Insights Header image
Insights Header image
Insights Header image

Update for Federal Employers: Changes to Termination Notice Period as of February 1, 2024

August 1, 2023 Employment and Labour Relations Bulletin 3 minute read

The federal government recently announced that amendments that increase the minimum notice of termination required for an individual termination under the Canada Labour Code (the “Code”) will take effect on February 1, 2024.[1]

The amendments will revise section 230 of the Code to provide employees who have completed at least three years of continuous service a longer notice period when they are terminated without cause – up to a maximum of eight weeks’ notice or pay in lieu of notice.

The amendments will also require employers to provide terminated employees with a written statement of benefits. Federally regulated employers should proactively consider how the amendments will affect their obligations moving forward.

Changes to Minimum Notice of Termination

Under the individual termination provisions of the Code, employers must currently provide a minimum of two weeks’ notice of termination, or pay in lieu of notice, to an employee who has completed at least three months of continuous employment with the employer.

The amendments will instead require employers to provide employees with a graduated notice of termination, or pay in lieu of notice, based on the length of an employee’s continuous employment. For employees who have completed at least three months of continuous employment, the notice period will remain unchanged at two weeks. However, once an employee has completed three years of continuous employment, the notice period will increase to three weeks. Thereafter, the notice period will increase by one week for each additional year of service completed, up to a maximum of eight weeks’ notice or pay in lieu of notice.

Continuous Service Minimum Notice Period
3 months 2 weeks
3 years 3 weeks
4 years 4 weeks
5 years 5 weeks
6 years 6 weeks
7 years 7 weeks
8+ years 8 weeks

Eligible employees will still be entitled to severance pay under section 235 of the Code, in addition to their statutory notice or pay in lieu of notice. Severance pay remains the greater of two days’ wages per completed year of service or five days wages.

New Requirement for a Written Statement of Benefits

The amendments will also establish a requirement for employers to provide a written statement of benefits to employees who are terminated. The statement of benefits must set out the employee’s vacation benefits, wages, severance pay, and any other benefits and pay, such as a car or cell phone allowance, arising from their employment as of the date of the statement.

Where an employee receives pay in lieu of notice, the statement of benefits must be delivered to the employee no later than the date of their termination and, where an employee receives notice of termination, the statement of benefits must be delivered no later than two weeks before the date of their termination.

Takeaways for Federally Regulated Employers

Employers should proactively update their employment agreement templates before February 1, 2024, with language providing employees with at least the amended statutory minimum notice upon termination.

Existing agreements that provide less than the amended minimum entitlements by, for example, limiting notice to the previous minimum of two weeks’, have a heightened risk of being found unenforceable by the court or adjudicator. In such cases, an employer may have to provide an employee with common law reasonable notice, which can be a far greater amount than the minimum notice provided for under the Code.

To learn more or for assistance, contact a member of McMillan’s Employment and Labour Relations Group.

[1] Canada Gazette, Part 2, Volume 157, Number 13: Order Fixing February 1, 2024 as the Day on Which Certain Sections of the Budget Implementation Act, 2018, No. 2 Come into Force.

by Kyle Lambert and Ricki-Lee Williams

A Cautionary Note

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2023

 

Insights (5 Posts)View More

Featured Insight

The “Due Care” Standard for Payment of Annual Patent Maintenance Fees

In Taillefer v. Canada (AG), the Federal Court considered the scope of the “due care” standard regarding the payment of annual patent maintenance fees.

Read More
Feb 28, 2024
Featured Insight

Two-Year Anniversary of Russia’s Illegal Invasion of Ukraine: New Sanctions Designations and Expansion of Export Prohibitions

To coincide with the two-year anniversary of Russia's invasion of Ukraine, Canada announced new sanctions and financial reporting obligations.

Read More
Feb 28, 2024
Featured Insight

2024 Changes to Canada’s Thresholds for Merger Notification and Investment Canada Act Reviews

Providing updates on the 2024 merger thresholds under Canada's Competition Act and Investment Canada Act.

Read More
Feb 28, 2024
Featured Insight

Adjudication Under the Construction Act: Fast but Fair

Adjudicator discretion under the Construction Act. Ontario Court recently confirmed a limit on this discretion in Ledore Investments v. Dixin Construction

Read More
Feb 23, 2024
Featured Insight

Environmental Protection: An Essential Consideration for Any Minor Exemption

The Quebec Court of Appeal quashed, on environmental grounds, a municipal resolution on a minor exemption

Read More
Feb 22, 2024