What are collateral benefits?

What are collateral benefits

What are collateral benefits?

If you are an employee who has experienced a loss, for example a wrongful dismissal at the workplace, you may be entitled to collateral benefits. These act as additional benefits paid by the party responsible for the damages that affected the employee in question.

It is the responsibility of the defendant to compensate the employee with the amount of income loss during the notice period, minus any mitigation income (payments collected from another job within that period). When collateral benefits are provided to the employee, they will either be deducted from their wage loss benefits or can be collected post loss.

What is a double recovery?

Any employee who has suffered a loss is entitled to recovery, however, they do not need to recover twice. If an employee files a claim for damages, while also receiving the full amount of anticipated compensation, this would be characterized as the employee initiating a double recovery and will not be accepted.

The collateral source rule is the only exception to double recovery. This rule accepts that any benefit received by the plaintiff that is provided by public or private support, like charity, will not be deducted. And second, any private insurance exemption, like disability insurance, purchased by the employee, is not deductible.

How can an employee undergoing a wrongful dismissal claim collect collateral benefits?

For an employee to file a wrongful dismissal claim, there must have been a failure to provide the proper termination notice, pay in lieu of notice, or termination without cause. In this case, when filing a wrongful dismissal claim, the employee is ultimately asking for the damages, triggered by this dismissal, to be compensated to them.

When an employee receives income replacement benefits, some of these benefits can be deducted. Deductions are possible when the damages received in response to the wrongful dismissal claim and benefits collected during the notice period equate to a greater amount than the employee’s losses.

An example of a collateral benefit that must be deducted is Workers’ Compensation Payments because they are benefits that act to recompense the employee for the losses they endured for a period. Employment Insurance Benefits is an example of a collateral benefit that is not deductible. The employee is provided with Employment Insurance benefits during their notice period, however, once they receive damages from a wrongful dismissal claim, they must reimburse this payment. This benefit is not deductible because of the private insurance exemption (employees pay for EI).

If you believe you have been wrongfully dismissed, please contact KCY at LAW by filling in an online consultation request or contact us by phone at 905-639-0999 to book your consultation today.