Change is Coming to Termination Requirements under the Canada Labour Code

As of February 1, 2024, Part III of the Canada Labour Code (“CLC”) will require federally-regulated employers (including those in the private sector and Crown corporations) to meet the following obligations when terminating employment:

1. Notice of Termination

Section 230(1) of the CLC currently requires an employer to provide either two weeks’ advance notice of dismissal or a payment in lieu equal to two weeks’ wages when dismissing an employee (who has at least 3 months of consecutive service and is not being fired for cause).

This provision will be replaced with a graduated notice (or pay) requirement tied to an employee’s tenure of continuous employment.

The revised formula will provide for a maximum of 8 weeks notice (or pay in lieu), following a similar structure to that codified within Ontario’s Employment Standards Act, 2000.

Notwithstanding these changes, eligible employees will also continue to receive statutory severance pay in accordance with section 235(1) of the CLC. For reference, section 235(1) requires that where a dismissed employee has completed at least 12 months of continuous service (and not been dismissed for just cause), they are to receive the greater of: five days’ wages (based on the employee’s regular wage rate) and two days’ wages per completed year of employment.

It is worth noting as well that while the CLC will soon require an increased notice period (or pay in lieu) be provided in many circumstances, these changes do nothing to relieve subject employers from the unjust dismissal provisions set out at section 240 therein. For clarity, qualifying employees (those with at least 12 months’ service in a non-unionized or non-managerial role) remain entitled to continued employment unless there is just cause for dismissal or their role has been eliminated.

2. Written Statement on Termination

Separate and apart from the revised notice provisions, federally regulated employers (that are subject to Part III of the CLC) will be required to provide a written statement of benefits to an individual upon dismissal. Our firm previously wrote about this requirement here.

Takeaway for Employers and Employees

It is important that affected employers and employees be aware of these forthcoming changes to the CLC, given the potentially significant impact on termination rights and entitlements. Failure to meet minimum statutory requirements upon termination can unnecessarily exacerbate a situation and, if not remedied, may attract liability in the form of punitive damages.

Moreover, while this article is focused on changing legislative requirements, employers and employees should continue to be aware that in many termination situations the CLC will only tell part of the story. Many employees have a common law right to reasonable notice of termination (which will generally subsume and exceed that prescribed by statute). This reality should inform strategy when crafting a severance offer or consider how best to respond to the same.

Employers and individuals who may need assistance in preparing for this change, or in navigating a termination process, are invited to contact our firm directly for assistance.

Vey Willetts LLP is an Ottawa-based employment and labour law firm that provides timely and cost-effective legal advice to help employees and employers resolve workplace issues in Ottawa and across Ontario. To speak with an employment lawyer, contact us at: 613-238-4430 or info@vwlawyers.ca.