August 11, 2023
What’s happening? The federal government recently published an Order in Council proclaiming that specific sections of the Budget Implementation Act, 2018, No. 2 (the “BIA”) will come into effect in 2024. These sections of the BIA amend the Canada Labour Code (the “CLC”) to increase the overall period of notice employers are required to provide employees they plan to terminate without just cause and require that employers provide each employee who is terminated without just cause with a statement of benefits.
Effective Date. The BIA’s amendments to the CLC referred to above (the “Amendments”) come into effect on February 1, 2024.
What does it say? The Amendments are as follows:
Notice period: Currently, employers are required to provide employees whom they intend to terminate without just cause with either two weeks of notice of termination or wages in lieu of notice so long as the employee has completed three continuous months of employment. The Amendments instead provide for a notice period under the CLC that increases incrementally based on the employee’s length of service, as outlined below:
|Period of continuous employment||Notice period|
|At least 3 months||2 weeks|
|At least 3 years||3 weeks|
|At least 4 years||4 weeks|
|At least 5 years||5 weeks|
|At least 6 years||6 weeks|
|At least 7 years||7 weeks|
|At least 8 years||8 weeks|
Form of notice: Notice can be given (i) in writing as working notice; (ii) as wages in lieu of notice; or (iii) as a combination of the two.
Statement of Benefits: An employer must also provide an employee who is terminated without just cause with a written statement of benefits which includes vacation benefits, wages, severance pay and any other benefits and pay (“Statement of Benefits”), per the timeline set out below:
|Form of Notice||Deadline to provide Statement of Benefits|
|Employee receives working notice||As soon as possible but no later than 2 weeks before the end of the notice period|
|Employee receives wages in lieu of notice||No later than the last day of the notice period|
|Employee receives a combination of working notice and wages in lieu of notice||As soon as possible but no later than 2 weeks before the end of the notice period; if the notice period is less than 2 weeks, then the last day of the notice period|
What should we do? Prior to February 1, 2024, employers are encouraged to consider the following:
- Plan Financially: Employers should consult with their bookkeeping or finance team to evaluate the financial implications of a graduated termination notice structure, which could increase a (longer-term) employee’s statutory notice period by six weeks.
- Prepare and Distribute the Statement of Benefits: Employers that are planning to terminate an employee without just cause should consider being proactive and preparing the Statement of Benefits at the time they prepare termination-related documents; they are also strongly encouraged to provide the Statement of Benefits to the employee as soon as possible, rather than waiting until the deadline for providing this document.
- Severance: The existing CLC rules around severance remain unchanged. Severance pay must still be provided to terminated employees who have completed 12 or more consecutive months of continuous employment. The amount of severance an employer must pay remains the greater of: (i) two days of wages for each year of completed employment; and (ii) five days of wages in total.
- Avoid changes to employment during notice period: As a reminder, during the notice period, an employer must not reduce the rate of wages or alter any other term of condition of employment (such as benefits) without the employee’s written consent.
- Consider contractual entitlements: The notice periods referred to in this HR Alert are minimum statutory amounts. An employer may be obligated to provide an employee with greater termination notice entitlements based on their employment contract or the common law.
- A manager;
- Has less than 12 months of service;
- Terminated due to lack of work or discontinuance of a function; or
- Covered by a collective agreement.
Not Federally-Regulated: Why should we care? All provinces and territories have some form of a graduated notice of termination system based on an employee’s length of service. The federal government joins these jurisdictions in transitioning to this model. Employers across Canada should ensure that they comply with the termination notice requirements set out in the applicable minimum employment standards legislation, as failure to do so could result in an employment standards complaint or lengthy and expensive lawsuit. Not all jurisdictions mandate that employers provide a terminated employee with a Statement of Benefits or equivalent document, so employers are encouraged to review any such requirements that apply to their workplaces.
For additional information regarding this HR Alert, please contact your Relationship Manager or the ADP Workforce Now Comprehensive Services team. This HR Alert, along with all the other HR Alerts and HR Tips issued by ADP Workforce Now Comprehensive Services, is also available in the HR Knowledge Library through the ADP Workforce Now Comprehensive Services Portal.
The information contained in this document is summary in nature and is intended to provide general guidance only. It should not be viewed as a replacement for legal or professional advice. While every effort is made to provide current information, the law changes regularly and laws may vary depending on the province or territory. You should review applicable law in your jurisdiction and consult experienced counsel for legal advice.
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