In this case, the British Columbia Court of Appeal considered the issue of the deductibility of pension benefits from an award of damages for wrongful dismissal. Mr. Waterman, upon being wrongfully dismissed from IBM, automatically began receiving pension benefits because of his age upon dismissal. Madam Justice Prowse ruled that these pension benefits should not be deducted from the damages awarded for wrongful dismissal and accordingly dismissed the appeal.
Mr. Waterman, at the age of 65, was dismissed without cause and notice from IBM. Upon termination, he began receiving pension benefits from IBM’s defined benefit pension plan (which was wholly funded by IBM). He sued IBM for wrongful dismissal and was awarded damages. IBM argued that the pension benefits should be deducted from the damage award, as disability benefits were in Sylvester v. British Columbia, but the trial judge came to the opposite conclusion. The Court of Appeal concurred, distinguishing this case from Sylvester because of the nature of the benefits. The Court noted that disability benefits and pension benefits have historically been distinguished: pension benefits are not substitute for wages but a benefit earned by being an employee for a specified period of time. It is also clear from the contractual relationship between the parties that they did not consider the pension to be a substitute for salary. Madam Justice Prowse therefore came to the conclusion that pension benefits should not be deducted from an award of damages and dismissed the appeal.
August 2, 2011
Link to Decision
Sam Golder & Dominik Swierad
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