ARTICLE · 17 DECEMBER 2013

Pension Benefits Do Not Replace Wages Owed, Supreme Court Rules

Affleck Greene McMurtry LLP

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An employee’s pension payments should not be deducted from damages otherwise payable for wrongful dismissal, the Supreme Court ruled recently.

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Affleck Greene McMurtry LLP

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An employee's pension payments should not be deducted from damages otherwise payable for wrongful dismissal, the Supreme Court ruled recently. Pension benefits are not intended to indemnify wage loss due to unemployment, but rather are a form of deferred compensation for service and constitute a type of retirement savings.

In a decision released earlier this month, IBM Canada Limited v. Waterman, the employee Waterman had been dismissed without cause after 42 years of service. IBM offered only 2 months pay in lieu of notice, leading Mr. Waterman to sue for wrongful dismissal. The trial judge awarded 20 months notice, and declined to deduct pension benefits already paid to Waterman during this notice period.

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