Last week the Supreme Court of Canada delivered a ruling to
clarify what has been an unsettled issue in employment law. In a
wrongful termination dispute,IBMCanada Limited v. Waterman (2013 SCC 70)
Canada's highest Court heard an appeal from the British
Columbia Court of Appeal with regard to Waterman's entitlements
Waterman was a long-term employee who had been wrongfully
dismissed by IBM. After his employment ended, Waterman began
drawing from his pension benefits, and then launched his claim for
wrongful dismissal damages. At trial, he was awarded pay in lieu of
notice of termination equivalent to 20 months' salary.
IBM took the position that since Waterman had been in receipt of
pension benefits, he was not also entitled to collect pay in lieu
of notice. In the company's view, this would be a form of
"double-dipping" whereby Waterman would get to collect
twice for the same loss. Its position was that since a wrongfully
dismissed employee is only entitled to be compensated for his or
her actual losses, IBM ought not be responsible to pay the full
amount in lieu of notice if Waterman already mitigated his losses
by receiving pension benefits. Accordingly, the employer argued
that the wrongful dismissal award ought to be reduced by the amount
Waterman had already collected from drawing the pension
The Supreme Court of Canada disagreed. It ruled that Waterman
was not recovering double compensation for the loss of his
employment by seeking pay in lieu of notice after having drawn from
his pension benefits. Rather, the Court drew a distinction by
stating, in part:
In general, a benefit would not be deducted if it was not an
indemnity for the loss caused by the breach and the plaintiff had
contributed in order to obtain entitlement to it.
The pension benefits, to which Waterman had contributed
throughout his employment, were never intended to be an indemnity
for the type of loss suffered as a consequence of the wrongful
dismissal. On the other hand, the intent of wrongful dismissal
damages in the form of pay in lieu of notice of termination is to
ease the burden of loss of employment and help bridge the
transition to new employment, or retirement.
The significance of this ruling for employers is a warning to be
a more certain and cautious when calculating potential wrongful
dismissal damages. While a terminated employee is required to
mitigate his or her losses, and should only recover damages to
compensate for the loss of employment, the Supreme Court of Canada
has made it clear that a terminated employee's entitlements for
wrongful dismissal damages will not be off-set if they draw from
their pension benefits during the reasonable notice period.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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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.
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.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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