Social Security Tribunal Rules Settlement Proceeds as Employment Insurance Earnings

Citation: JT  v  Canada Employment Insurance Commission , 2026  SST  247 Social Security Tribunal of Canada Appeal Division Decision Appellant: [redacted] Respondent: [redacted] Representative: [NAME] Decision under appeal: General Division/ February 2, 2026 (GE-26-164) Tribunal member: [NAME] of hearing: Videoconference Hearing date: May 21, 2026 Hearing participants: Appellant Respondent’s representative Decision date: June 10, 2026 File number: AD-26-142 On this page Decision Overview Issue Preliminary observations Analysis Conclusion Decision [ 1 ] The appeal is dismissed. Overview [ 2 ] The Appellant (Claimant) got $121,382.00 from his former employer. The Respondent (Commission) decided that the money is “earnings” under the law because it was vacation pay and severance pay. [ 3 ] The Commission allocated the earnings starting the week of February 18, 2024, to August 23, 2025, at an amount of $1,503.00 per week. This is the week that the Commission said that the Claimant was separated from his employment. The Commission said that being separated from his job is why the Claimant received the earnings. The Claimant disagreed with the Commission. He appealed to the General Division of the Tribunal. [ 4 ] The General Division found that the payment arose out of the Claimant’s employment and that he received this payment because his employment ended. It found that the payment was not made in exchange for relinquishing his reinstatement rights. The General Division concluded that the payment was earnings and these earnings had to be allocated starting the week of January 28, 2024, to August 23, 2025, at $1,503.00 per week. [ 5 ] The Appeal Division granted the Claimant leave to appeal. The Claimant essentially submits that the General Division ignored his evidence and made an error in law when it concluded that the settlement proceeds were for loss of income because of his termination. [ 6 ] I am dismissing the Claimant’s appeal. Issue [ 7 ] Did the General Division ignore the Claimant’s evidence, and make an error in law when it concluded that the settlement proceeds were for loss of income because of his termination? Preliminary observations [ 8 ] In deciding the present appeal, I must look at the evidence that was before the General Division. The Appeal Division doesn’t accept new evidence—except in rare circumstances that don’t apply in this case. Footnote 1 [ 9 ] I proceeded to listen to the recording of the General Division hearing held on January 29, 2026. Analysis Did the General Division ignore the Claimant’s evidence and make an error in law when it concluded that the settlement proceeds were for loss of income because of his termination? [ 10 ] The Claimant submits that he was wrongfully dismissed and that the employer realized this and rather than fight on sought to resolve outside of a court's decision. He puts forward that he did request to be reinstated and suggested that he move to another unit within X. He argues that the Minutes of Settlement (MOS) specifically states that he is never to be reinstated with the [NAME]. The Claimant submits that payment was made specifically for him to relinquish his reinstatement rights. [ 11 ] The Claimant stopped working on January 29, 2024. His employer issued an initial Record of Employment ( ROE ) on February 13, 2024, showing he was paid $11,382.00 for vacation pay. [ 12 ] The General Division found that the Claimant’s vacation pay arose out of his employment and was paid to him as a direct result of his separation of employment. It determined that this vacation pay is considered earnings within the meaning of the Employment Insurance Act . [ 13 ] The Claimant’s employer later issued an amended ROE dated May 22, 2025. This ROE reported the Claimant further received “settlement pay” in the amount of $110,000.00. [ 14 ] The General Division turned its mind to whether the $110,000 payment to the Claimant was made in exchange for relinquishing his right to be reinstated. [ 15 ] Case law is abundant to the effect that if a claimant claims that the amounts received from his employer or former employer were paid out for reasons other than the loss of revenue arising from employment, in the case of a settlement or agreement based upon a lawsuit, a complaint or a claim because of a dismissal, it is up to the claimant to demonstrate that due to "special circumstances" some portion of it should be regarded as compensation for some other expense or loss. [ 16 ] The General Division had to determine whether the Claimant demonstrated that due to "special circumstances" the amount he received as a settlement following his multiples grievances should be regarded as compensation for something other than the loss of wages or other employment benefits. [ 17 ] As the General Division pointed out, an amount received in consideration for relinquishing the right to be reinstated is not considered earnings for EI purposes and is not allocated. However, three conditions must be met, namely, the right to reinstatement exists, reinstatement has been sought, and the amount is paid to compensate for relinquishment of that right. Footnote 2 [ 18 ] The onus of showing that monies received by way of a settlement are not earnings lies on the Claimant. [ 19 ] The General Division found the Claimant did not meet the second condition. It found that the evidence did not support the Claimant’s position that he had a right to reinstatement. It found that there was no evidence that the Claimant’s grievance was likely to be successful and that he would have been entitled to reinstatement. [ 20 ] The evidence shows that the Claimant was terminated, and that he immediately filed a grievance pursuant to its collective agreement to contest his termination. When asked by the General Division what remedies he was seeking in his grievance, the Claimant answered that he requested his job back because he had worked more than 10 years for the employer and liked his job. However, considering the professional breakdown in his unit, he said that he wanted to be transferred to another unit within X. [ 21 ] During a meeting prior to arbitration, the Claimant expressed the desire to be assigned to another unit. However, it became apparent that the employer wanted him gone. The case was therefore set for arbitration. Before proceeding before the arbitrator, the parties came to an agreement. [ 22 ] The Federal Court of Appeal has defined the right to reinstatement as the right to resume his or her position following a wrongful dismissal. Footnote 3 The Claimant submits that the MOS specifically states that he is never to be reinstated with the [NAME]. [ 23 ] I notice that the MOS rather indicates that the Claimant “…is not eligible to apply for re-employment with the City in future.”. I agree with the Commission that, unlike reinstatement, re-employment does not carry the expectation a claimant is returned to the position they formerly held. [ 24 ] Even if I were to accept that the General Division erred in not concluding that the Claimant was entitled to reinstatement to his former position, but in a different unit, and that he sought reinstatement, the evidence does not support his claim that the amount paid was intended to compensate for the loss of that right. [ 25 ] The MOS indicates that the monies were paid as a “retirement allowance” and nothing expressly states that the employer agreed to pay the Claimant to relinquish reinstatement. Footnote 4 [ 26 ] Furthermore, the MOS indicates that the Claimant is resigning from his position on January 30, 2024, which supports the position that he was not paid by the employer to relinquish his right to be reinstated. Footnote 5 [ 27 ] The Claimant also had multiple grievances before the employer that were part of the final settlement. The agreement does not specify that the $110,000 was paid, in part or in full, as compensation for waiving the right to reinstatement. [ 28 ] In support of his reconsideration request, the Claimant indicated that the amount of 110 000$ was awarded wholly as income, none as damages, and that he tried to get the settlement structured as back pay going back two years, to 2019, the start date of his grievances. Footnote 6 [ 29 ] As stated by the General Division, no other documentary evidence supports the Claimant’s position that he received the amount of $110,000 as compensation to relinquish any right to reinstatement (letters, emails, etc.). [ 30 ] The Claimant had the burden of proving before the General Division, on a balance of probabilities, that the settlement amount constituted something other than compensation for the loss of wages or other employment benefits. [ 31 ] Unfortunately, for the Claimant, he did not meet his burden of proof. [ 32 ] I find that the General Division did not make any error that would justify my intervention in concluding that the settlement proceeds the Claimant received are earnings and that these earnings are to be allocated starting the week of January 28, 2024, to August 23, 2025, at $1,503.00 per week. [ 33 ] Although I greatly sympathize with the Claimant who is going through hard times, I have no choice but to dismiss his appeal. Conclusion [ 34 ] The appeal is dismissed. Footnotes Footnote 1 [NAME]  v  Canada (Attorney General) , 2022  FCA  157. Return to footnote 1 referrer Footnote 2 Canada (Attorney General)  v  [NAME] , 2012  FCA  74. Return to footnote 2 referrer Footnote 3 Canada (Attorney General)  v  [NAME] , 2012  FCA  74 at para 8. Return to footnote 3 referrer Footnote 4 [NAME] , A-34-91. Return to footnote 4 referrer Footnote 5 Canada (Attorney General)  v.  [NAME] , 2012  FCA  74. Return to footnote 5 referrer Footnote 6 See GD3-28. Return to footnote 6 referrer