Products & Services

Court Testimony From Experts @ BEC

Excerpt from Millott v. Reinhard

Fringe Benefits

[218] The experts disagreed on the appropriate percentage to add to their income predictions for fringe benefits, which are the non-wage compensation from employment. They can range from employee merchandise discounts to medical benefits and pension plans. Bruce, for the Plaintiffs, initially added four per cent to Millott's base annual income to account for fringe benefits. He later increased this to eight per cent, based largely on the generous company funded pension plan at the CP Hotel chain, which he valued at three to five per cent of Millott's income. He testified that his initial four per cent figure had only about a one per cent component for pension, which is very low. His view is that as four per cent is probably reasonable for an average service person in the hotel industry, four per cent is quite conservative for management. And he felt it was unrealistically low for a $100,000 per year position (transcript p.1260). (I note that I am not concerned with the calculations based on a $100,000 per year salary, as I have found that scenario unlikely on a balance of probabilities.)

[219] Brown's fringe benefit amount is 2.8 per cent - based on the "weighted probability of receiving benefits in the service sector" (September 27, 2000 Report, p.29). She testified that she relied on general industry statistics for two reasons. First, she did not know how long Millott would have remained in the CP Hotels chain, which made it inappropriate, in her opinion, to base calculations on its figures (e.g., see transcript p.2331). Second, she did not have access to CP Hotels' figures, so could not have used them as a benchmark in any event. Her report stated that (September 27, 2000 Report, "Fringe Benefits Supplement", p.25):

Generally speaking, surveys of non-wage compensation across sectors of the economy and amongst industries confirm that higher-paid jobs are generally associated with higher non-wage benefits, and larger firms offer greater benefits. [footnotes omitted]

[220] As Brown's background material on fringe benefits concluded that "fringe benefits for full-time, full-year workers will range from approximately 4.0 to 14.0 percent, depending on the existence of a company pension plan" ("Fringe Benefit Supplement", p.26), she has apparently discounted this amount based on the service sector itself, and on the theory that Millott would not have progressed far in the hotel management world. Brown testified that she did not factor in a pension plan at all for Millott, because she did not have the dollar figure for the CP Hotels plan, and because she was unable to say if he would stay with that employer and advance to a position where he would participate in its pension plan.

[221] As discussed elsewhere in these Reasons, I find it reasonable that Millott would have advanced to a management position with CP Hotels or another organization, ultimately reaching a position with compensation in the range of $60,000 per year. In that type of position, whether with CP Hotels or elsewhere, he would likely have been entitled to significant fringe benefits, including a pension plan. Accordingly, it is reasonable to assume an average fringe benefit rate of six per cent throughout his projected remaining working life. This takes into account that his fringe benefit rate would be lower than six per cent now, but would have increased significantly over time as his wage compensation increased.