Federally regulated employers who have employees that fall under the Canada Labour Code (the "Code") will need to take note of significant changes effecting employer obligations to employees upon termination.
Effective February 1, 2024, the Budget Implementation Act, 2018 enacts significant amendments to the Code. One amendment will require employers to provide individual employees with a graduated notice of termination based on the employee's consecutive years of continuous employment with the employer. Where the Code used to provide for two weeks' notice of termination or wages in lieu, the Code will now require a graduated notice system, similar to that found in the BC Employment Standards Act.
As of February 1, 2024, an employee under the Code will be entitled to the following notice requirements upon termination without cause:
- two weeks' notice, after at least three consecutive months of continuous employment;
- three weeks' notice, after at least three consecutive years of continuous employment;
- four weeks' notice, after at least four consecutive years of continuous employment;
- five weeks' notice, after at least five consecutive years of continuous employment;
- six weeks' notice, after at least six consecutive years of continuous employment;
- seven weeks' notice, after at least seven consecutive years of continuous employment; and
- eight weeks' notice, after at least eight consecutive years of continuous employment.
The new termination notice provisions will not apply to employees who are terminated for just cause or terminated as part of a group termination. Notably, the changes to the termination notice provisions do not impact the existing severance pay obligations under the Code.
Further, the new amendments will require employers to provide each terminated employee with a statement of benefits setting out the employee's vacation benefits, wages, severance pay and any other benefit or pay arising from their employment with the employer. The Code also sets out timelines for when these statements are to be provided. For employees who are terminated with notice, or a combination of notice and pay in lieu, the statement must be given prior to the termination within specified time frames. For employees who are terminated with pay in lieu of notice, the statement must be provided no later than the date of termination.
We recommend that federally regulated employers review their employment agreements prior to February 1, 2024, to ensure they are consistent with these amendments.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.