Scotiabank Canada is facing a CAD$550 million class action suit over claims it breached the Canada Labour Code by failing to provide certain current and former employees with the minimum vacation and statutory holiday pay.

Nathalie Deacon and Gail Ouellette have filed the lawsuit in Ontario’s Superior Court of Justice, alleging that the banking giant violated employment contracts declaring that the bank was “negligent and breached its duty of care” by failing to take reasonable steps to ensure those payments were made.

Deacon and Ouellette in their court petition say Scotiabank was unjustly enriched by that alleged failure. As such, the plaintiffs are seeking a CAD$500 million in general damages and CAD$50 million in punitive damages for members of the class action suit.

Ouellette, of Ottawa was employed by Scotiabank for 32-year between 1986 and 2018, while Deacon has worked for the bank since 2004 and resides in Calgary. The plaintiffs and class members are current or former home financing advisors (HFAs), referred to as mortgage development managers until around 2012 at Scotiabank, selling mortgage and insurance products to the company’s clients.

Details of the claim

The suit claims that Scotiabank changed the way it compensated HFAs, including its approach to vacation and statutory holiday pay, around the beginning of November 2009, and that “since the change in approach, Scotiabank has failed to meet the requirements of the CLC [Canada Labour Code].” The petitioners claim Scotiabank stopped paying vacation and statutory holiday pay in addition to HFAs’ incentive-based and variable compensation instead.

The bank purports to include those payments in the commission or incentive-based compensation paid to those employees. This was accompanied by a failure on the bank’s part to inform plaintiffs and class members adequately about its change in approach, according to the suit.

The plaintiffs claim Scotiabank’s approach to vacation and statutory holiday pay for HFAs since November 1, 2009 contravenes both the Canada Labour Code (CLC) and the bank’s own compensation policy. The claim alleges the bank’s commission statements and pay stubs “exacerbate the confusion”. According to the plaintiffs claim, “the pay stub that Scotiabank provides to its HFAs expressly states that Scotiabank is paying amounts for vacation pay and statutory holiday pay in addition to the HFAs’ commissions.”

Reverse engineer

Continuing, they argue: “Scotiabank does not in fact pay vacation pay and statutory holiday pay in addition to the HFAs’ commissions. Rather, Scotiabank calculates the commissions and then reverse engineers amounts to be deducted for vacation pay and statutory holiday pay. Scotiabank reflects these numbers on the HFAs’ pay stubs, leaving the appearance of compliance with the CLC.”

The petitioners made the point that such an approach makes it impossible for HFAs to understand that the bank isn’t providing vacation and statutory holiday pay.

The claim also alleges that Scotiabank provided contradictory information to HFAs, “suggesting in some documents that HFAs receive statutory holiday pay in addition to their commissions, and in other documents that those payments are included in their commissions with no further amounts payable.” When approached by Canadian Mortgage Professional on this story, Scotiabank said it could not comment further as the matter was currently before the courts.