The Canada Labour Code (the “Code”) is the federal legislation that defines the rights and responsibilities of employers and employees in federally-regulated workplaces. The Government of Canada has recently announced changes to the termination provisions in the Code that will take effect on February 1, 2024.
Minimum notice of termination
Currently, under section 230 of the Code, federally-regulated employers who terminate an employee without cause must provide the employee with a minimum of two weeks’ notice or two weeks’ pay in lieu of notice, as long as the employee has at least three consecutive months of continuous employment.
Recently, the Government of Canada amended section 230 of the Code so that employees with at least three years of continuous service must be provided with an increased notice period upon termination without cause. The minimum notice periods will be graduated based on length of employment. The maximum notice period that employees will be entitled to under the Code is eight weeks’ notice or pay in lieu of notice.
The following table demonstrates employees’ minimum notice period entitlements under the Code as of February 1, 2024:
Length of continuous service / Minimum notice period entitlement
- 3 months / 2 weeks
- 3 years / 3 weeks
- 4 years/ 4 weeks
- 5 years/ 5 weeks
- 6 years / 6 weeks
- 7 years / 7 weeks
- 8 plus years / 8 weeks
Eligible employees will still be entitled to severance pay under section 235 of the Code, in addition to their notice of termination or pay in lieu of notice.
Written statement of benefits upon termination
The amendments to the Code will also require federally-regulated employers to provide a written statement of benefits to employees who have been terminated. This statement must include the employee’s wages, vacation pay, severance pay, and any other benefits including car or phone allowance.
The Government of Canada will also implement certain timing requirements for this written statement of benefits. If an employee is given written notice of termination, the written statement of benefits must be given at least two weeks prior to the termination date. If the employee is given pay in lieu of notice, the statement must be given to the employee no later than their termination date. If the employee is given a combination of written notice and pay in lieu of notice, the statement must be given on the termination date, unless the employee is provided with at least two weeks of written notice, in which case the statement must be given at least two weeks before the termination date.
Takeaways
Before February 1, 2024, federally-regulated employers should proactively review and, if necessary, update the termination provisions in their employment agreement templates. All termination provisions should provide employees with at least the amended statutory minimum notice upon termination without cause.
The caselaw demonstrates that employment agreements that provide less than the minimum statutory entitlements upon termination have a heightened risk of being found unenforceable by a court or adjudicator. Where the termination provisions in the employment agreement are unenforceable, an employer may have to provide an employee with common law reasonable notice, which can be far greater than the minimum notice required under the Code.
Please feel free to contact a member of Miller Thomson LLP’s Labour and Employment Team to discuss these changes to the Code and how they affect your business.
For information about other recent changes to the Code that have been announced by the Government of Canada, please see our companion Labour and Employment Communique.