Deduction of Pension Benefits from Wrongful Dismissal Damages

In Waterman v. IBM Canada [2011] S.C.C.A. No. 427 (QL), the Supreme Court of Canada has granted leave to appeal a decision of the BC Court of Appeal deciding that pension benefits are not deductible from wrongful dismissal damages.

The Plaintiff Waterman was terminated without cause by IBM after approximately 42 years of service.  Upon termination, he began receiving full pension benefits under IBM’s defined benefit pension plan, which was entirely funded by IBM.

Waterman gave evidence that did not want to retire at the time his employment was terminated, even though he had the right to retire on full pension.  He declined a settlement offer from IBM and sued for damages for wrongful dismissal.  He was awarded damages of approximately $93,000 based on a reasonable notice period of 20 months.

Both the Trial Judge and Court of Appeal found that the pension benefits received by Mr. Waterman during the period of reasonable notice were not deductible from the damages he was awarded from wrongful dismissal.

Given the advancing age of the workforce, and the fact that people may not want to retire at 65 for various reasons, this issue will become more common.  We await the Supreme Court of Canada’s decision with interest.

age benefits damages IBM pension retire retirement termination Waterman wrongful dismissal



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