The Supreme Court of Canada has decided that pension benefits
received by a dismissed employee are not to be deducted from an
award of wrongful dismissal damages. The decision in IBM Canada v. Waterman affirms an earlier
ruling of the BC Court of Appeal which we discussed
Mr. Waterman was a long-service employee who was terminated with
two months' notice when he was 65. He sued for wrongful
dismissal but in the meantime began to get payments under the
defined benefit pension plan that was part of his contract of
employment. He succeeded with his wrongful dismissal claim
and was awarded damages based on a 20 month period of reasonable
notice. IBM sought to have the amount of pension payments
received during the 20 months deducted from the damages.
The court agreed he had received a "compensating
advantage": i.e. if he had been given actual notice of
termination, he would only have received his regular pay but,
because he was terminated, he collected damages for loss of income
while also receiving pension payments. Nevertheless, the
court decided to apply the "private insurance
Five of the seven judges held that the pension plan was like
private insurance, the benefits of which are not deductible from
wrongful dismissal damages. The most common example is an
employee who is allowed to keep disability benefits from a private
policy even when she or he also receives damages for wrongful
The majority noted that Mr. Waterman did not contribute money to
his pension plan, but he did contribute his time and service.
In addition, the majority noted that the pension plan
compensates for past service; it is not an indemnity for lost
wages. Therefore, Mr. Waterman was entitled to keep both the
pension payments and wrongful dismissal damages.
Two of the seven judges disagreed, saying that the private
insurance exception had no application to a pension plan that
arises from a single contract of employment under which the
employee is also claiming wrongful dismissal damages.
While the decision went in favour of the employee in this case,
and it will be highly influential in future cases involving pension
benefits, each case will have to be examined on its own terms to
see if the result will be like "private insurance" (see
Sylvester v. British Columbia for details
of that principle) or double recovery (see
our previous post).
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
A former teacher at Bodwell High School has learned a valuable lesson from the B.C. Human Rights Tribunal— it is not discriminatory for an employer to offer child-related benefits to only employees with children.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
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