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Digest of the Week — Pension Benefits not Deductible From Wrongful Dismissal Damages

2013 CarswellBC 3726 |  (Westlaw Canada)
Waterman v. IBM Canada Ltd. |  (WestlawNext Canada)
Supreme Court of Canada

Labour and employment law | Employment law | Termination and dismissal | Remedies | Damages | Calculation of quantum

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Employee was employed by employer for approximately 42 years and was terminated at age 65 without cause and without notice — Following termination, employee began receiving full pension benefits pursuant to employer’s defined benefit pension plan which was entirely funded by company — At time of termination, employee had right to retire on full pension — Employee brought action for damages for wrongful dismissal — Following summary trial, employee was awarded damages in amount of $93,305.32 based on reasonable notice period of 20 months — Trial judge found that pension benefits paid to employee during period of reasonable notice were not deductible from damages — Employer’s appeal was dismissed — Appellate court found pension benefits received by employee during period of reasonable notice were not deductible from damages he was awarded for wrongful dismissal — Appellate court found pension plan constituted part of one overall employment contract between employee and company — Appellate court found terms of pension plan supported view that had parties turned their minds to question before Court at time of contracting, they would have viewed vested pension benefits in issue as right in nature of property belonging to employee and not deductible from any damages he was awarded for loss of his salary during notice period — Appellate court found pension benefits in issue were properly characterized as form of non-deductible, non-indemnity insurance — Appellate court found benefits were triggered by company in terminating employee without cause or notice and thereby effectively forcing him into early retirement — Appellate court found employer could not now complain that employee was entitled to retain those benefits together with salary to which he was entitled for breach of term of his contract providing for reasonable notice of termination — Employer appealed — Appeal dismissed — Contractual principles dictated that pension amounts should be deductible — However, private insurance exemption was applicable so that no deduction occurred.

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