In DeMone v Composites Atlantic Limited, 2015 NSLB 141, the board found that Section 71 had not been violated because DeMone's position had been eliminated due to the employer's restructuring.
“The permanent lay-off of an employee as a result of the good faith elimination of an employee's position is a well-established exception to Section 71,” explains Bird, adding that the this aspect of the decision doesn’t change the applicable principles in assessing a Section 71 complaint.
However, the board also reconsidered the previous decision in regards to the legality of the release – this time, it concluded that the complaint could in fact be barred.
“This was based on the board's finding that Section 71 was not violated because there had been a good faith elimination of DeMone's position,” explains Bird. “As DeMone had received his statutory entitlement to 8 weeks' pay in lieu of notice and an additional 19 weeks' pay, DeMone had received a benefit that exceeded his entitlement under the Code.”
Disappointingly, the board declined to decide whether a release is binding if an employer is unable to prove than an employee was only terminated due to their position being eliminated.
“There is now no clear statement from the Labour Board that a release will not bar a Section 71 complaint,” stresses Bird. “Instead, it now seems that a release likely will be enforceable in circumstances where an exception to Section 71 applies.
“However, there remains significant uncertainty regarding whether a release will bar a Section 71 complaint in circumstances where an exception to the provision does not apply,” she continues.
“Accordingly, given the significant risks of a Section 71 complaint, employers in Nova Scotia would be well-advised to seek legal advice before dismissing an employee with more than 10 years of service.”
Read Alison Bird’s full article here
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