In Demone v Composites Atlantic ( 2014 NSLB 163) it was held that a release which gave the ex employee both his statutory minimum notice of 8 weeks plus an extra 19 weeks pay was not sufficent to displace the employees right to seek reinstatement under Section 71(1) of the Labour Standards Code of Nova Scotia.
This section provides for statutory tenure for employees with over 10 years service, subject to various exceptions, notably just cause or a legitimate layoff . This can only be waived if the employee obtains a benefit from the employer greater than his statutory rights, including the right of reinstatement.
This is what the Board said:
24. The Respondent’s letter also refers to what is described as a payment offered to the Complainant on a ‘gratuitous basis’. Section 71(1) of the Code provides a ten year employee with statutory tenure which means that termination may only take place where the employer is able to demonstrate “just cause”. The Code does not contain a pay in lieu of notice provision for employees whose period of employment is ten years or more. Consequently, as Board jurisprudence has shown, an employee of ten years or more who has been wrongfully terminated may seek to be reinstated. It rests with the Board to determine the appropriate remedy where wrongful termination has been established. In the absence of just cause or an exemption under section 72(3) which has not been alleged by the Respondent, the Board is left to ask does the ‘gratuitous payment’ provide the Complainant with a benefit or benefits greater than those provided under the Code? The Board is of the opinion that, based upon the information as presented, the offer of 19 weeks pay is not a benefit greater than the statutory tenure conferred on the Complainant by the Code.
25. It is the finding of the Board that the Complainant in signing the Full and Final Release gave up his rights under the Code and as such the Release, for the purposes of the Code, is invalid pursuant to section 6 of the Code.
26. Based upon the Board’s finding on the preliminary issues the Complainant is entitled to pursue his complaint under the Code. A hearing will be scheduled in due course to determine the substantive issues arising from the Complainant’s termination.
When that case was ultimately heard by the Labour Board on its merits, it was found that the dismissal was a legitimate layoff ( his job duties were divided between four existing employees ) and thus reinstatement was not available. Moreover they seemed to question the validity of the aforementioned Preliminary Order as set out in following quote from 2015 CarswellNS 695.
71. Given the findings of the Board, arising from a full hearing of this matter and despite the preliminary ruling, it is evident that the facts and arguments of this particular case do not lend themselves to making a determination on whether a Release is binding in a situation where an employer is unable to establish that an employee had been permanently laid off by the elimination of a position and was therefore entitled to reinstatement. This, therefore, remains an issue to be determined in a different case based upon the appropriate facts and full argument. Consequently, the Board’s preliminary ruling in DeMone v. Composites Atlantic Ltd., 2014 NSLB 163 (N.S. L.B.) in so far as it relates to this particular issue is varied in accordance with the Board’s findings as set out above.
As this provision is similar to the Unjust Dismissal section of the Canada Labour Code, could this logic also be applied to settlements in the federal sector where an employee receives a common law settlement, signs a release and then pursues a claim for reinstatement ?
One way to avoid this situation may be to only settle the case after the 90 day limitation period in the Canada Labour Code after insuring that no prior complaint has been filed.