Canada Labour Code Changes May Affect Your Employment Contracts
Federally regulated employers should pay attention to the new amendments to the Canada Labour Code (the “Code”) taking effect February 1, 2024. Federally regulated industries and workplaces captured by the Code include air transportation, banks, postal and courier services, and telecommunications, among others.
When terminating an employee without cause, an employer must provide the employee with a certain notice period.
This can be paid by wages equivalent to the wages the employee would have earned during the notice period (commonly referred to as severance), a working notice period, or a combination of both. The notice period begins on the day that an employer gives notice of the termination to the employee.
The new amendments to the Code increase this notice period depending on the duration of the employment.
This brings the Code into alignment with the BC Employment Standards Act for notice required to terminated employees. The applicable number of weeks are now:
Duration of Employment – Notice Period
- At least 3 consecutive months of continuous employment – 2 weeks
- At least 3 consecutive years of continuous employment – 3 weeks
- At least 4 consecutive years of continuous employment – 4 weeks
- At least 5 consecutive years of continuous employment – 5 weeks
- At least 6 consecutive years of continuous employment – 6 weeks
- At least 7 consecutive years of continuous employment – 7 weeks
- At least 8 consecutive years of continuous employment – 8 weeks
The notice period caps out at 8 weeks. For example, an employee who is terminated without cause after 15 years of employment would still only be entitled to a notice period of 8 weeks.
Further, a federal employer must now give an employee a written statement that sets out their vacation benefits, wages, severance pay, and any other benefits and pay arising form their employment with the employer. If the employee receives wages in lieu of notice, then the employer must provide the statement of benefits no later than the date of termination. If the employee receives working notice, then the employer must provide the statement of benefits no later than two weeks before the date of termination of employment.
Takeaway for Employers
Federal employers should review and update employment contracts to confirm compliance with the updated legislation, particularly to ensure that termination provisions are enforceable.
Federal employers should also be mindful that these notice periods do not take into account the common law reasonable notice requirement or the broad requirement under the Code that dismissals be “just” (i.e. fair).
