New Notice of Termination Requirement
On June 1, 2023, the Federal government determined February 1, 2024 as the date on which new notice of termination provisions under the Canada Labour Code will come into effect. These provisions will require federally regulated employers to provide individual employees with a graduated notice of termination, or pay in lieu of notice, based on the length of an employee's continuous employment.
Previously, employees with three consecutive months or more of continuous employment were entitled to two weeks' notice or pay in lieu of notice upon being terminated without cause. Once the new provisions come into effect, such 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. Employers who provide notice before February 1, 2024 will not be required to follow the new provisions.
The new provisions also require employers to provide a written statement of benefits to employees who are terminated. The statement must set out the employee's vacation benefits, wages, severance pay and any other benefits and pay arising from their employment with the employer as of the date of the statement. The statement must be given to the employee as follows:
- If the employee is given advance working notice of termination, no later than two weeks before the date of the termination; or
- If the employee is given pay in lieu of notice, no later than the date of the termination.
Considerations for Employers
Now that the new notice provisions are set to come into force in early 2024, it is recommended that federally regulated employers audit their employment agreements to ensure the agreements provide at least the minimum notice of termination. Note though that non-managerial level employees are protected by the unjust dismissal provisions of the Canada Labour Code and therefore the ability to terminate without cause but with notice is constrained to situations involving a lack of work or discontinuance of a function.
Also based on recent case law, including the Waksdale v. Swegon North America Inc., decision of the Ontario Court of Appeal, there is heightened risk that contracting out of the minimum standards required by the Canada Labour Code may render the termination clauses in an offending employment contract unenforceable. Meaning, if the agreement contemplates providing less than the minimum notice of termination (by e.g. providing only two weeks of notice in the event of termination), it may be rendered unenforceable. The risk is the employee would be presumptively entitled to "reasonable notice", which can be far greater than the statutory notice requirements under the Canada Labour Code.
Takeaway
Taking a proactive step and auditing your employment agreements to ensure they are onside the new notice provisions may help avoid greater costs down the road. At a minimum, employers should ensure any new employment agreements entered into conform with the new amendments, on a go-forward basis. And employers are encouraged to not ignore the post-termination benefit statement requirement after February 1, 2024.
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