Summary
In Brannigan v. Administrator, 139 Conn. 572, the plaintiff had retired and made application for severance pay available to him under an agreement.
Summary of this case from Petela v. AdministratorOpinion
The Unemployment Compensation Act provides that an individual shall be ineligible for benefits during any week with respect to which he has received any payment by way of compensation for loss of wages. The plaintiff's employer S and the unions of its employees entered into an agreement which provided that any employee who reaches sixty-five and has been in the company's employ for five years shall be entitled to severance pay by reason of age and length of service. The plan was financed entirely by the employer. Under its terms the plaintiff, when he retired, was entitled to and did receive $5055, which represented eighteen months' pay. Held that the money paid the plaintiff was a "payment by way of compensation for loss of wages" within the act and he was ineligible for unemployment compensation with respect to his separation from his employment with S. If the plaintiff enters the employ of another and establishes a new benefit rate, his discharge and consequent claim for unemployment compensation would present another and an entirely different question. The question determinative of the issue whether the payment comes within the clause of the statute as one made "by way of compensation for loss of wages" is whether the contract is to be interpreted as expressing the intention of the parties that the lump sum payment was to he compensation for the loss of the plaintiff's wages with respect to the eighteen months next after his retirement. Consequently, the decision turns on questions of the construction of a statute and the interpretation of a contract, both of which are questions of law. The principle that the finding of the commissioner cannot be disturbed unless he acted arbitrarily, unreasonably or illegally was not applicable.
Argued February 4, 1953
Decided March 17, 1953
Appeal from an award of the unemployment commissioner for the fourth district granting the plaintiff unemployment compensation, brought to the Superior Court in Fairfield County and tried to the court, Cullinan, J.; judgment sustaining the appeal and vacating the award, from which the plaintiff appealed to this court. No error.
James F. Rosen, with whom, on the brief, was Peter Marcuse, for the appellant (plaintiff).
Harry Silverstone, assistant attorney general, with whom, on the brief, was George C. Conway, attorney general, for the appellees (defendants).
The plaintiff has appealed from a judgment of the Superior Court sustaining the appeal of the administrator and vacating an award of unemployment compensation to the plaintiff. The question presented is whether the plaintiff is entitled to unemployment compensation when, upon his voluntary retirement from his employment, he received from his employer a sum of money equal in amount to eighteen months' wages at his regular rate of pay.
The plaintiff was employed for thirty-two years by D. A. Schulte, Inc., hereinafter called the company, as clerk and manager in one of its stores in Bridgeport. He voluntarily retired on June 2, 1951, at the age of sixty-seven. Since then, he has been totally unemployed. He applied for unemployment compensation and registered for work with the state employment service on June 10, 1951, but it has not referred him to any employment. He is currently receiving social security benefits in the amount of $68.50 each month. Prior to January 1, 1948, the company had no retirement plan. The plaintiff's union, in co-operation with other unions of the company's employees, urged the company to adopt one. The company found, upon investigation, that a plan whereby qualified retired employees received a retirement allowance until death would cost more than the company could afford. Consequently, on January 1, 1948, the company and the unions acting in behalf of the employees entered into an agreement which provides that any employee who reaches the age of sixty-five and who has been in the company's employ for five years or more "shall be entitled to severance pay by reason of age and length of service." The plan was financed entirely by the company. Under its terms the plaintiff was entitled to receive upon retirement, and did receive, $5055.80, which represented eighteen months' pay, less federal income tax and social security deductions.
General Statutes, 7508, provides that "[a]n individual shall be ineligible for benefits . . . (4) during any week with respect to which the individual has received or is about to receive remuneration in the form of (a) wages in lieu of notice or dismissal payments or any payment by way of compensation for loss of wages, or any other state or federal unemployment benefits. . . ." We do not consider the question whether the payment made to the plaintiff was within that part of the clause of the statute which disqualifies a claimant if he receives "wages in lieu of notice or dismissal payments." The plaintiff stopped working voluntarily and made application. for the severance pay available to him under the agreement. It suffices to say that notice or dismissal payments are usually associated with a termination of the employment relationship for reasons primarily beyond the control of the employee. See note, 147 A.L.R. 151. We rest our decision of the case upon the answer to the question whether the money paid to the plaintiff was a "payment by way of compensation for loss of wages."
Almost the identical issue was before us in Kneeland v. Administrator, 138 Conn. 630, 88 A.2d 376. The plaintiff in that case had been retired and was receiving payments pursuant to a pension plan provided by the employer. He also was entitled to old-age benefits under the Social Security Act. Although he had registered for work with the state employment service, he had not been referred to any job. We held (p. 636) that he was disqualified for unemployment compensation. The facts in the Kneeland case differ from those in the instant case only in that in the Kneeland case the pension payments were to be made periodically over an extended period and would terminate upon the death of the pensioner, while in this case the payment was made in a single lump sum. In each, payment was made by the plaintiff's last employer, in consideration of services rendered in the past and not for services to be rendered currently or in the future. In each, the payment was a substitute for the wages the employee once was receiving but no longer did because he was not working for his former employer. It is not a question of how the payments are made but why they are made. Wages are defined in the Unemployment Compensation Act as "all remuneration for employment." Cum. Sup. 1951, 1324b. When employment ceases, so do wages. The plaintiff, having retired, was not required to perform any additional services in order to be entitled, under the agreement, to a sum equivalent to eighteen months' pay.
The plaintiff argues that if he is disqualified because he has been given the equivalent of eighteen months' pay, he can never qualify for unemployment compensation. That is true in so far as any claim may be predicated upon his separation from what is presently his last employment, that with D. A. Schulte, Inc. However, as we pointed out in the Kneeland case (p. 635), if he enters the employ of another and establishes a new benefit rate, his discharge and consequent claim for unemployment compensation would present another and an entirely different question. The plaintiff also argues that, since the commissioner found as a matter of fact that the payment made to him was not a pension and was not made "by way of compensation for loss of wages," the finding cannot be disturbed unless the commissioner acted arbitrarily, unreasonably or illegally. That is not so. A finding that the payment was not a pension is not decisive. In the case of Barclay v. Administrator, which immediately precedes this one, we held that a "pension disqualifies any recipient whose claim for benefits under the act is based upon his lack of employment with the payer of the pension." Even though payments made after the severance of employment are held not to be pensions, it does not necessarily follow that the applicant can qualify under the act. The real issue is whether the payment comes within the clause of the statute as one made "by way of compensation for loss of wages." The question determinative of that issue is whether the contract is to be interpreted as expressing the intention of the parties that the lump sum payment was to be compensation for the loss of the plaintiff's wages with respect to the eighteen months next after his retirement. Consequently, the decision of the case turns on questions of the construction of a statute and the interpretation of a contract, both of which are questions of law. Bridgeport v. United Illuminating Co., 131 Conn. 368, 371, 40 A.2d 272. It was the apparent intent of the legislature, as expressed by the clause of the act under consideration, to prevent, within reasonable limits, the duplication of payments to employees separated from their employment.
The sum paid to the plaintiff was not wages but a "payment by way of compensation for loss of wages," that is, for the loss of the wages he would have received if his employment had continued.