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The logo of Scotiabank is seen at a branch in Toronto November 9, 2007.

© Mark Blinch / Reuters/REUTERS

Bank of Nova Scotia has reached a tentative settlement in a long-standing class action lawsuit launched by current and former employees who argue they are owed years of overtime pay.

The case dates back to 2007 when a Scotiabank branch employee filed a suit arguing that the lender's overtime approval process prevented staffers from receiving overtime pay they are entitled to. The case was certified for class action status in 2009, and the proposed settlement will now go before a judge in August.

At the core of the case is a Scotiabank policy that required employees to be pre-approved for overtime pay. Retail banking staff argued such pre-approval wasn't always possible -- if a customer walked into a branch five minutes before closing and requested a mortgage approval, the employee simply couldn't turn him or her away.

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Scotiabank fought the case every step of the way – first at the class action certification stage, then in the appeals court, and finally sought to have it heard by the Supreme Court of Canada. That request was ultimately denied.

The settlement process started in March 2013 and resulted in "serious and intense" negotiations, according to David O'Connor of Roy O'Connor LLP, which served as lead plaintiff's counsel, but the two sides ultimately "arrived at a solution and a process that is certainly fair to class members and fair to the bank."

It's too early to predict how much Scotiabank will have to shell out in back pay. If the settlement is approved by the court, all current and former full-time personal banking and small business banking employees working in branches between January 1, 2000 and December 1, 2013 and who worked overtime for which they were not compensated can submit claims by October 15.

Once a claim has been submitted, the bank will evaluate the request and has agreed not to fight unless there is evidence that the claim is flawed, according to Mr. O'Connor. In agreeing to this process, Scotiabank acknowledges that most employees will not have documentation proving they are owed money, but that will not prevent them from getting paid money they are owed, Mr. O'Connor said.

Such a system could be problematic because current and former employees may try to game it. "There's always the possibility that people will try to take advantage" of these rules, Mr. O'Connor said. However, Scotiabank will review each case and the bank has the right to reject claims if they see fit. Employees who are rejected have the right to take their claim to an independent arbitrator.

"Scotiabank is participating in the settlement proposal to reinforce its long standing commitment to pay employees for their overtime work or provide time in lieu," the lender said in a statement. "The bank is confident that its employee policies, including on overtime, have been applied fairly and consistently."

Scotiabank's settlement comes as two similar cases remain outstanding. Canadian Imperial Bank of Commerce is ensnared in a class action suit with retail branch employees of its own, while Bank of Montreal not faces one from a number of investment advisers who also want overtime pay.

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Mr. O'Connor said it can be difficult to ascertain whether the outcome of the Scotiabank case is positive for employees in the other two cases, because each suit must be judged on its own merits. However, he said the settlement is an acknowledgement that employees have a right to overtime pay.

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