Digest of Benefit Entitlement Principles Chapter 4 - Section 4

4.4.0 Remuneration without work

It often happens that employees are remunerated for weeks during which they are exempted from the performance of their normal duties, or for which they receive a full weekly salary even though they have been employed for less than the full working week.

Any week during which a worker's contract of service continues and for which the usual remuneration for a full working week is received, is not a week of unemployment ^{Footnote 1} . This means that, regardless of whether or not services have been performed, the claimant is not entitled to be paid any benefit for such week.

4.4.1 Annual vacation period

Workers are not unemployed during any week in which they are on annual leave and for which they receive their usual remuneration for a full working week ^{Footnote 2} . The time of payment is not a determining factor ^{Footnote 3} . It is immaterial whether the leave with pay is taken during the course of employment, at the time of a separation from work ^{Footnote 4} or some time during a lay-off ^{Footnote 5} .

A company may decide to close down for several weeks a year so that all employees take their vacation at the same time. Workers with little seniority may have entitlement to vacation for only part of the shutdown period. In spreading out the vacation pay according to the usual weekly remuneration of the worker from the beginning of the shutdown, any week for which the usual remuneration for a full working week is received by the worker is not a week of unemployment. An appropriate deduction from the weekly benefit payable shall be made in respect of a week for which the worker receives less than the usual remuneration ^{Footnote 6} .

On the other hand, workers are frequently given their accrued vacation pay at the time of separation without being placed on vacation leave. In this case, the contract of service does not continue and the weeks immediately following separation may be weeks of unemployment. The same is true when vacation pay is remitted during a period of lay-off without the contract of service being revived to allow for a vacation leave. However, this must not be taken to mean that the vacation pay will not result in any deduction from the weekly benefit payable ^{Footnote 7} .

4.4.2 Leave with pay

Where a person is placed on leave with full pay for any reason during a week, that week is not a week of unemployment ^{Footnote 8} . It is implicit in the very nature of leave of any kind that the contract of service continues.

Accordingly, weeks for which the usual remuneration for a full working week is received by a worker while on sick, maternity or parental leave are not weeks of unemployment ^{Footnote 9} . An appropriate deduction shall be made from the weekly benefit payable in respect of any week for which less than the usual remuneration is received ^{Footnote 10} .

4.4.3 Compensatory leave

It is not uncommon for people working overtime to be given a period off work rather than pay as compensation for the additional hours worked. Any week for which a worker is either exempted, by reason of being on leave as compensation for overtime worked, from performing some of the duties normally required or exempted from performing all of the duties is not a week of unemployment ^{Footnote 11} . A contention that the remuneration is not to be allocated to the period of the leave but to the period during which the services were performed, since services were actually performed in the past to earn that remuneration, was not accepted.

It is possible that the contract of service provides for a normal workweek longer than normal and, at the same time, time off to compensate for the additional hours. Every week off granted in this way is not a week of unemployment ^{Footnote 12} . The time at which the remuneration should be paid under the terms of the contract is not a determining factor.

It has been held many times that workers in the navigation industry are subject to this rule when they are expending lay days accrued while at sea for a certain period of time ^{Footnote 13} . The rule applies even where the worker is not to resume work upon expiration of the leave, and even where the contract of service comes to an end on the last day worked.

4.4.4 Deferred salary leave plans

These plans have recently been introduced by employers and employees in an effort to reduce the number of lay-offs in a given industry. Under these plans, a payment formula provides for a distribution of salary over an agreed period during which there will be a leave of absence.

A most common application appears to provide for salary from four equal periods to be paid over five equal periods, one of which is a period of leave. For example, it may be agreed between an employer and employee that the latter's salary from four years will be spread over five years; that the employee will provide services for the first four years and then be off work for a whole year.

It is considered that the percentage of the salary which is payable for each week under the terms of the arrangement becomes the employee's usual remuneration for a full working week for the duration of such arrangement; that the contract of service continues beyond the last day worked to include the period of leave; and that a portion of the salary is payable without the performance of services during the period of the leave ^{Footnote 14} . As a result, that employee is considered not unemployed at any time while the contract continues ^{Footnote 15} .

4.4.5 Off-season covered by contract

Where the remuneration for a full working week is guaranteed for a specific period of time under a contract and is paid, the weeks wholly contained in that period are not weeks of unemployment ^{Footnote 16} , regardless of the time of payment and the amount of work performed. An example would be that of certain stevedores whose seasonal contract guarantees that they will be paid at least an amount equivalent to what they would receive for 40 full working weeks.

Similarly, any week covered by a contract of service and for which a remuneration is provided is not a week of unemployment, even if the person is exempted from performing services during that week ^{Footnote 17} . A professional football player was held not to be unemployed for the duration of his contract, and in particular beyond the termination of the season, even though the payments of his salary ceased with the last game played ^{Footnote 18} .

4.4.6 Notice and severance pay

Wages in lieu of notice as well as severance pay are generally paid in one lump sum upon termination of the contract of employment. Where this is the case, the weeks following the last day worked are weeks of unemployment ^{Footnote 19} .

However, this must not be taken to mean that a person thereby becomes eligible for benefit. The payments received may be earnings to be taken into account, so they may result in no benefit being payable or in a deduction to be made from the weekly benefit payable ^{Footnote 20} .

4.4.7 Damages for wrongful dismissal

In some cases, an employer's action in terminating employment may be regarded as unjust and challenged by the employee through the proper grievance channel or even before a court. Damages for wrongful dismissal may then be awarded either through a labour board decision or through a court judgment, or be conceded by the employer as an out-of-court settlement.

Where following such an action a person is reinstated in employment with full pay for the past period, the contract of service is considered to be re-established retroactively and the weeks elapsed since the last day worked are no longer regarded as weeks of unemployment. As a consequence, unemployment benefits paid for these weeks result in an overpayment that has to be repaid by the claimant.

On the other hand, if the contract of service is not re-established or if the claimant is only partially compensated for each week of the period elapsed, these weeks remain weeks of unemployment for benefit purposes. The moneys received may then become earnings to be taken into account.

4.4.8 Stand-by hours

The requirement to be on standby is a condition of employment for claimants in certain occupations. These hours may or may not be remunerated. The remuneration for the standby hours is normally at a rate less than the rate paid for normal hours of work. The hours that an employee is required to be on standby is usually but not limited to over and above the hours worked in a given week or pay period. One could work 40 hours per week and also be on standby for a couple of evenings per week or even during the weekend.

A claimant who is on standby for 35 hours in a week and is not receiving their normal remuneration for that week, would be considered to be unemployed for that week, unless the standby hours require the claimant to be on the employer's premises.

However, a week during which a claimant receives his/her normal remuneration for a full working week even though they do not have any duties to perform during that week cannot be considered as a week of unemployment ^{Footnote 21} .

[ May 2004 ]