In 2018, as part of the federal government’s efforts to modernize its labour standards regime, the Budget Implementation Act, 2018, No. 2 (the “Act”) introduced a number of changes to the Canada Labour Code (the “Code”). A recent Focus Alert discussed two of these changes, namely the requirement for employers to reimburse reasonable work-related expenses and to provide employees with certain information related to employment, which came into effect earlier this summer. Now, employers should note that further changes originating from the Act – this time, related to individual termination entitlements – will be coming into effect on February 1, 2024.
Background
Part III of the Code sets out basic labour standards that many federally regulated employers, including federal Crown corporations and those in the private sector, must abide by. Amongst other things, it dictates the statutory obligations that these employers have when terminating an individual’s employment.
Presently, the Code provides that employers must give a minimum of two weeks’ notice of termination (or two weeks’ pay in lieu, or a combination of both) to any employee who has completed at least three months of continuous employment. This requirement applies unless the termination is for just cause or is part of a “group termination of employment” (i.e., 50 or more employees having their employment terminated either on the same date or within any 4-week period). Notably, in the latter case, the Code provides for distinct rules and termination entitlements. Although the Act also made amendments to the Code in respect of group terminations of employment, a date has not yet been fixed for those changes to come into effect.
New Graduated Notice Entitlement
Effective February 1, 2024, individual notice entitlements under Part III of the Code will change. Beginning on that date, employers will have to provide employees with a graduated notice of termination (or pay in lieu, or a combination of both) which will be based entirely on the length of the employee’s continuous employment.
Employees who have completed between three months and three years of continuous employment will see their entitlement unchanged at two weeks. However, once an employee has completed at least three years of continuous employment, their entitlement will increase to three weeks. Thereafter, the entitlement will continue to increase in one-week increments for each additional year of employment, up to a maximum of eight weeks, as follows:
| Length of Continuous Employment | Individual Notice Entitlement |
| At least 3 months, up to 3 years | 2 weeks |
| At least 3 years, up to 4 years | 3 weeks |
| At least 4 years, up to 5 years | 4 weeks |
| At least 5 years, up to 6 years | 5 weeks |
| At least 6 years, up to 7 years | 6 weeks |
| At least 7 years, up to 8 years | 7 weeks |
| 8 years or more | 8 weeks |
It is important to note that these individual notice entitlements are unrelated to and will not alter an employee’s additional entitlement to severance pay pursuant to the Code.
New Requirement for Statement of Benefits
Also effective February 1, 2024, employers will have to provide individuals whose employment is terminated with a statement of benefits outlining their right to vacation benefits, wages, severance pay, as well as any other benefits and pay arising from their employment. The statement will have to be provided as follows:
- If the employee is given working notice of termination, as soon as possible, and no later than two weeks before the date of termination, and
- If the employee is given pay in lieu, no later than the date of termination.
This new requirement is specific to individual terminations of employment, as it already exists separately in the Code with respect to group terminations of employment.
In Our View
The transition towards a graduated notice entitlement at the federal level is not entirely surprising, as it aligns the Code with provincial and territorial labour standards legislation across the country. That being said, its practical application is somewhat constrained because of the unjust dismissal provisions already contained in the Code, which provide non-managerial employees with at least 12 months of continuous employment statutory protection from the termination of employment without cause and with notice, except in the event of lack of work or discontinuance of a function. Moreover, for employees with less than 12 months of continuous employment, their individual notice entitlement will remain unchanged.
Nevertheless, federally regulated employers should carefully review their employment agreements well ahead of the February 1, 2024 deadline in order to ensure that any existing termination provisions provide for at least the (new) minimum required notice of termination. Provisions that do not do so risk being declared unenforceable in the event of litigation, exposing the employer to greater notice-related liability at common law. Employers should also consider revisiting any template termination letters to ensure that they cover off the requirements of the statement of benefits.
For more information, please contact Lauren Jamieson at 613-404-5058 or Kecia Podetz at 613-769-6207.
