Dick et al. v. Deputy Attorney General of Canada, [1980] 2 SCR 243

Supreme Court of Canada

Dick et al. v. Deputy Attorney General of Canada, [1980] 2 S.C.R. 243

Date: 1980-06-27

Judith S. Dick and The Manitoba Teachers’ Society

and

Judith Silver and The Manitoba Teachers’ Society

and

Afra Kavanagh, Anita Riffel, Brenda Kersell, Linda Johansson, Elaine Hansen, Sharon Hallstead, Elizabeth Spencer, Catherine Keyzer and Bernice Poworoznyk and The Manitoba Teachers’ Society Appellants;

and

Deputy Attorney General of Canada on behalf of the Unemployment Insurance Commission Respondent.

1980: March 26; 1980: June 27.

Present: Laskin C.J. and Ritchie, Dickson, Beetz, Estey, Mclntyre and Chouinard JJ.

ON APPEAL FROM THE FEDERAL COURT OF APPEAL

Unemployment insurance—Teacher taking leave of absence for maternity reasons—Whether pregnancy benefits payable in July and August—Calculation of adjustment paid at date of separation of employment—Unemployment Insurance Act, 1971, 1970-71-72 (Can.), c. 48, ss. 2(n), 17, 30—Unemployment Insurance Regulations, Reg. 173(4).

The appellants, all school teachers who had ceased working during the school year, claim pregnancy benefits under s. 30 of the Unemployment Insurance Act extending in the months of July and August following their cessation of work. They would not, even if their employment had continued, have been liable to perform any services for their employers during July and August. The case of the appellant Dick is chosen as typical of the group. The appellant Dick sought a leave of absence and ceased working on March 26, 1976. On ceasing work, she was paid a lump sum as salary adjustment under Article 2 of the collective agreement covering her employment. She eventually resigned in November with effect from December 31, 1976. Her application for pregnancy benefits was approved by the Unemployment Insurance Commission and after the usual two-week waiting period her benefit payments commenced on April 11, 1976. Under s. 30(2) of the Unemployment Insurance Act, they would ordinarily have continued for

[Page 244]

a period of fifteen weeks, i.e., until July 24, 1976. However, the Commission denied her any benefits under the Act as from July 4: It was considered that the contract of employment continued to exist, that the lump sum final payment received by the appellant when she left her employment was made to cover sums which would otherwise have been received by her in July and August when no performance of services was required, and that in view of s. 30(5) of the Act and of Regulation 173(4) the benefits had to be reduced by the amount of earnings attributed to the weeks in July covered by the period of entitlement. The Commission’s decision was maintained by the Umpire and by the Federal Court of Appeal.

Held: The appeals should be allowed.

While the contract of employment was not brought to an end when the appellant left her work, she having sought only a leave of absence, there was a separation from employment and the lump sum payment made to her pursuant to Article 2 of the contract was a payment in full for services rendered up to the date of her withdrawal from service and did not constitute a payment in respect of July and August. The fact that the teacher’s salary was an annual salary, paid in twelve equal installments, was merely a device whereby teachers who earned their annual salary by the performance of services in the other ten months of the year would receive payments in July and August for convenience in their personal budgeting, and the application of the adjustment provisions of the employment contract will do no more than pay the teacher in full for the period taught, whether the salary for a full year’s services is paid in ten or twelve installments and whether the contract of employment is abrogated or preserved in existence for future years. Since the adjustment payment received on termination of services merely paid the appellant for services performed to March 26, 1976, no part thereof is attributable to July and August. Accordingly, the appellant was properly entitled to payments during the month of July.

Gladys Pelts and The Alberta Teachers Association v. Umpire Constituted Under Section 92 of the Unemployment Insurance Act, 1971, [1974] 2 F.C. 225, distinguished; In re the Unemployment Insurance Act, 1971 and in re Judith S. Dick, [1978] 2 F.C. 336, referred to.

APPEALS from judgments of the Federal Court of Appeal dismissing appeals from the decision of an Umpire. Appeals allowed.

[Page 245]

Derek Booth, for the appellants.

E.R. Sojonky and M. Zazulak, for the respondent.

The judgment of the Court was delivered by

MCINTYRE J.—This appeal raises the question of the entitlement of the various appellants, all school teachers who had ceased working for their respective school boards during the school year, to pregnancy benefits under s. 30 of the Unemployment Insurance Act for the months of July and August following their cessation of work. The appellants would not, even if their employment had continued, have been liable to perform any services for their employers during July and August. The case of the appellant Dick is chosen as typical of the group and detailed reference will be made to it. However, since the same principles are applicable to all the other appellants, the disposition of her case will be dispositive of the others.

The appellant Dick was first employed by Winnipeg School Division No. 1 on September 3, 1970. She signed an employment agreement dated May 5, 1970, with her employer which provided in paragraph 2:

The Division convenants and agrees with the said Teacher that the Division will during the terms of service of the said Teacher pay to him subject to conditions hereinafter set forth, a salary at the rate of the schedule contained in The Winnipeg Division Association’s Collective Agreement with the Division, prevailing from time to time, in twelve equal monthly payments to be made on or before the last teaching day of each month for which payment is being made, with the exception of the months of June and December, when salary will be paid on presentation of duly certified half-yearly returns and other reports. Provided that in the event of the Teacher withdrawing from the service of the Division during his year of service and before completing such year, the final payment shall be so adjusted that the Teacher shall receive for the part of the year taught such fraction of the salary of the whole year as the number of days taught is to 200 days (which said 200 days is the total number of teaching days in a normal school year). In reckoning the days taught all legitimate sick leave shall be included. (Emphasis added.)

Upon the termination of her employment, the calculation required under Article 2 of the employ-

[Page 246]

ment agreement was made with the result that she received an adjustment payment in the amount of $1,878.07. On March 26, 1976, the date she ceased working, she completed an application for unemployment insurance benefits and on this application form she added the words “I intend to apply to extend leave for three months”. She had previously applied for a leave of absence on February 4, 1976, from April 5 to May 31, 1976. Later, on November 1, 1976, she resigned and her resignation was accepted with effect from December 31, 1976. The application for pregnancy benefits was approved by the Unemployment Insurance Commission and after the usual two-week waiting period her benefit payments commenced on April 11, 1976. Under s. 30(2) of the Unemployment Insurance Act, they would ordinarily have continued for a period of fifteen weeks or until July 24, 1976. On July 15, 1976, however, a notice of refusal was issued by the Commission addressed to the appellant the effective part being in these terms:

On the information which has been presented in connection with your claim for benefit you are disentitled under Section 21(2) of the Unemployment Insurance Act and benefit is suspended from 4 July 1976 to indefinite in that you have not proved that you were unemployed in that you received your usual remuneration for the full working week and your contract of service continues.

The effect of this refusal was that from July 4 to July 24 during a period when, even if she had remained an active teacher in the employment of the Winnipeg School Division she would not have been required to perform any duties, she was denied any benefits under the Unemployment Insurance Act. It has been held in Gladys Petts and The Alberta Teachers’ Association v. Umpire Constituted Under Section 92 of the Unemployment Insurance Act, 1971[1], that a teacher who taught a full school year, ending in June and intending to commence a new school year in the subsequent September, is not entitled during July and August to receive unemployment insurance benefits, though in that case the benefits in issue were not the pregnancy benefits provided for in s. 30.

[Page 247]

On July 23, the appellant notified the Unemployment Insurance Commission of her intention to appeal to a Board of Referees against the refusal of her benefit payments. The Board of Referees disallowed her objection on August 24, 1976. An appeal was taken to the Umpire on October 26, 1976. The Umpire, Dubé J., dismissed the appeal. He considered the payment of $1,878.07 was a payment referable to the months of July and August and that accordingly no interruption of earnings had occurred in that period. His decision was set aside by the Federal Court of Appeal on November 21, 1977[2], after review under s. 28 of the Federal Court Act. The Court of Appeal said:

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 necessarily followed that the payment of the $1,878.07 would have been a payment in advance of salary for the summer months.

and accordingly remitted the matter to the Umpire in these terms:

The section 28 application is granted, the decision of the Umpire made on April 1, 1977, is set aside and the matter is referred back to the Umpire for decision 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 this 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 pursuance of that direction, Dubé J. again dealt with the matter and on May 5, 1978, confirmed his earlier dismissal of the appeal. A further application, under s. 28 of the Federal Court Act, was made by the appellant to the Federal Court of Appeal and dismissed. The Court of Appeal said:

Having regard to the earlier judgment of this Court of November 21, 1977, regarding an earlier decision of the

[Page 248]

Umpire with reference to the same matter, the Section 28 application is dismissed.

This appeal was taken to this Court pursuant to leave granted April 24, 1979.

At this stage it will be helpful to refer to certain provisions of the Unemployment Insurance Act and Regulations as they stood at the relevant times, and consider their application to this case. To be eligible for benefits under the Act, an applicant must show, pursuant to s. 17, insured employment, which was done in this case, and an interruption in earnings. An interruption in earnings is defined in s. 2(n) as follows:

“interruption of earnings” means that interruption that occurs in the earnings of an insured person when after a period of employment with an employer the insured person has a lay-off or separation from that employment;

The appellant Dick applied for benefits under s. 30 of the Act, which is set out hereunder:

30. (1) Notwithstanding section 25 or 46 but subject to this section, benefits are payable to a major attachment claimant who proves her pregnancy, if she has had ten or more weeks of insurable employment in the twenty weeks that immediately precede the thirtieth week before her expected date of confinement; and for the purposes of this section, any weeks in respect of which the major attachment claimant has received benefits under this Act that immediately precede the thirtieth week before her expected date of confinement shall be deemed to be weeks of insurable employment.

(2) Benefits under this section are payable for each week of unemployment in

(a) the fifteen week period that begins eight weeks before the week in which her confinement is expected, or

(b) the period that begins eight weeks before the week in which her confinement is expected and ends six weeks after the week in which her confinement occurs,

whichever is shorter, if such a week falls in her initial benefit period established pursuant to section 20 exclusive of any re-established period under section 32.

[Page 249]

(3) When benefits are payable to a claimant in respect of unemployment caused by pregnancy and any allowances, monies or other benefits are payable in respect of that pregnancy to the claimant under a provincial law, the benefits payable to the claimant under this Act shall be reduced or eliminated as prescribed.

(4) For purposes of section 23, the provisions of section 25 do not apply to the two week period that immediately precedes the periods described in subsection (2).

(5) If benefit is payable to a major attachment claimant under this section and earnings are received by that claimant for any period that falls in a week in the periods described in subsection (2), the provisions of subsection (2) of section 26 do not apply and all such earnings shall be deducted from the benefit paid for that week.

Benefits were approved and paid up until the month of July when the remaining payments which would otherwise have been payable were stopped. The payments, it seems, were terminated because it was considered by the Referees, and in this they were supported by the findings of the Umpire, that the contract of employment continued to exist and that the lump sum final payment received by the appellant when she left her employment was made to cover sums which would otherwise have been received by her in July and August. If that were so, the provisions of s. 30(5) of the Act would have to be considered and the benefits otherwise payable be reduced by the amount of earnings attributed to the weeks in July covered by the period of entitlement. Reliance was also placed by the respondent in argument in this Court on the provisions of Regulation 173(4) which provides:

Wages or salary payable to a claimant under a contract 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.

On this basis, the respondent argued that the lump sum payment received on ceasing work must be attributed to July and August and therefore no interruption of earnings occurred for those months.

[Page 250]

The question then is limited to the three weeks during the month of July 1976 which would fall within the 15-week entitlement period. As the Court of Appeal said, if the contract of employment had terminated when she left work in March of 1976, the payment made in the adjustment of her salary could not have been applied to the months of July and August. It would have been applied as provided in the employment agreement to the part of the year already taught. The court also was of the view, however, that since the contract of employment was not terminated—even though it is clear there was a separation from employment—the adjustment monies were properly attributable to July and August. It is this last proposition which must be examined.

Article 2 of the employment agreement deals with this point. It provides that the teacher’s salary will be paid in twelve equal monthly installments. It provides, as well, that 200 teaching days shall be the total number of days taught and it is a matter of common knowledge, of which courts can take notice, that those days fall within the months of September to June so that no teaching duties are imposed upon teachers during the months of July and August. While the contract of employment was not brought to an end when the appellant left her work on March 26, 1976, she having sought only a leave of absence, there was a separation from employment and, in my view, there was within the meaning of Article 2 of the employment contract a withdrawal by the appellant from the service during her year of service and before its completion. Therefore, the adjustment provisions of Article 2 were brought into play and the appellant was paid a sum of money which had the effect of paying her in full for services rendered up to the date of her withdrawal from service. She received, when the sum of $1,878.07 was added to what she had already received, that portion only of her annual salary which equalled the portion of the school year which she had taught. This is in complete accordance with the agreement which provides that these monies will be applied to the part of the year taught and this provision is also in accordance with Regulation 173(3) which provides:

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.

[Page 251]

I cannot find that in receiving this sum she received anything in respect of July and August.

The appellant contended that the teacher’s salary was an annual salary paid in twelve equal installments. The salary, however, was earned by the performance of 200 days teaching during the months of September to June, inclusive. It was said that the payment of the salary in twelve monthly installments providing for the receipt of funds in July and August was merely a device whereby teachers, who earned their annual salary by the performance of services in the other ten months of the year, would receive monthly payments in July and August for convenience in their personal budgeting. Whatever the reason for the division into twelve installments, in the case of a teacher terminating employment before the completion of the year, the application of the adjustment provisions of the employment contract will do no more than pay the teacher in full for the period taught, whether the salary for a full year’s services is paid in ten or twelve installments and whether the contract of employment is abrogated or preserved in existence for future years. I set out below a calculation (using figures rounded out for ease of calculation) demonstrating this proposition. In either case, on this calculation, the appellant received only that portion of her annual salary which covered the part of the year in which she performed teaching duties. There is nothing in the payment received for July and August.

YEARLY SALARY - $18,000

12 mos. basis, monthly cheque = $1,500
Payment rec’d Sept. 1 - Apr. 1 = 7 x $1,500 = $10,500

10 mos. basis, monthly cheque = $1,800
Payment rec’d Sept. 1 - Apr. 1 = 7 x $1,800 = $12,600

ADJUSTMENT

12 mos. basis
140 x 18,000 = $12,600 less $10,500 rec’d = $ 2,100
200

10 mos. basis
140 x 18,000 = $12,600 less $12,600 rec’d = $ 0
200

TOTAL Received Sept. 1 - April 1 including adjustment

12 mos. basis = $10,500 + $2,100 = $12,600
10 mos. basis = $12,600 +       0     = $12,600

[Page 252]

It is clear from this calculation that, while figures will vary from case to case depending on actual salary and date of separation from employment, the teacher received, when the adjustment was paid, payment for 140 days of teaching only. She received, including the adjustment, only that portion of the total annual salary which would have been payable if she had completed the school year, which equals that portion of the school year she actually taught. Since the adjustment payment received on termination of services merely paid the appellant for services performed to March 26, 1976, no part thereof is attributable to July and August or any period later than March 26. Even though the contract had not been terminated, the appellant had clearly been separated from her employment and this fact was recognized by her employer in making the adjustment payment. The requirements of s. 25 of the Act relating to continued availability for employment as a condition of the payment of benefits do not apply to benefits paid under s. 30 and this point was not raised or argued against the appellant. It is therefore my opinion that the appellant was properly entitled to the payments during the month of July.

The cases of the other appellants may be disposed of on the same basis as the Dick appeal; there are no differences in principle. Judith Silver was employed in the Transcona Springfield School Division. She was separated from her employment on May 13, 1977. Her pregnancy benefits were terminated for the period July 4 to August 26, 1977. Afra Kavanagh was employed by the Fort Garry School Division. She separated from her employment on March 25, 1977 and her pregnancy benefits were terminated for the period July 4 to August 26, 1977. Anita Riffel was employed with the Winnipeg School Division No. 1. She separated from employment on April 8, 1977. Her pregnancy benefits were terminated for the period July 8 to August 27, 1977. Linda Johansson was employed with the Transcona Springfield School Division. She was separated from employment on March 25, 1977. Her benefits were terminated July 3 to September 2, 1977. The appellant, Elaine Hansen, was employed by the Fort Garry School Division No. 5, was separated from her employment on June 3, 1977 and her benefits were ter-

[Page 253]

minated for the period July 1 to August 31, 1977. The appellant, Sharon Hallstead, was employed at the St. Boniface School Division. She separated from her employment May 13, 1977 and her benefits were terminated for the months of July and August. The appellant, Elizabeth Spencer, was employed by the Norwood School Division No. 8. She separated from her employment on May 28, 1976 and her maternity benefits were terminated for July and August of 1977. The appellant, Catherine Keyzer, was employed by the River East School Division. She separated from employment January 31, 1977 and her benefits, under the pregnancy provisions of s. 30, terminated on May 29, 1977, she having received her full entitlement. She also applied for unemployment insurance benefits after enrolling as being available for employment and received benefits which were terminated for the months of July and August on the basis that the adjustment payment made to her upon the termination of her school board employment covered an element of remuneration for the months of July and August. The appellant Bernice Poworoznyk was employed with the Winnipeg School Division No. 1. She separated from her employment in 1977 and lost benefits on the same basis as did the appellant Dick.

For these reasons, I would allow the appeals costs and direct the payment to the appellants of the payments required to complete the entitlement periods originally established.

Appeals allowed with costs.

Solicitors for the appellants: Allen & Booth, Winnipeg.

Solicitor for the respondent: R. Tassé, Ottawa.