Federally regulated employers take note: Changes to the notice period for termination of individual ‎employment finally coming into force February 1, 2024‎

On August 30, 2019, we discussed the modernization of the Canada Labour Code (“Code”) under the Budget Implementation Act, 2018, No.2 (the “Act”). Among other things, this modernization of the Code increases the amount of notice of termination of employment, or compensation in lieu, that employees working for federally regulated employers are entitled to in the event of a without cause termination.

After a delay of some four to five years, on June 1, 2023, the federal government issued an Order in Council (OIC) proclaiming that these amendments will come into force on February 1, 2024. Effective that date, the current two-week notice period required under the Code will be replaced with a graduated notice system similar to that adopted by many Canadian provinces:

Notice of termination must be delivered in writing, and the employer may provide notice, compensation in lieu of notice (at the employee’s regular wages for their regular hours of work) or a combination of both. As before, an employer is not required to provide notice where the dismissal is for just cause.

An employer must also give the employee a written statement no later than two weeks before the effective date of termination, or if the notice period is shorter than two weeks, on the date notice of termination is provided to the employee. The statement must set out an 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.

These changes do not change employees’ severance entitlements under the Code, nor do they affect the protections of section 240 (“unjust dismissal”), under which a non-manager who has been employed for longer than 12 months may challenge the termination of their employment and seek reinstatement. It is also important to remember that the Code only applies to federally-regulated employers (i.e. employers who are federal work and undertakings for the purposes of the Canadian constitution) who generally make up only a small percentage of employers in Canada.

These amendments will come into force on February 1, 2024. Notice given to employees prior to this date will remain subject to minimum standards under the current provisions in the Code (i.e., two-weeks notice).  However, once the amendments are in force, the graduated system will apply and the termination clause in any written employment agreement that does not meet the minimum requirements of the new graduated system will likely be unenforceable. This likely leaves employers exposed to claims of reasonable notice of termination of employment under the common law which can be exponentially higher than claims for statutory entitlements.

It is critically important that federally-regulated employers undertake a review of their existing employment agreements before February 1, 2024 to ensure that they are revised to meet the Code’s newly applicable minimum standards.

See our previous comments regarding the modernization of the Code here, here and here.

For further information please contact any of the members of the DLA Piper Canadian Employment and Labour Law Service Group listed here.