Amendments to the Canada Labour Code (CLC) are set to introduce greater termination entitlements for federally regulated employees who are terminated without cause. These changes are to take effect February 1, 2024. 

Federally vs Provincially Regulated Employees

Employers may be provincially or federally regulated. Though most industries and businesses in Canada are subject to provincial regulation, a handful of employers fall under the federal regulatory landscape. Federally regulated employers include but are not limited to, banks, railway companies, interprovincial trucking companies, broadcasting and telecommunications entities, airlines, shipping companies, and federal crown corporations. It is crucial for employees to be aware of their status as being either provincially or federally regulated for the purposes of understanding their entitlements upon termination. While provincially regulated employees in Ontario are subject to the Employment Standards Act (ESA), federally regulated employees are subject to the CLC. 

The Canada Labour Code (CLC) 

The Canada Labour Code outlines minimum entitlements for federally regulated employees terminated without cause. Prior to the changes being made to the CLC, individuals terminated without cause who had completed three consecutive months of continuous employment with the employer were entitled to 2 weeks’ notice or 2 weeks’ pay in lieu of notice upon termination.

Amendments to Notice of Termination Requirements 

The recent regulatory amendments will increase the minimum notice of termination or pay in lieu federally regulated employees are entitled to. After February 1, 2024, employees governed by the CLC terminated without cause will be entitled to notice or pay in lieu as follows: 

• Two weeks after three consecutive months of continuous employment; 
• Three weeks after three consecutive years of continuous employment; or
• Three weeks plus one additional week per consecutive year of continuous employment up to a maximum of eight weeks. 

These changes represent an increase in minimum entitlements upon termination for CLC governed employees. 

Severance Pay Entitlements remain Unchanged

Federally regulated employees may also be entitled to severance pay when terminated without cause. The CLC states that employees who have completed 12 consecutive months of continuous employment are entitled to the greater of 2 days wages for each year of completed service, or 5 days wages. These amounts are to remain unchanged by the recent amendments to the CLC. 

Other Amendments to the CLC

In addition to increased notice upon termination, the CLC will also be changed to make employers provide individual employees with a written statement of benefits which specifies an employee’s vacation pay, wages, severance pay and any other benefits arising out of their employment with the employer upon termination. This change largely mirrors section 213(2) of the CLC which requires employers to provide a benefits statement in the context of group terminations. 

The Common law 

These amendments do not change entitlement to wrongful dismissal damages at common law. In cases where employees have not contracted out of common law notice, their entitlements upon termination may be greater than the minimum standards provided by the CLC. 

Takeaway 

It is critical for employees to be aware of their rights and entitlements upon termination of their employment. Depending on whether an employee is provincially or federally regulated, they may look to the ESA or CLC to determine their minimum entitlements. It is likely that many employment contracts will no longer comply with CLC termination provisions after the above-mentioned amendments come into effect. Accordingly, federally regulated employees should review their employment contracts to establish whether they are still CLC compliant after February 1, 2024.