In August 2011, the British Columbia Court of Appeal held that
pension benefits received by an employee during the reasonable
notice period were not to be deducted from wrongful dismissal
damages for that period: 2011 BCCA 337. A 7-member majority of the
SCC agreed with that approach in IBM Canada Limited v Waterman, 2013 SCC
The majority noted that, under what has been described as the
'private insurance exception', a benefit received by the
employee is not generally deducted from wrongful dismissal damages
if (a) the benefit is not in the nature of an indemnity for the
loss caused by the breach of the employment contract and (b) the
employee has contributed to obtain the benefit. Although the
employee in this case had not made financial contributions to the
pension plan, he had earned the pension benefits through his years
of service. The benefits were a form of deferred compensation
intended as retirement savings. They were not intended to indemnify
the employee against wage loss arising from a loss of employment.
Policy reasons also supported non-deductibility, as the law should
not make it cheaper for an employer to dismiss pensionable
The Court confirmed the employee's entitlement to an
additional 18 months' salary, on top of the 2 months'
salary provided by IBM, on dismissal of the 65-year-old employee,
who had 42 years of service at the time of his dismissal on 2
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