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Supreme Court of Canada confirms that pension benefits should not be deducted from notice period damages

Sector: - High Tech

In IBM Canada Limited v. Waterman, 2013 SCC 70, the majority (7/2) of the Supreme Court of Canada confirmed that pension benefits should not be deducted from notice period damages. In doing so, the Supreme Court of Canada upheld the decisions of the BC Court of Appeal and the BC Supreme Court. My summary of the BC Supreme Court's ruling, which sets out the facts, can be found here.

In the majority ruling the Supreme Court of Canada summarized its ruling as follows:

...employee pension payments, including payments from a defined benefits plan as in this case, are a type of benefit that should generally not reduce the damages otherwise payable for wrongful dismissal. Both the nature of the benefit and the intention of the parties support this conclusion. Pension benefits are a form of deferred compensation for the employee's service and constitute a type of retirement savings. They are not intended to be an indemnity for wage loss due to unemployment. The parties could not have intended that the employee's retirement savings would be used to subsidize his or her wrongful dismissal. There is no decision of this Court in which a non-indemnity benefit to which the plaintiff has contributed, such as the pension benefits in issue here, has ever been deducted from a damages award (para. 4).