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Reminder: Termination notice rules change in February for federally regulated employers

The amount of notice employers are required to give workers who are federally regulated is changing on Feb. 1, 2024.

As of that date, there will be a graduated notice of individual termination of employment. Federally regulated employers in Canada include those in transportation, telecommunications, broadcasting, and banking sectors, among others.

The changes essentially bring the federal rules in line with existing legislation in most provinces that provide a sliding scale of notice based on tenure.

Current rules

Under Part III of the Canada Labour Code, the current standards mandate a minimum two-week notice or pay in lieu for employees with at least three continuous months of employment. The individual termination provisions do not apply where the termination is for just cause.

When a group of 50 or more employees have their employment terminated together in what is termed a “group termination of employment,” other rules apply.

New rules

Beginning Feb. 1, 2024, federally regulated employees will see a new structure for termination notices, directly tied to their length of service.

Employees with up to three years of service will continue to receive the standard two weeks’ notice, as long as they’ve completed a minimum of three months with the employer.

However, for those surpassing three years of continuous employment, the notice period extends to three weeks and will further increase by one week for each subsequent year of service, capping at eight weeks. This approach aims to offer enhanced support to longer-serving employees, who might face greater challenges in job transitions, including the need for retraining or acquiring new skills.

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.

Additionally, the amendments will require employers to provide a statement of benefits to terminated employees, outlining their rights to various benefits and pay arising from their employment. This move aims to equalize rights for all terminated employees, aligning federal standards with those under provincial and territorial labour jurisdictions.

Consultations

The changes follow extensive consultations that were held in 2017 and 2018 involving about 3,100 individuals, employers, unions, and organizations. The 2024 implementation date was chosen to give employers time to prepare, according to the federal government.

“The increased benefit for employees will have a cost impact to employers,” it said. “However, employers concerned with paying higher amounts of termination pay can mitigate their costs by providing notice instead. When terminations of employment are unforeseen and employers cannot provide the full notice period, the new provision allows them the flexibility to give a partial notice period along with some termination pay.”

Also, it’s important to note that the new amounts included in the Canada Labour Code do not take into account common law notice periods, which can be significantly higher if an enforceable employment contract to limit the notice period isn’t in place.