New Termination Notice Amounts for Federally Regulated Employers

As many employers know, where an employer terminates the employment of an employee in Canada “without cause” (or as I am more frequently referring to it: “with notice”), the employer must provide notice of termination, or pay in lieu of that notice. Generally, where the employee has worked more, the employee is entitled to receive more notice of termination. 

Employers who are federally regulated know the calculation of notice of termination is unique across Canadian jurisdiction.  The Canada Labour Code currently states that an employee who has worked at least three months receives a flat two weeks of notice or pay in lieu of notice (plus additional Severance Pay as mentioned below).

This is, however, being significant increased as of February 1, 2024.  All federally regulated employers should take note of this important change.

Updated Termination Notice

As of February 1, 2024, the new termination notice entitlements will be as follows:

• 2 weeks, if the employee has completed at least 3 consecutive months of continuous employment with the employer;
• 3 weeks, if the employee has completed at least 3 consecutive years of continuous employment with the employer;
• 4 weeks, if the employee has completed at least 4 consecutive years of continuous employment with the employer;
• 5 weeks, if the employee has completed at least 5 consecutive years of continuous employment with the employer;
• 6 weeks, if the employee has completed at least 6 consecutive years of continuous employment with the employer;
• 7 weeks, if the employee has completed at least 7 consecutive years of continuous employment with the employer; and
• 8 weeks, if the employee has completed at least 8 consecutive years of continuous employment with the employer.

As with other jurisdictions, the employer can decide whether the employee receives notice of termination, pay in lieu of said notice, or a combination of both.

The updates to the law also confirms that an employer must provide all of the following details regarding the termination entitlement, in writing, upon termination:

• vacation benefits,
• wages,
• severance pay, and
• any other benefits and pay arising from their employment with the employer as of the date of the statement.

This written statement must be given to the employee no later than 2 weeks before the effective date of termination, or on the date notice of termination is provided to the employee (if the notice period is shorter than 2 weeks or pay in lieu of notice is being provided).

CLC Severance Pay Remains Intact

The Canada Labour Code currently requires employers to provide “Severance Pay” to employees whose employment contracts are terminated with notice / without cause, but only where that employee has completed one year of service.  Employers must therefore provide Severance Pay of 2 days wages at the employee’s regular rate for each completed year of employment with the employer, but the minimum amount of severance pay employers must provide is 5 days of wages. This entitlement does not change in 2024.

How to Prepare for Changes

Every employer, and especially federally regulated employers, should take the time to review their contracts and ensure the termination clauses are up to date.  If an employment contract tries to restate what the minimum entitlements were in the past, to be applicable at some point in the future, those termination clauses may be completely unenforceable. With the start of a new school year, now is always a good time to review existing and template employment contracts to ensure the business is protected.

Contact our Employment and Labour Law Department for more details on how to protect your business and prepare for these new changes.