The Supreme Court held in Waterman v. IBM that an employee who receives his employer funded pension after he has been dismissed is not required to credit his employer with the pension benefits when he claims damages for wrongful dismissal.
The BC Court of Appeal had held that Mr. Waterman was entitled to both amounts on the basis that there were separate contracts involved. IBM argued that this amounted to double recovery and violated the compensatory principle of contract damage principles. Rather than putting the employee in the monetary position in which he would have been had he worked the notice period, Mr. Waterman received both full pay and full pension payments for the notice period.
In 1997, the Supreme Court of Canada in Sylvester v. British Columbia decided that employer funded disability benefits had to be credited in determining damages for lost wages during the notice period. IBM argued that just as an employee receiving disability benefits has not lost his or her full wages during the notice period, an employee receiving employer funded pension benefits has not lost his or her full wages.
All three courts decided that pension benefits are different in character than other employer funded benefits which reduce an employee’s loss. The view that an employee has earned his pension over time appears to have been more significant to all three levels of court than the principle that contract damages are limited to compensating for actual losses.