A-609-79
In re the Unemployment Insurance Act, 1971 and
in re Alma A. Bonneau (Applicant)
Court of Appeal, Heald and Urie JJ. and Maguire
D.J.—Winnipeg, May 2, 1980.
Judicial review — Unemployment insurance — Eligibility
for benefits — Teacher's contract of employment terminated
— Adjustment payment received pursuant to contract formula
— Declared ineligible for benefits — Adjustment payment
considered salary payable under contract of service without
performance of services pursuant to Unemployment Insurance
Regulation 173(4) — No interruption of earnings under Regu
lation 148(1) — Whether adjustment payment made in respect
of performance of services or not — Federal Court Act, R.S.C.
1970 (2nd Supp.), c. 10, s. 28 — Unemployment Insurance
Regulations, SOR/71-324, s. 173(3) and (4), SOR/72-114, s.
148(1).
This section 28 application seeks to set aside an Umpire's
decision that dismissed applicant's appeal from a Board of
Referees and held her disentitled to benefits. The applicant, a
teacher whose contract of employment was terminated as of
June 30, 1978, received an adjustment payment in addition to
her final pay and pursuant to a formula in her employment
contract. Shortly after, she applied for unemployment insur
ance benefits but her claim was disallowed by the Commission
on the basis of Unemployment Insurance Regulation 173(4).
The Umpire, after observing that the contract had been ter
minated, applied Regulations 148(1) and 173(4), found that
there was no interruption of earnings and disentitled applicant
to claim for benefits. The question is whether the adjustment
payment was made in respect of the performance of services or
not.
Held, the application is allowed and the matter is referred
back for decision based on the reasons for judgment. Regula
tion 173(3) rather than Regulation 173(4) applies to this case.
Clause 8 of the contract provides that the adjustment payment
is to be paid "for the part of the year taught". Regulation
173(4) applies to wages or salary payable "without the
performance of services". In this case, the adjustment payment
was clearly made in respect of the performance of services,
pursuant to Regulation 173(3) and accordingly, it should have
been allocated for the period taught. On this basis, the appli
cant would have had an interruption of earnings pursuant to
Regulation 148(1).
In re the Unemployment Insurance Act, 1971 and in re
Dick [1978] 2 F.C. 336, distinguished.
APPLICATION for judicial review.
COUNSEL:
D. A. Booth for applicant.
Brian H. Hay for respondent.
SOLICITORS:
Allen & Booth, Winnipeg, for applicant.
Deputy Attorney General of Canada for
respondent.
The following are the reasons for judgment of
the Court delivered orally in English by
HEALD J.: This is a section 28 application to
review and set aside the decision of an Umpire
under Part V of the Unemployment Insurance Act,
1971, S.C. 1970-71-72, c. 48. By that decision, the
Umpire dismissed the applicant's appeal from the
decision of a Board of Referees holding that she
was not entitled to receive unemployment insur
ance benefits for the months of July and August,
1978.
The relevant facts may be shortly stated. The
applicant entered into a teaching engagement with
the Norwood Manitoba School Division by a con
tract in writing dated December .10, 1977. Pursu
ant to the contract, the applicant's duties com
menced on January 3, 1978. On May 3, 1978, the
School Board, applicant's employer, advised her in
writing that because of the reorganization of
assignments within the school, her position would
disappear effective June 30, 1978 and accordingly,
that her employment was terminated as of that
date.
At or about June 30, 1978, the applicant
received, in addition to her June salary and pursu
ant to clause 8 of her employment contract, an
adjustment payment amounting to $1,233.13,
which brought the total of all salary payments
received by her up to the same fraction of her
yearly salary as the number of days taught (122)
was of the number of days in the school year
(200).
On July 6, 1978, the applicant applied for
unemployment insurance benefits. Her claim was
disallowed by the Commission on the basis that
section 173(4)' of the Unemployment Insurance
Regulations, SOR/71-324, applied because, in the
view of the Commission, the adjustment payment
herein was salary payable under a contract of
service without the performance of services. It was
therefore allocated to the period for which it was
said to be payable, i.e., July 2, 1978 to August 31,
1978. This disallowance was subsequently upheld
by the Board of Referees and the Umpire.
For a proper determination of this matter, it is
necessary, in my view, to set out the relevant
provisions of the applicant's contract of employ
ment. The learned Umpire set out these provisions
and I repeat his recital thereof from pages 61 and
62 of the Case, reading as follows:
I. The school board hereby engages the teacher, and the
teacher hereby accepts engagement for service with the school
board, at the yearly salary of as per the Collective
Agreement in effect Dollars, such engagement to
commence on the 3rd day of January, A.D. 1978, and to be
terminated in the manner hereinafter provided.
2. The school board agrees that it will pay the said salary to
the teacher in ... equal consecutive monthly payments of ...
dollars each, on or before the last teaching day of each month
beginning with the ... day of ... A.D. 19 ..., in each year
during the continuance of this contract.
3. If any salary is payable during July or August, it shall be
paid on the last day of the month.
6. This agreement shall be deemed to continue in force, and
to be renewed from year to year, ..., unless and until terminat
ed by one of the following methods:
(a) ...
(b) By written notice given at least one month prior to the
31st of December or the 30th of June, terminating the
contract on the 31st of December or the 30th of June, as the
case may be, but the party giving notice of termination shall,
on request, give to the other party the reason or reasons for
terminating this agreement.
8. If this agreement is terminated by notice as provided in
Clause 6 hereof, the final payment shall be so adjusted that the
teacher shall receive, for the part of the year taught, such
fraction of the salary for the whole year as the number of days
' Said Regulation 173(4) reads as follows:
173. ...
(4) Wages or salary payable to a claimant under a con
tract of employment without the performance of services and
monies payable in consideration of a claimant returning to or
commencing work with an employer shall be allocated to the
period for which such wages, salary or monies, as the case
may be, are payable.
taught is of the number of days in the current school year as
prescribed by the Minister of Education.
After referring to the dismissal letter of May 3,
1978, the learned Umpire observed that the appli
cant's contract of employment did not exist after
June 30, 1978. However, the learned Umpire then
proceeded to quote section 148(1) of the Regula
tions although he did not quote it in its entirety 2 .
Said section 148 (1) reads as follows:
148. (1) Subject to this section, an interruption of earnings
occurs when, following a period of employment with an
employer, an insured person has a separation from that employ
ment and has or will have a period of seven or more consecutive
days during which no work is performed for that employer and
in respect of which no earnings that arise from that employ
ment, other than earnings described in subsections 173(9) and
(12), are payable or allocated.
He then found that Regulation 148(1) was appli
cable to the facts in this case, and applying that
Regulation, he found that there was no interrup
tion of earnings in July and August, thus disenti-
tling the applicant to claim for benefits. To arrive
at this conclusion it seems to me that it was
necessary for the learned Umpire to rely on Regu
lation 173(4) (supra). With respect, I do not agree
that Regulation 173(4) applies to the facts in this
case. Clause 8 of the employment contract pro
vides that where the agreement is terminated by
notice pursuant to clause 6 (which is the factual
situation here), the adjustment payment is to be
paid to the teacher "for the part of the year
taught". Regulation 173(4) applies to wages or
salary payable "without the performance of ser
vices". In this case, the adjustment monies were
paid in respect of the performance of services in
the portion of the year when the applicant taught
for the employer. Therefore, in my view, Regula
tion 173(3) rather than Regulation 173(4) applies
in this case. Regulation 173(3) reads as follows:
173... .
(3) Wages or salary payable to a claimant in respect of the
performance of services shall be allocated to the period in
which the services were performed.
In my opinion, the adjustment payment made
herein was clearly made "in respect of the
performance of services" during the period Janu-
2 The portion omitted from the section by the Umpire does
not, in my opinion, have pertinence to the issues in this case.
ary to June inclusive when the applicant was actu
ally teaching. Accordingly, the adjustment pay
ment should have been allocated to that same
period, pursuant to Regulation 173(3).
On this basis, the applicant would have had an
interruption of earnings pursuant to Regulation
148(1) (supra) in July and August of 1978, since
none of her earnings including the adjustment
payment could properly be allocated to the period
following June 30. It follows therefore, in my view,
that the applicant was improperly disqualified
from receiving benefits during July and August of
1978.
In the case of In re the Unemployment Insur
ance Act, 1971 and in re Dick 3 , the Court con
sidered the claim of a teacher in the Winnipeg
School Division who was claiming maternity ben
efits under the Unemployment Insurance Act,
1971. Her contract of employment also provided
for an adjustment payment "for the part of the
year taught". In that case also, Regulation 173(4)
was relied on to justify the allocation of the adjust
ment payment to the months of July and August,
1976. In that case, the claimant had filed her
claim on March 26, 1976, giving her reason for
separation as pregnancy, stating that she was on
"leave of absence" for maternity purposes and that
she intended to return to her employment in Sep-
tember, 1977. This Court, in a unanimous judg
ment, set aside the Umpire's decision and referred
the matter back to him to be decided on the basis
that the question whether the applicant's contract
of employment was terminated must be decided in
the light of all the circumstances of the case as
disclosed by the evidence already adduced as well
as by any further evidence that, in the Umpire's
discretion, might be adduced. In the reasons for
judgment in the Dick case (supra), Mr. Justice
Pratte stated at page 338:
The crucial question that the Umpire had to answer was
whether or not the applicant's employment contract had come
to an end on March 26, 1976.* If that question was resolved in
the affirmative, it followed that the $1,878.07 had been paid to
the applicant "for the part of the year taught", pursuant to the
provision of the contract of employment quoted by the Umpire
in his decision, and could not have been allocated as if it had
been paid as salary for the months of July and August. On the
other hand, if the question was answered in the negative, it
3 [1978] 2 F.C. 336.
necessarily followed that the payment of the $1,878.07 would
have been a payment in advance of salary for the summer
months.
* Contrary to what certain passages of the Umpire's deci
sion may seem to imply, that question must not be confused
with the question whether the applicant had been separated
from her employment so as to have had an "interruption of
earnings" within the meaning of section 2(n). In my view, a
separation from employment does not necessarily imply a
termination of the contract of employment.
In the case at bar, unlike the Dick case (supra),
there is no doubt that the applicant's employment
contract had come to an end on June 30, 1978.
The learned Umpire so found based on the termi
nation letter from the employer and he was cor
rect, in my view, in so finding. Based on such a
factual situation, the ratio of the Dick case (supra)
makes it clear that the adjustment payment herein
was paid to the applicant "for the part of the year
taught" and could not be allocated as though it
were paid for salary for July and August.
For these reasons, I would allow the section 28
application, set aside the decision of the Umpire
and refer the matter back to him for decision on a
basis not inconsistent with these reasons.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.