27
Feb
Navigating New Employment Termination Rules: What Federally Regulated Employers Need to Know
As of February 1, 2024, recent amendments to the Canada Labour Code introduce fresh obligations for employers, notably concerning the termination of employment. Federally regulated employers terminating less than 50 employees now have to provide written notice of termination, pay in lieu of notice, or a combination of both, to dismissed employees without cause, with a maximum notice period of 8 weeks. The rules applying to terminations involving 50 or more employees remain unchanged.
The updated legislation mandates graduated notice periods based on an employee's length of service. Employees terminated without cause are entitled to varying notice periods depending on their tenure:
2 weeks for at least 3 months, up to 3 years of continuous employment.
3 weeks for at least 3 years, up to 4 years.
4 weeks for at least 4 years, up to 5 years.
5 weeks for at least 5 years, up to 6 years.
6 weeks for at least 6 years, up to 7 years.
7 weeks for at least 7 years, up to 8 years.
8 weeks for at least 8 years.
This notice must be provided in writing and can be given as working notice, pay in lieu of notice, or a combination of both. This contrasts with the previous obligation to provide employees with three consecutive months of continuous employment, two weeks of termination notice or pay in lieu of notice. These new notice requirements are distinct from the existing obligation to provide severance pay to employees with 12 consecutive months of service.
Additionally, employers must now furnish terminated employees with a written statement detailing all entitlements as of the statement date, including wages, severance pay, vacation benefits, and any other benefits or pay related to their employment. The timing of this statement's provision depends on whether the employee is receiving work notice, pay in lieu of notice, or a combination thereof.
Despite these changes, the unjust dismissal protections for non-unionized employees under the Canada Labour Code remain unaffected. Employees not terminated for just cause who are non-managerial with 12 consecutive months of service may challenge their termination as being unjust, generally when the termination was not due to lack of work or discontinuance of a function, potentially resulting in various remedies, including reinstatement or monetary damages.
In light of these amendments, federally regulated employers should review and update their employment agreements and termination letters to ensure compliance with the revised legislation.
Author: Tara Matheson
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