “I find this argument persuasive in my support for the applicant’s position that if the legislature did not intend to treat EI benefits differently, it would not have specifically included them as deductible under one section, and specifically excluded them as not deductible under another. I agree that this would result in an over-deduction as a result of an impairment.”  Given this, Adjudicator Boyce found that EI sickness benefits are not deductible when calculating the quantum of an IRB payable.

Read the decision in full detail here: Tania Spence and Aviva Insurance Company of Canada (19-013457/AABS)