Executive Summary: Key Legal and Evidentiary Issues

• Class certification granted regarding the treatment of incentive pay in calculating statutory vacation and holiday pay.

• Plaintiff alleges that The Bank of Nova Scotia breached employment contracts by excluding variable compensation in pay calculations.

• Claim relies on incorporation of Canada Labour Code minimum standards into employment contracts through the bank’s vacation policy.

• Court approved discontinuance of claims related to unused and expired vacation days due to their individualized nature.

• Over 44,000 employees affected, with issues centralized around whether incentive pay qualifies as “wages” under federal labour law.

• Defendant consented to certification but denies liability, reserving the right to defend against the claim on the merits.

Facts of the case

Justin Ngan, a former employee of The Bank of Nova Scotia, brought a proposed class action against the bank. The dispute centers on how the bank calculated vacation and holiday pay for its employees. Specifically, Ngan alleged that the bank failed to include incentive awards and other forms of variable compensation in its calculations. He contended that this practice violated minimum employment standards guaranteed under the Canada Labour Code (CLC), which were allegedly incorporated into employees’ contracts through the bank’s own vacation policy.

Ngan sought certification of the claim as a class action on behalf of thousands of bank employees across Canada (excluding certain categories such as home financing advisors and executives) who had received incentive compensation between December 14, 2020, and the certification date. The total estimated class size was over 44,000 individuals.

In preparing for the certification motion, Ngan also moved to partially discontinue part of his claim relating to unused and expired vacation days. This aspect of the case, his counsel explained, was unique to Ngan and related to his specific circumstances while on short-term disability leave. Since the issue was not systemic and not broadly applicable to the proposed class, Ngan’s legal team proposed removing it to streamline the proceedings.

Procedural outcome and court decision

Justice Leiper of the Ontario Superior Court granted all the relief requested by the plaintiff. This included:

1. Approving the partial discontinuance of the claim concerning unused and expired vacation days.

2. Granting leave to file a freshly amended statement of claim reflecting the narrowed issues.

3. Certifying the action as a class proceeding with common issues relating to breach of contract, whether incentive compensation constitutes “wages” under the CLC, and the appropriateness of damages.

The Court found that the claim disclosed a viable cause of action in breach of contract, stemming from the alleged failure to include incentive compensation in statutory holiday and vacation pay calculations. The class was clearly defined and objectively identifiable, and the issues raised were substantially common across the class. The plaintiff's theory of harm—based on uniform contractual obligations and consistent treatment of incentive compensation—was deemed suitable for class-wide determination.

In deciding to allow the partial discontinuance, the Court noted that the narrowed issue was personal to Ngan and not widely shared among the class members. Removing it avoided potential prejudice to the class and ensured the remaining claim was focused and manageable.

Finally, the defendant did not oppose certification and consented to the motion, while expressly maintaining its right to defend the claim on the merits at a later stage. The court emphasized that while certification does not determine liability, it serves the procedural purpose of consolidating common issues for collective adjudication. As a result, the motion was granted, and the case will now proceed as a certified class action.