Labour Studies Index

Pension Benefits and Wrongful Dismissal Damages: Double Recovery or Double Jeopardy Workplace Pensions: Next Generation or Final Frontier

Document type Article
Author Thornicroft, Kenneth Wm.
Journal Canadian Labour and Employment Law Journal
Volume 19
Date 2015-2016
Pages 171-200

Abstract

In the Waterman case, the Supreme Court of Canada decided - at least with respect to the defined benefit pension plan under review - that pension benefits received by a wrongfully dismissed employee during the reasonable notice period are not deductible from any severance pay in lieu of reasonable notice that is otherwise payable. A majority of the Court held that the pen- sion benefits constituted a form of deferred compensation that was not intended to indemnify against income loss due to a wrongful dismissal, while the min- ority maintained that pension benefits received during the notice period must be deducted to prevent the dismissed employee from obtaining an undeserved windfall. In this article, the author reviews the law relating to the deductibility of various benefit payments from wrongful dismissal damages. In his view, the Waterman majority judgment does not provide wrongfully dismissed employees with an improper windfall, and there is no principled reason why pension bene- fits should be deducted from a damages award and thereby placed on a separate footing from other benefits that are components of an employee's overall com- pensation package.