Numerous changes to the Canada Labour Code (CLC) are coming into effect on February 1, 2024, and it will be very important for human resources professionals to understand how these amendments affect both employers and employees. The amendments provide for greater amounts of notice to employees and bring the CLC closer to existing entitlements under provincial employment standards such as Ontario’s Employment Standards Act.
Amendments to the CLC
Currently, under the individual termination provisions of the CLC, employers must give an employee with at least three months of service two weeks of notice or pay in lieu (or some combination thereof) for a without-cause termination. The amendments to the CLC under section 230 outline more generous notice requirements which are based on the length of the employee’s employment.
Employees with at least a minimum of three months of continuous service, but less than three years, will still have the same two-week notice period. Once an employee has completed at least three years of continuous employment, their entitlement will increase to three weeks notice period. After the three-year benchmark, the entitlement will continue to increase in one-week increments for each additional completed year of employment, up to a maximum of eight weeks’ notice or pay in lieu. Eligible employees will still have the same entitlements to severance pay in accordance with section 235 of the CLC.
In addition, upon termination of an employee, federally regulated employers must provide terminated employees with a written statement of benefits in accordance with section 230 2.2 of the CLC. This statement must outline an employee’s rights to vacation benefits, wages, severance pay, and any other benefits and pay arising from their employment. Since this entitlement already exists for employees included in a group termination, this amendment will equalize the right to a benefits statement for all employees whose employment is terminated.
When preparing the statement of benefits, keep in mind as well that benefits have to be continued during the notice period, as section 231 of the CLC requires that the terms and conditions of employment not be altered during the notice period. This obligation was affirmed by the courts in 2020 ONSC 6608.
If an employee receives pay in lieu of notice, the statement of benefits must be delivered to the employee no later than the date of their termination and, where an employee receives notice of termination, the statement of benefits must be delivered no later than two weeks before the date of their termination.
Federally regulated employers such as banks and airlines should carefully take note of the amendments to the CLC as it significantly changes obligations and entitlements at termination.
Federal employers should review and update employee contracts and termination letters to ensure compliance with the February 1, 2024, amendments to the CLC. This especially includes making sure that the termination clauses in the employment contracts are enforceable.
Navigating these changes can be complicated, and employment lawyers are available to assist federal employers to ensure they are meeting the new requirements.