Call Us Now

Blog

Pension Earnings Cannot Offset Wrongful Dismissal Damages: Supreme Court

Posted On: January, 23 2015

n a decision released in December 2013, the Supreme Court has held that employee pension payments should not reduce the severance payment or damages otherwise payable by an employer for wrongful dismissal.

The facts of the Supreme Court’s decision are as follows.  Richard Waterman was employed with IBM in British Columbia, when he was terminated at the age of 65 and after 42 years of service with the company.  Upon termination, IBM offered Mr. Waterman a severance payment representing 2 months’ pay.  At the time of his termination, Mr. Waterman was also entitled to retire with a full pension.

Mr. Waterman sued IBM for wrongful dismissal.  The British Columbia Supreme Court trial judge held that Mr. Waterman was entitled to common law notice of 20 months.  At trial, IBM took the position that Mr. Waterman’s monthly pension benefit of $2,124 should be deducted from his wrongful dismissal damages for that same 20 month period.  Both the BC Supreme Court and the BC Court of Appeal rejected IBM’s position and held that Mr. Waterman’s 20 month severance payment should not be reduced by the value of his pension benefits for 20 months.  IBM appealed on the pension issue, and the matter was heard by the Supreme Court.

In the appeal before the Supreme Court, IBM took the position that it was only obligated to make Mr. Waterman “whole” during the reasonable notice period; therefore, under the general rule of contract damages, the pension benefits should be deducted.  IBM also argued that Mr. Waterman’s pension benefits should be offset, as the Supreme Court had done with disability insurance benefits in the case of Sylvester v. British Columbia, [1997] 2 S.C.R. 315.

The Supreme Court disagreed with IBM and held that pension earnings should not be deducted from wrongful dismissal damages.  The Court reasoned that an employee’s pension is tantamount to a retirement savings vehicle that belongs to the employee.  The Supreme Court held that retirement pension benefits are akin to private insurance, because the employee contributes to his or her pension directly.  As well, pension benefits form an aspect of an employee’s compensation for past service, and are not intended to indemnify an employee for lost wages as a result of termination or an inability to work.

The full text of the Supreme Court’s decision can be found here: IBM Canada Limited v. Waterman, 2013 SCC 70.

 

Contact Us

RECENT NEWS & EVENTS

5 STAR REVIEWS

  • Rating: 5 Lawyer Toronto - 5 Star Reviews
    Pinto Wray James Reviewed by SB

    I just wanted to let you know how happy I am with the outcome and how very grateful I am for the guidance and support that you and your team provided.
  • Rating: 5 Lawyer Toronto - 5 Star Reviews
    Pinto Wray James Reviewed by Google user

    Patrick James is really a great lawyer who is smart and great to deal with. He's been our litigation counsel for over 5 years on several different matters. Patrick recently gave our company great strategic advice that resulted in a big commercial litigation win for our company. He's fierce, tenacious, and really cares about getting the best outcome for his clients.
  • Rating: 5 Lawyer Toronto - 5 Star Reviews
    Pinto Wray James Reviewed by Google user

    Patrick is a very good lawyer. He recently successfully defended a lawsuit against my company and has pursued several litigation claims for us in the past. All claims settled input favour. Mr. James is smart and quickly gives you great strategic advice. Patrick has been a real asset to our business.
  • Rating: 5 Lawyer Toronto - 5 Star Reviews
    Pinto Wray James Reviewed by Sandra L.

    Andrew Wray and Patrick James recently helped settle a difficult situation for me and my family. The results were exactly what we were hoping for. They are honest, strategic and will provide you with the best advice for you and your financial situation. I highly recommend them to everyone I know.
  • Rating: 5 Lawyer Toronto - 5 Star Reviews
    Pinto Wray James Reviewed by Mark C.

    Their team is highly focused and incredibly professional - from our experience it would be difficult not to believe that Pinto Wray James are one of Ontario's leading Firms in Labor and Employment law. The mindful client care and complete understanding of the case eased fears and the stress that comes with any legal dispute. Expect to find high level smartly crafted legal solutions at Pinto Wray James LLP - couldn't recommend more.
  • Rating: 5 Lawyer Toronto - 5 Star Reviews
    Pinto Wray James Reviewed by Sherry C.

    Patrick is knowledgeable, strategic, supportive, and patient. His guidance and advice helped me to maintain focus and to keep things in perspective. His experience and keen perception provides him with an edge that allows him to assess the situation, the people involved, and to offer a strategic resolution that works best for all involved. If you ever require legal advice and assistance, I highly recommend him and his team. They will be there 100% for you.
  • Rating: 5 Lawyer Toronto - 5 Star Reviews
    Pinto Wray James Reviewed by Christian V.

    Patrick is a fearless advocate for diverse clients. His strategic approach, and his empathy, are what set him apart as a litigator, and champion of the underdog.
  • Rating: 5 Lawyer Toronto - 5 Star Reviews
    Pinto Wray James Reviewed by A Google User

    I have no hesitation recommending Andrew Wray of Pinto Wray James LLP. He provided me with legal advice regarding an employment law issue and his council was practical and honest. Andrew's approach is very much one of blending legal excellence with good common sense. An excellent lawyer!
  • Rating: 5 Lawyer Toronto - 5 Star Reviews
    Pinto Wray James Reviewed by Larry S.

    Patrick listens to his clients and shows compassion, empathy and professionalism. He cares deeply that the individual that has been wrongfully terminated gets the best judgment available to him. I would not hesitate in recommending him to friends or family.
Submit