Special thanks to our articling student Ravneet Minhas for contributing to this update.

Federal employers should be aware of recent amendments to the Canada Labour Code, which increased the minimum termination notice period for federally regulated private sector employees.[1] The changes came into force February 1, 2024 and provide employees who have completed at least three years of continuous service with a longer notice period if terminated without cause.

Previously, employers had to provide a minimum of two weeks’ notice of termination or pay in lieu of notice to an employee who had completed at least three months of continuous employment with the employer.

Upon amendment, employers must now provide employees with a graduated notice of termination based on the length of an employee’s continuous employment. The entitlement remains unchanged for employees who have completed up to three years of employment; however, once the employee has completed three years of continuous employment, the notice period increases to three weeks. The notice period continues to increase by one week for each additional year of service completed thereafter, up to a maximum of eight weeks. In lieu of notice, employers can provide termination pay equivalent to the wages that the employee would have earned during the notice period or a combination of notice and pay in lieu.

The increased minimum notice period does not alter an eligible employee’s entitlement to severance pay under section 235 of the Code. Eligible employees are entitled to severance pay which is the greater of two days’ wages per completed year of service or five days’ wages. We also note that the notice period requirements do not apply to employees terminated with just cause.

Further, the amendments establish a requirement for employers to provide a statement of benefits to employees whose employment is terminated. This statement must outline an employee’s rights to vacation benefits, wages, severance pay and any other benefits and pay arising from their employment.

Key Takeaways

Ensure employment agreement templates are updated to reflect the amendments. Be aware that existing employment agreements that provide less than the amended entitlements risk being found unenforceable by courts. As a result, employers may be required to provide an employee with common law reasonable notice, which is generally far greater than the minimum notice period provided under the Code.

[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.