Pension benefits and severance pay

Recent IBM decision clarifies deductions around wrongful dismissals
By Ian Breneman
|Canadian HR Reporter|Last Updated: 05/20/2014

At the end of last year, the Supreme Court of Canada held that defined pension benefits could not be deducted from a wrongful dismissal award in IBM Canada Limited v. Richard Waterman.

Richard Waterman had been employed with IBM for 42 years and was a member of its defined benefit (DB) pension plan, which was fully paid by IBM. He reached age 65, at which point he could have retired with a full pension. Under his employment contract, he was not entitled to receive both pension benefits and salary at the same time, so he could either keep working or retire and collect the pension.

Waterman decided to continue working but, in 2009, IBM terminated his employment and began paying him retirement benefits of $2,124 per month.