No “double dipping” allowed where disability benefits and notice pay are from one source

January 27th, 2016 by

By Michelle Stephenson

A recent decision, Fernandes v. Peel Educational, deals with the issue of “double dipping”, specifically, whether a dismissed employee is entitled to receive disability benefits while they are also receiving pay in lieu of notice.

The Plaintiff, Mr. Fernandes, had sued for wrongful dismissal and was awarded 12 months of salary in lieu of notice when the Court found that he was dismissed without cause. The issue then became whether, as an unemployed individual suffering from a disability, Mr. Fernandes’ was entitled to receive his wrongful dismissal damages (12 months of salary) while simultaneously receiving disability benefits.

Mr. Fernandes pointed out that there have been several cases where an employee was allowed to receive disability benefits at the same time as pay in lieu of notice. He had paid the premiums for his disability coverage, and he argued that his employer should not be able to benefit from this by offsetting his benefits against the salary he was owed for the notice period.

His employer, on the other hand, argued that this constituted double recovery. If Mr. Fernandes received both of these payments at once, his compensation would exceed his actual losses from being fired.

Ultimately, the deciding factor was that, in this case, the employer was the source of Mr. Fernandes’ disability benefits.  In other words, there was no insurer paying the disability benefits.

The court ultimately found that Mr. Fernandes was entitled to his 12 months of pay in lieu of notice, followed by his disability benefits.  He was not entitled to receive pay in lieu of notice and disability benefits concurrently.

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