Employer Responsible for Extra Income Tax Burden of Dismissed Employee:

In Schram v Govt of Nunavut, ( 2018 CarswellNB 280) the NB Court of Appeal had a situation where the plaintiff was employed in Nunavut on a fixed term contract. She was terminated before the end of the term and returned to New Brunswick, her home. Once she won her case in the NB courts, she was awarded a retiring allowance of $213,000.

As she was now a resident of NB, she paid tax at the NB rate which is higher than the tax she would have paid if she was permitted to work out her fixed term contract and pay rates applicable to Nunavut residents.

The CA awarded her additional compensation equal to the difference between the higher NB tax rate and the lower Nunavut rate.

This was done on the principle that she should be put into the same economic position as had the breach of contract not occurred.