The Federal Government has recently announced amendments to the Canada Labour Code (the “Code”). As of February 1, 2024, the Code will provide greater notice of termination periods for employees based on their length of employment.
Under the current Code, federally regulated employees are entitled to two (2) weeks’ notice of termination, pay in lieu of notice, or some combination of the two, except where the termination is by way of dismissal for just cause.
The amendments will revise section 230 of the Code. The new provisions under the Code will implement a graduated notice system similar to the structure found in most provincial employment standards legislation. Terminations by way of dismissal for just cause will remain exempt from section 230 notice period entitlements.
For employees who have completed between three (3) months and up to three (3) years of continuous employment, the two-week notice period will remain unchanged. However, once an employee has completed three (3) years of continuous employment, the revised section 230 will entitle them to either prior written notice, wages in lieu of notice, or any combination of the two, in accordance with the following formula:
|Minimum Notice Period
|8 years (or greater)
The severance pay provisions under section 235 of the Code will remain in effect for employees who have completed at least 12 consecutive months of continuous employment before their termination of employment. Employees eligible for severance pay under the Code will continue to be entitled to two (2) days’ regular wages for each full year that an employee has worked prior to their termination of employment, with a minimum payment equal to five (5) days’ wages; whichever is the greater benefit.
Statement of benefits
As of February 1, 2024, employers will also be required to provide terminated employees with a statement of benefits. The statement of benefits, which is already required in a group termination context, is required to outline vacation benefits, wages, severance pay, and any other benefits and pay arising from their employment.
There are timing requirements employers will need to follow. Specifically, the Code requires that the statement of benefits must be provided no later than the date of termination for employees who receive pay in lieu of notice. If employees are provided with notice of termination, the statement of benefits must be delivered no later than two (2) weeks before the date of their termination. If the employee receives a combination of notice, and pay in lieu of notice, the statement of benefits must be delivered no later than two (2) weeks before the date of their termination.
Implications on Employers
Federally regulated employers should have an employment lawyer revise their agreements to ensure they provide the statutory minimum entitlements so their agreements remain enforceable after the Code amendments take effect.