Long-service employees in Nova Scotia are afforded extra protections under the Labour Standards Code but – according to one labour lawyer – some employers still underestimate the associated risks.
Labour Standards Code
Section 71 of the Labour Standards Code – otherwise known as the tenured employee rule – states that a worker with at least 10 years’ service can only be fired for just cause.
“A finding that an employer violated Section 71 can have serious consequences,” warns Alison Bird. “In addition to the potential time and cost involved in defending a Labour Standards complaint, the employer may be ordered to reinstate the employee and provide them with back pay and benefits, or to pay damages to the employee.”
Bird, a Cox & Palmer labour lawyer, says many Nova Scotia employers still choose to dismiss long-tenure employees despite the risk.
“These employers would offer the employee a severance package in exchange for a release, with the assumption that the release would shield them from Section 71 liability,” explains Bird. However, releases don’t always afford the protection that an employer might expect.
The case in question
Halifax-based Bird says the case of Demone v Composites Atlantic Limited, 2014 NSLB 163, serves as an example to employers.
“An employee with more than 18 years of service filed a complaint that he had been dismissed in violation of Section 71,” she explains. “The employee had signed a release after taking time to consider the employer's offer and receiving legal advice. In exchange for signing the release, the employee received 27 weeks of pay.”
However, despite having the hallmarks of a legally-binding release, the Labour Board found that the release did not bar the complaint because parties cannot contract out of the Labour Standards Code.
“This was a preliminary decision which only decided whether the complaint could proceed, and it did not determine whether Section 71 had in fact been violated,” revealed Bird. “Many employment lawyers and employers in Nova Scotia have been waiting to see how the complaint itself would be decided.”
The Labour Board's decision on the complaint has now been released. (Continued...)