Are Sick Leave Benefits Deductible from Awards of Damages?

The 1996 amendment to the insurance Act, supra, refers expressly to “sick leave plans”: s. 265.4(1)(b). Before then, sick leave credits used as a result of an injury could potentially be claimed if the evidence showed that they were cashable at the time of retirement or if there was an undertaking to reimburse the employer of the sick time used: Allen v. Farrell (1988), 86 NBR (2d) 50 para 47 (QB). Since 1996, sick leave benefits have to be deducted from awards for past loss of income, even where they may be considered a capital asset (this part was added to the provision in 2003).

That being said, the unanimous Court of Appeal has left open possible claims for the future loss of such benefits in case of depletion of such credits if “there is a real and substantial possibility that his bank of sick leave benefits will not be sufficiently plentiful to cover absences from work unrelated to the accident”: Fraser v. Haines, 2008 NBCA 59 para 46. Therefore, while benefits paid between the date of the accident and the date of the trial are deductible from an award of damage for past loss of income, they may still be claimed as a future loss if the requirements of Vincent v. Abu-Bakare, 2003 NBCA 42 para 76-81, are met.

In Abu-Bakare, supra, the plaintiff, a unionized school teacher, was injured in a motor vehicle accident. Under the collective agreement, he could cumulate up to 15 sickness days per year, carry them over up to a maximum of 195 days; if unused, they could not be cashed at retirement. He used 74 of those days as a result of the accident. During the two school years preceding the trial, the plaintiff had used only a portion of the yearly sick leave benefits available; his total credits had therefore increased during that time. He had lost no past income and formulated no claim in that respect. The trial judge awarded him $18,850 to compensate the “full face value of the sick leave benefits used by Mr. Vincent for accident-related absences from work” (para 1). Although the wording of the provision was different then, not speaking of capital assets, the unanimous bench acknowledged “that s. 265.4(1)(b) of the Insurance Act does ‘not relate to claims for future loss and the loss of the capital asset or benefit of accumulated sick leave benefits’ and that, at common law, the appellants were not entitled to a deduction for future sick leave benefits” (para 77). Because the credits could not be cashed-in, it held however that they were not a capital asset (para 78). Plus, the plaintiff had received an additional award for future loss of income, including time off work because of his injuries, and the award for loss of sickness benefits compensated the plaintiff twice for the same loss.

In light of Fraser v. Haines, supra para 46, the loss of sick leave benefits may still be compensated notwithstanding s. 265.4(1)(b) of the Insurance Act, supra. However, that claim would be formulated as a future loss (general pecuniary damages), not as a past loss (special damages). Given the 2003 amendment, it remains to be seen whether the past depletion of sick leave credits may serve to form the basis of a future claim (even if they are deductible from past losses of income), but it seems clear that future depletion as a result of the accident may be awarded if the credits are redeemable at some point. That inevitably implies that future credits are not deductible from the award of damages.

Finally, the case of Savoie v. Robichaud, 2011 NBQB 337, is also of interest. Part of the plaintiff’s claim consisted of unpaid leave of absence from work due to her injuries. The trial judge allowed a portion of the claim, as a loss, which was shown to be related to the accident (paras 31-34). Of course, being unpaid, this could not fall in the category of ‘sick leave plan’ (or of ‘income continuation plan’) as no money was received during that time off of work. In fact, this was the only pecuniary loss accepted by the presiding judge, as the plaintiff had not proven that her earnings had otherwise suffered as a result of her injuries. However, Justice Léger did deduct the Employment Insurance sickness benefits that she collected during that time (para 33).