The Budget Implementation Act, 2018, No. 2, introduced increases to the notice requirements for individual terminations of employment under the Canada Labour Code, and the Federal Government has confirmed that these amendments come into force on February 1, 2024.
Amendments to Notice of Termination Requirements
Under the current Canada Labour Code, federally regulated employers are required to provide a minimum of two weeks’ notice or two weeks’ wages in lieu of notice to an employee with at least three consecutive months of continuous employment.
The forthcoming Canada Labour Code amendments provide greater notice requirements which are based on the employee’s length of employment. As of February 1, 2024, employees that have completed at least three consecutive months of continuous employment with the employer will be entitled to either prior written notice, wages in lieu of notice, or any combination of the two, in accordance with the following formula:
a) two weeks, if the employee has completed at least three consecutive months of continuous employment with the employer;
b) three weeks, if the employee has completed at least three consecutive years of continuous employment with the employer;
c) four weeks, if the employee has completed at least four consecutive years of continuous employment with the employer;
d) five weeks, if the employee has completed at least five consecutive years of continuous employment with the employer;
e) six weeks, if the employee has completed at least six consecutive years of continuous employment with the employer;
f) seven weeks, if the employee has completed at least seven consecutive years of continuous employment with the employer; and
g) eight weeks, if the employee has completed at least eight consecutive years of continuous employment with the employer.
The Severance Pay provisions under section 235 of the Canada Labour Code remain in effect.
Upon termination of employment, an employer must also give the employee a statement outlining their vacation benefits, wages, severance pay and any other benefits and pay arising from their employment as at the date of the statement. There are certain timing requirements that the employer must follow:
(a) If the employee is given prior written notice of their termination, the statement must be given to the employee as soon as possible, but no later than two weeks prior to the termination date.
(b) If the employee is given pay in lieu of notice, the statement must be given to the employee no later than their termination date.
(c) In rare cases, where a combination of prior written notice and pay in lieu of notice is provided, the statement must be given on the termination date, unless the employee is provided with at least two weeks of prior written notice, in which case the statement must be provided as soon as possible but no later than two weeks prior to the termination date.
Implications for Employers
It is imperative that federally regulated employers review their employment agreements and employment policies and confirm that their existing termination provisions are updated before these changes come into force on February 1, 2024.
The Waksdale v Swegon North America Inc. decision from the Ontario Court of Appeal reinforces the importance of complying with statutory minimum standards. For more information about the Waksdale decision, you can see our prior blog post here.
In Waksdale, the Court held that an entire employment agreement is null and void if a provision violates employment standards. Although this decision has not, to our knowledge, been judicially considered in the federal context, it nevertheless creates the risk that a non-compliant termination provision may render the entire employment agreement unenforceable.
Employers must be cognizant of the new notice requirements under the Canada Labour Code and update their employment termination provisions to ensure that their agreements remain enforceable. For existing employees, employers must provide valid consideration in exchange for those employees signing new employment agreements.
Our labour and employment team has extensive experience in navigate these requirements, and would be happy to assist you.
This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.